Julius Nyerere, the former President of Tanzania, was a powerful advocate for Africa and its development. Nyerere once gave a speech in which he essentially said twenty years ago, it took one ton of sisal for us to buy a tractor (sisal was a big Tanzanian export crop). Ten years ago, it took two tons. Today it takes three tons. And this is proof of a conspiracy by the developed world to keep Africans in poverty. We have to work three times as hard just to stay in the same place.
That’s a pretty common way in which people explain to themselves unfavourable economic changes. It is in a sense comforting to think that you have been the victim of some international conspiracy to do you down. It makes you the centre of the story, and a victim to boot.
But that wasn’t why the price of sisal was falling. People don’t want sisal anymore. We have developed artificial fibres that are cheaper, better and do more things.
Nyerere’s message on behalf of his people was “the world must adapt to us.” But the world doesn’t adapt to us. When people are free to buy what they please, you have to give them what they want.
This is relevant to everything we do in Atlantic Canada, but nowhere is it more important than in agriculture. This is an industry many parts of which are still mired in a bygone era of marketing boards, export subsidies and other policies designed to shield farmers from pressure to produce what consumers actually want.
No one knows if it will take 10 or 15 or 20 years of further international trade negotiations to get rid of agricultural tariffs, compulsory marketing board with price setting powers, export subsidies and all the rest. They will go, however. The benefits in terms of cheaper and more plentiful food and more economic activity are simply too great for it to be otherwise.
The bad news is that Canada is rapidly losing its ability to compete in many kinds of bulk, unprocessed agricultural commodities. The good news is that those are the things we want to get out of because there’s more money to be made in value-added. This story has been repeated over and over around the world. In New Zealand, when economic crisis hit the country, the wine production subsidy was eliminated to cut costs. Today, New Zealand wine is highly prized rather than despised, because once farmers started producing for consumers and not bureaucrats, they saw that smaller quantities of high-quality wine were far more valuable than producing plonk to collect the subsidy.
Other changes are coming. Rich agricultural regions, like the Annapolis Valley or Sussex County, are likely to host a wave of immigrants serving nearby urban markets. Look at the rich farm land of the Fraser Valley. That land long ago passed out of the hands of the traditional Canadian farmer and into the hands of Chinese and then Sikh immigrants growing high-value produce for Greater Vancouver.
Freer trade in agriculture has been good for Canada. Contrary to fears that big American farmers will overpower Canadians, we’re selling more to the US consumer than ever before. Over the last 20 years, our food exports to them quadrupled to $16-billion and we went from a trade deficit to a surplus of some $2-billion. Our higher-value products appeal to sophisticated consumers in growth markets like China, India and Brazil. But the growth in Canada’s food industries is dominated by those who have escaped the interference of government schemes to “help” farmers.
We need transition strategies for those still trapped in the old, highly regulated, highly politicized agriculture of the past, to allow consumers everywhere to speak more directly to our farmers and entrepreneurs. We may need to look, for example, to Australia for a strategy to buy out dairy quota and release that industry from a cost of quota (including financing) of about $5 a day per cow. Our domestic costs are so high that an end to export subsidies would almost surely spell the end of dairy exports. The only way the industry can survive in its current form is by sheltering behind huge tariffs that cost Canadian consumers big money.
Yet when Agriculture Minister Chuck Strahl suggested recently that dairy farmers and processors work together on a strategy to compete with cheap imports, the Dairy Farmers of Canada (DFC)would have none of it unless the government threw up new trade barriers to protect them even further. Strahl properly responded that this should be part of the discussions he is proposing, and that international trade agreements limit Canada’s ability simply to throw up barriers such as the ones the DFC is suggesting.
The spirit of Julius Nyerere is alive and well and running a lot of Canadian agriculture.
Brian Lee Crowley is president of the Atlantic Institute for Market Studies (www.aims.ca), a public policy think tank in Halifax. E-mail: [email protected] .