The Collapse of DOHA: Now What?

In late July, it made headlines around the world as the top powers failed to agree on measures toward liberalizing trade in farm and manufactured goods. And while the United States and the European Union trade accusations of blame as to whom is ultimately responsible, Canada and the world wonder what they will do post-Doha. Keep in mind, Grains and Oilseeds producers have been coached to be patient for the successful conclusion of WTO that will free them of the burdensome US farm bill that has reduced their incomes for many years.

Recognizing this breakdown, and the uncertainty of when or if the negotiations will ever resume, the National Liberal Rural Caucus released a recommendation for a new plan that would help farmers face these new realities. Liberal agriculture critic Wayne Easter, whose government created and implemented the current national agriculture policy, suggested a new policy is needed because the former presumed a WTO deal would be made to reduce foreign subsidies. A couple of key initiatives outlined in their recommendation are as follows:

Easter was also quoted as saying the government must be more aggressive in supporting farm incomes and as a result, a resolution reflecting the new policy will be debated at a Liberal national convention in Montreal in late November.

So where does the Conservative minority government stand on this issue? Recently, Chuck Strahl responded to the issue of low commodity prices in a press release where he ‘accepts the farm lobby argument that a margin-based system like the Canadian Agricultural Income Stabilization program does not adequately help sectors such as the grain industry that faces depressed prices, often pushed down by foreign subsidies or, some analysts say, by corporate concentration’ and suggested that ‘they must create a safety net program that supports farmers facing chronically low commodity prices’. He went on to add that a new program would require certain guiding principles such that the federal government won’t be seen to have endlessly deep pockets and he does not want to have our entire package declared amber (under WTO rules) and he does not want to make a bad situation worse by distorting markets. For these reasons, he rejects the Risk Management Program embraced by virtually all Ontario farm groups. Let’s tackle each concern one at a time.

Along the line of affordability to the federal government, Minister Strahl indicated in a recent interview that the federal government ‘can’t go toe to toe with the Americans or the Europeans, $8 billion in subsidies to corn; doesn’t have endlessly deep pockets; and doesn’t want to have our entire package declared amber (under World Trade Organization rules).’ It was forecasted that the Canadian government would spend CAN$4.3 billion in support for the entire Canadian agri-food sector in 2004; slightly over 1/2 of the amount the US spent on a single commodity. The US spent US$8 billion in support for corn in 2004. Until such time that other countries significantly reduce or eliminate their domestic support programs, Canada’s primary producers can’t be expected to fight the treasury boards of other countries out of their own pockets. While the government has contributed some much need financial assistance, it is not enough to ease the financial crisis faced by the grains and oilseeds industry. Had all the ad hoc funds been invested in a Risk Management Program, producers would have been a lot closer to having a viable long-term program.

The issue of WTO compliance is the second concern. If the WTO continues to have standing, one would have to ask about predecessor programs which were very similar to RMP. These programs were in place at the start of the APF and were discontinued by the government and not as a result of WTO compliance or excessive spending beyond caps.

The final concern, the distortion of markets, is a hard one to understand. Even when former income support programs were operating at their maximum, Ontario corn acreage was on the decline; this argument makes no sense.

Unfortunately, the press release falls short of any suggestions for the shortcomings of the current Canadian Agricultural Policy. Information being fed back to the Grains and Oilseeds sector suggest the work on the Business Risk Management pillar of the APF 2 is almost complete and consists of a disaster program, a new program (not called CAISP, but works in the same way), Production Insurance and Cash Advance Programs. There is reserved hope that some sort of positive progress towards a solution will fall out of the federal-provincial ministers’ meeting mid-November. Early signs are not that optimistic; as OCPA has recently been made aware the Grains & Oilseeds crisis has been removed from the meeting agenda. Until changes are made, Grains and Oilseeds producers will continue to be left fending for themselves and asking the question, “Now what?”