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Agriculture This Week - Farm income should not rely on governments

There is nothing quite as discouraging in agriculture as a headline suggesting farm incomes have risen, but not because of prices. That was the situation recently at www.producer.com where a headline read; ‘U.S.
Calvin

There is nothing quite as discouraging in agriculture as a headline suggesting farm incomes have risen, but not because of prices.

That was the situation recently at www.producer.com where a headline read; ‘U.S. farm income expected to rise in 2019, but only because of government aid’.

Most farmers have generally maintained they would be happiest if governments would just get out of the way so that supply and demand could determine farm commodity prices, allowing farmers to then respond to the signals of the marketplace.

Of course governments are never completely out of the picture. We have seen markets dominated through the years by subsidies from the United States and the European Union.

We have seen beef markets blocked by questionable government decisions surrounding the safety of meat following the first confirmed case of Bovine spongiform encephalopathy (BSE).

We have seen trade disrupted when China used market access as a hammer in a purely political dispute over the December 2018 arrest in Vancouver of Huawei CFO Meng Wanzhou on behalf of the United States.

None of the above has anything to do with supply or demand economics.

Of course agriculture, like a lot of industries, would like less government intervention in trade up until the point markets short incomes too much, and then government support is often quickly sought.

The headline noted above has the United States Department of Agriculture increasing its net farm income forecast for 2019 by more than 10 per cent, to $92.5 billion, driven largely by the Trump administration’s trade aid payments to farmers and federal insurance indemnities from extreme weather events, states the article.

It has become largely the norm that governments backfill shortfalls of farm income in various ways.

In Canada crop insurance is a first line of defence to issues with production that can cause income loss. While farmers pay for the insurance, the cost is shared by the coffers of the federal and provincial governments as well.

Crop insurance is of course only one of a number of income stabilizing programs government has cost-shared with farmers through the years.

It might seem such programs run counter to the idea of government getting out of the way of strictly market-driven farm commodity pricing but it shows that there is an appreciation still that farming is a unique business in as much as it ultimately does feed the people.

It would be folly to let the sector flounder too greatly because of weather conditions or the meddling of other governments.

It is a sector that might work best left to market signals and demand but is all too important not to have some safety nets in place for those times incomes need bolstered.

Calvin Daniels is Editor with Yorkton This Week.