GUELPH — The new American Farm Bill poses significant risks for Canada. Signed by U.S. President Barack Obama a few weeks ago, this $956-billion deal will increasingly isolate America from the global agrifood market, and the once strongly integrated North American agricultural economy will become progressively less fluid.
Frankly speaking, this strategy appears to suggest that the Americans are not as concerned with this shift as they should be.
Canada’s primary issue in this matter is our livestock industry; in particular, country-of-origin labelling, or (COOL). Under the George W. Bush administration, the United States since 2002 has required meat producers to segregate and label animals originating from other countries. As a result, American-based food processors are obligated to set up separate production lines, which is often financially prohibitive. With past food safety scares such as the breakout of "Mad Cow" and foot-and-mouth disease, the Americans felt the need to address perceptual risks.
Most analysts assumed that the COOL policy would be loosened somewhat upon Obama’s arrival in the White House. The administration, however, tightened regulations. Consequently, America-bound exports of meat from Canada have dropped significantly since 2008, and could potentially cost well over $1 billion a year in losses to our ag-economy.
In essence, the Farm Bill fosters the principle of buying local, on a global scale. In retrospect, Canada is just as guilty as the Americans in encouraging consumers to do the same. In addition to federal programs, for years most provinces have had their own "buy local" food programs in place. Given the sheer market clout and influence of the America economy, their industry can get away with it.
Why? Mere economics.
Canada and Mexico are now considering retaliatory tariffs on a range of U.S. goods in concert with an appeal to the World Trade Organization to be made later this month. It’s not clear how this tactic would better serve our own consumers, since tariffs on imports, for example, would likely increase the cost of many goods we purchase every single day.
The American Farm Bill is little more than a cornucopia of public subsidies for its food industry, although this is not in any way a recent state of affairs. Indeed, following the aftermath of the Great Depression, such subsidies have been perceived as a morally-binding contract between American agriculture and the federal government, with National security hanging in the balance. While it has worked internally for America to a certain extent, it has distorted trade equity for decades.
In spite of this, there is some good news. The new Farm Bill marks the end of direct payments to farmers. Under the old policy, a kind of agricultural welfare was in place, in which farmers were paid to not grow anything. Instead, Washington is taking on greater risk to protect farmers when production is affected by harsh weather patterns. Notably, this new Farm Bill offers provisions for farmers who show an interest in such things as growing sushi rice. Like the Food Stamps program, this is yet another example of how the Farm Bill has been able to alleviate the reality of the political divide between rural and urban culture in America.
Nonetheless, the American Farm Bill unequivocally ignores America’s vital role in the global food system. It is intentionally designed to cater exclusively to national agriculture and consumers, with extreme prejudice.
We may dislike such an approach, but the fact is that the U.S. has offered something to its agriculture industry that Canada has struggled with for years: a vision for what many would consider the most important sector in the American economy. Unlike Canada’s agricultural policies, the Farm Bill does pick winners and losers. Due to shifting systemic risks and climate change, Washington opted to protect certain farmers over others.
It’s decidedly un-Canadian, granted, but at least the framework is impressively focused, whether we agree with it or not.
Sylvain Charlebois is associate dean at the college of management and economics at the University of Guelph in Ontario.