Canada's Farmers Seek Assistance
Thousands of grain-growers in western provinces may be unable to pay debts as prices sag
THE tension runs high as 1,500 farmers from across Manitoba jam the local community hall to demand emergency help from the Canadian government because of the lowest grain prices in recent memory."We're scared," Patti Swinburne, a farmer from Killarney, Manitoba, tells the packed meeting. "When one in four farm families by the end of 1991 are not going to be able to buy groceries, we have to have some orderly misconduct." For farmers in this conservative southern Manitoba community, a call for public demonstrations is totally out of character. But the rally, which mushroomed from an idea in a coffee shop, reflects the desperation among farmers whose bins are overflowing this fall with grain below the cost of production. Despite harvesting one of their best crops on record, western Canada's 140,000 grain-growers are in a bleak mood. Farmers say they need immediate government assistance of at least $1 billion (Canadian; US$881 million) just to get through the winter. Almost unanimously they blame their condition on low grain prices. Last month the Canadian Wheat Board, the marketing agency responsible for export sales of all western Canadian wheat and barley, announced initial prices for 1991-92 of just over C$2 a bushel for top grade wheat and C$1.40 for feed barley, after freight and handling charges. The prices are more than 30 percent less than last year and the lowest in 17 years. It is an additional blow for an industry still recovering from a recession and four droughts in the last decade. "We need a major turnaround or grain farmers will be in a very grave situation," says Clay Gilson, a University of Manitoba economist.Skip to next paragraph
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Low world prices Every year the Wheat Board sets "initial" prices for wheat and barley based on expected trends in world markets. Usually, these prices are low and the board follows up the next year with a "final" payment to farmers based on the price of grain it sells overseas. But because of low world prices, some industry analysts predict there will be no final payment this year and that the board will end up with a large deficit, as it did last year. Farm management specialists say it is impossible these days for a Canadian grain farmer to make a profit. According to the Manitoba provincial agriculture department, the average farmer spends C$90 an acre just to put a wheat crop in the ground, plus another C$68 an acre for machinery and land. This year, even with a top grade crop and an average yield, a farmer's initial payment for wheat will amount to only C$70 an acre. Low returns and high costs have Manitoba's 24,000 farmers warning that up to 5,000 of them could be out of business within two years. In neighboring Saskatchewan, where wheat is the backbone of the provincial economy, a quarter of the 68,000 farmers are unable to pay their debts, according to one study. Across the Grain Belt farmers are leaving the land, farm dealerships are closing, and small rural communities are struggling to keep their services alive. "It's a total disaster," says Charles Swanson, president of Manitoba Pool Elevators, the largest grain company in the province. Canadian farmers blame their low prices on subsidies in other nations. They pinpoint the export subsidies of the European Community and the United States Export Enhancement Program (EEP), with bonuses as high as US$1.75 a bushel. According to Prairie Pools Inc., an association of grain cooperatives in Alberta, Saskatchewan, and Manitoba, the EEP has cost western Canadian farmers C$1.7 billion in lost income since its inception in 1985. Also, Canadian producers say their current wheat price is only half the target price guaranteed to US farmers and less than one-third the internal support price received by growers in Europe. American and European officials argue that Canada is far from clean when it comes to subsidizing the grain industry. As examples, they point to an annual C$720 million railroad subsidy from the Canadian government to help move grain to port, C$3 billion in federal farm aid between 1987 and 1989, and a new farm income insurance program. But Canadian farmers say their subsidies have traditionally been less than those of their major competitors and that large payments would not have been necessary if there had been no trade war between the US and Europe.
High debt also to blame However, some experts say low prices are only part of the reason for Canadian farmers' difficulties. The real issue is the Canadian farmers' C$23 billion debt, says Ralph Ashmead, a private economic consultant in Calgary, Alberta. "It isn't just a price problem. It's a structural problem that we haven't dealt with in this industry," Mr. Ashmead says.