Canada awash in grain harvest. But world glut and competitors' subsidies threaten export efforts
Canadian farmers are harvesting a record crop. Given a worldwide glut of grain, however, they wonder if they will be able to sell it.
``It is a worry, especially in Canada where we sell a large proportion of our production abroad,'' says Glen Nelson, who with his son Brad farms nearly 1,000 acres 25 miles northwest of Bentley in central Alberta.
Canadian farmers are especially troubled by competition from grain subsidized by the United States and the European Community (EC).
R. L. Kristjanson, assistant commissioner of the Canadian Wheat Board, told the Winnipeg Free Press: ``It is their [the EC's and US's] intention to put us out of business. The price of grain has been going down, down, down, and buyers have not been committing themselves ahead as they would normally.''
Thinking back more than a decade, many prairie farmers recall filling curling rinks and community halls with surplus grain from several consecutive years' bumper crops. Farmers near Winnipeg were even buying cheap, old street cars to stuff with wheat. Others had to pile grain on the ground, leaving it partially at the mercy of the elements and of pests.
``If we get a couple of bumper crops in a row, we could get back to that,'' says Mr. Nelson.
That's not the case at the moment. After two years of poor crops and solid export sales, the storage bins of Western Canada's 140,000 farmers are relatively empty.
Government statisticians predict the total 1986-87 grain crop will run around 52 million metric tons, up from nearly 42 million tons in the crop year that ended July 31. Canada consumes around 15 million tons of grain. Last crop year the nation exported 24.3 million tons. In 1983-84 it exported a record 30 million tons.
Mr. Kristjanson has doubts that his government agency, responsible for exporting Canada's wheat, barley, and oats, can sell all of the grain potentially available for export this current crop year.
Outside this prairie city on the edge of the Rocky Mountains, swathers and combines have been sweeping relentlessly over the rolling fields, either cutting the standing grain or picking up the swathes left earlier on the ground to dry. Depending on the province, some 13 to 26 percent of the crop has already been combined, and twice those amounts cut.
The initial payment made by the Wheat Board on wheat is down 19 percent from the year before. Farmers hope to make up in volume what they lose in price.
``We will have to have a bumper crop to break even with our costs,'' says Nelson, who had paused in harvesting his barley, rapeseed, and wheat fields because of rain. ``It will not mean any more net income for us.''
He, like other Canadian farmers and many in Argentina, Australia, and other food exporting countries, have been caught in the crossfire of the grain subsidy battle between the US and the Europeans.
Nelson says, ``I really can't see that subsidies are the answer in the long run. We have to stand on our own feet.'' In Ottawa, the Progressive Conservative government agrees that subsidies have to be cut.
For decades, the EC has subsidized farm exports. Other farming nations, including the US, have argued that this is unfair. But now the US has launched a subsidy program as well.
Officials from Canada and some 13 other agricultural nations met in Cairns, Australia, late last month to form an international trading alliance called Fair Traders in Agriculture. Their strategy is to bring pressure on the US and the EC to end their agricultural trade war.
The Canadian Wheat Board estimates that a Canadian farmer will get about $31.23 (US$22.46) in subsidies for every metric ton of wheat he grows this crop year. An American farmer, however, will receive the equivalent of $107.29 (US$77.24) a ton and a European farmer $115.12 (US$82.89).
The 1986 World Development Report of the World Bank comments: ``Because of the distortions in every trading country, the whole world would be better off if industrial countries were to stop protecting their farmers and liberalize agricultural trade.''
If there were a global liberalization of trade in farm products, this report indicates, the industrial and developing countries would enjoy a gain in incomes of about US$64 billion annually.
Canada and the US hope to give agriculture a high priority in the new trade round to be launched by the General Agreement on Tariffs and Trade at Punta del Este, Uruguay, Sept. 15. The EC and Japan will be trying to play down agriculture in those negotiations. Indeed, at a preliminary gathering near Lisbon, Portugal, over the weekend, the trade ministers of the US, Canada, the EC, and Japan were unable to reach agreement on proposed terms for agricultural negotiations.
``We want a serious attempt to address these issues and not just sweeping it under the carpet as has happened in the past seven trade rounds,'' says Earl Stewart, director of agricultural and commodity trade policy in the External Affairs Department in Ottawa. ``The government involvement in agriculture has really become excessive.''
If the EC wants to support the income of producers, it should do so in a way that doesn't mess up international trade, he maintains.