The farm income crisis is not caused by European subsidies (more on this in a future issue). It is caused by worldwide, chronic market failure. The market economy-in Europe, Australia, Argentina, Canada, the Philippines, the U.S., Canada, and elsewhere-is failing to return fair and adequate prices to farm families.

This market failure results from extreme imbalances in market power. Each sector of the agri-food economy (fertilizer, fuel, chemicals, machinery, seeds, and banking on the "upstream" side; and railways, grain handling, processing, meat packing, and retailing on the "downstream" side) is controlled by two to six multi-billion dollar multinationals. And the number in each sector is shrinking. The farm sector, in contrast, is made up of hundreds of thousands of individual producers with little or no market power compared to giant corporations. One food processor, Nestli, had revenues in 1998 that were three times those of all Canadian farmers combined.

Thus, market failure is not only widely observable, but completely predictable. The U.S. and EU have chosen to shield their farm families from market failure through generous support spending. Canada has chosen not to. The U.S. spent $24.5 billion [Cdn.] in the 1998-99 crop year and the EU spent $90 billion [Cdn.]. Canada spent between one and two billion dollars.

It is important to note that neither Canada, the EU countries, nor the U.S. will admit that markets are failing. Instead, politicians blame market "distortions"-tariffs and subsidies-and rush off to the next WTO talks to rid us of these impediments to the perfect functioning of the free markets.

Back to Union Farmer Index

Back to NFU Home Page