OECD praises the end of Wheat Board monopoly

The federal government has won praise from the Organization of Economic Co-operation and Development for dismantling the Canadian Wheat Board’s monopoly over the sale of wheat and barley grown in Western Canada.

The controversial decision to effectively eliminate the Wheat Board “is a positive step to enhance proactive risk management by farmers,” the OECD said in a report on global agriculture policy released Wednesday.

The government argued that removing the Wheat Board’s monopoly would free farmers to market their own grain. But opponents, including thousands of farmers, have fought the decision in court and argued the Board provided valuable clout in international markets.

In terms of Canada’s overall agriculture policy, the OECD said government subsidies have significantly decreased since 1986-88 and the majority of agriculture markets are competitive. However, the agency said the dairy, poultry and egg sectors, which operated under a supply-management system, “continue to receive high price support, distorting production and trade and establishing high rents capitalised in the quotas required to produce.”

Under the Canadian system, government regulators generally fix the price and supply of dairy, poultry and eggs. That has driven up the cost of quotas which the OECD says acts “as a barrier to entry into supply-managed sectors.”

The report also questioned Canada’s ad hoc approach to responding to disasters, such as droughts or floods. Those programs have become institutionalized, the report said, and could often be better managed within existing programs.

Overall the report found that government support for agriculture in the 34 OECD countries fell to 19 per cent of total farm revenue in 2011, a record low. New Zealand had the lowest level of support at just 1 per cent of farm income. Canada came in at 16 per cent, below the OECD average of 20 per cent. Farm support in the United States equalled 9 per cent of farm income. “The move toward lower farm support is a welcome trend, but we still see the need for better targeting and more cost-effective farm policy,” said OECD Trade and Agriculture Director Ken Ash.

“Farm support should be more closely directed at increasing agricultural productivity and competitiveness. Governments should also be doing more to address environmental issues, ensure sustainable resource use and help farmers better cope with risk.”

Original Article
Source: the globe and mail
Author: Paul Waldie