Free trade, rural Canada and how to keep Canada from being Trumped

"Farm capital needs have sky-rocketed as illustrated by the massive $90 billion farm debt."

Over the decades since the Canada-US Free Trade Agreement (FTA) and later, NAFTA, was signed, Canadian agriculture has undergone a significant shift. There was once a multitude of diverse local and regional economic drivers, but now we have a “one size fits all” export-driven, low-priced commodity production model. Farm capital needs have sky-rocketed as illustrated by the massive $90 billion farm debt. Off-farm investors control more and more of Canada’s farmland. Production per farm, per acre and per worker continues to go up. And that production became increasingly export and transport dependent as NAFTA-driven deregulation accelerated consolidation and transnational ownership of handling and processing facilities. Farmer numbers are ominously declining, yet governments, and most farm commodity groups and agri-business corporations remain euphoric over each signed trade agreement and growing exports.

What is missing in this picture is a few very sobering facts.

The once mighty farmer cooperative handlers and processors have been dismantled and absorbed into a handful of transnational corporations. 80% of Vancouver’s terminal capacity used to be owned and operated by prairie Pools. Now the private trade owns it all. With the Canadian Wheat Board gone there is no real economic participation by farmers beyond the farm gate, nor any referee to discipline the railroads. Prairie farmers, who once ran the majority of Canada’s grain industry, no longer have a direct connection to the customers and end-users that pay the real market value for their product.

Under NAFTA, Canada’s regulatory system facilitated North American integration of pork and beef slaughter, processing and marketing at the expense of regional and local processors, marketers and the jobs they provided. Despite trade agreements, Canadian exports are still disadvantaged due to transportation costs

Apart from supply management sectors and a brief spike after 2009, overall inflation-adjusted net farm income is dismal. Farm communities across Canada are suffering from chronic economic decline. This was camouflaged by off-farm manufacturing jobs in Central Canada and resource sector jobs in Western Canada, but those jobs are no longer easy to get. The decline of Canada’s rural economy is not often discussed, but four decades of loss of elevators, rail service, machinery dealerships, manufacturing, processing, input suppliers, essential community services and retailing outlets has steadily diminished the quality of rural life. Government cutbacks to agricultural research facilities, public plant breeding, the PFRA and government extension services have further aggravated prospects. The decline of rural Canada is stark and given little attention compared to the rural quality of life in other developed countries.

Canada’s growing dependence on food imports is another sobering fact. We can grow many of these products, but have lost our own market because trade agreements help integrated food companies operate across borders, depressing prices for producers while controlling the consumer price. Trade agreements also reward over-processing of foods by substituting basic ingredients with cheaper fats, vegetable oils, soy lecithin, corn starch, fructose and modified milk ingredients, hence North America’s infamous over-consumption of processed foods. If free trade facilitates efficiency, as claimed, why is the spread between prices at the farm gate and the grocery store constantly getting larger?

President Trump vilifies Mexico for the loss of US jobs, but fails to mention the American companies that flocked to the Mexican maquiladoras to take advantage of low labour and environmental standards. NAFTA allowed the US to flood Mexico with its heavily subsidized corn, pork, chicken, beef and dairy, destroying the livelihoods of millions of Mexican farmers. Many subsequently migrated (often illegally) to become super-exploited labour in American fields, factories and meat packing plants.

President Trump will likely find reasons to reject Canadian product coming across the border, so it is very important that Prime Minister Trudeau is prepared for the worst and applies the utmost diplomacy in dealing with the Trump administration.

It is important to understand that NAFTA was never the golden egg its promoters pretended it to be, and neither are the other free trade agreements signed since. NAFTA has caused a lot of damage to the Canadian rural economy and President Trump is likely going to add more trouble. The last thing rural Canada needs is more give-aways to the US in an attempt to persuade the Americans not to back out of the deal. It is time for our Prime Minister to stop trading away the livelihoods of Canadian farmers and to start repairing the damage these deals have done so our domestic and international markets can function in a way that will make farming profitable again.

The decline of the Canadian rural economy must be turned around. If Prime Minister Trudeau wants to prevent the election of a Trump-like Canadian leader in three years he will have to start fixing things in rural Canada. We need an agenda for agriculture that makes rural quality of life and viable family farms the priority.

 

Jan Slomp is President of the National Farmers Union. He farms near Courtenay, B.C.