in union is strength

New Brunswick's farm families, like all Canadians, want: fair and adequate payment for their work, a reasonable return on their investments, vibrant rural communities, and a healthy and sustainable natural environment. As farmers, they also want to produce safe, nutritious food and they want to ensure that food-producing lands remain productive and in the hands of farm families. Despite the modest nature of these wants, the current agricultural production, marketing, distribution, and trade system chronically fails to satisfy them.

When looking at the 1999 WTO negotiations, the question is: Will accelerating trade in food move us closer to these goals or farther away? Specifically, will the likely outcomes in the negotiations-accelerated trade, a restricted role for governments, and "disciplines" on farmers' marketing agencies-advance or retard our attempts to foster a healthy and sustainable farm sector and rural Canada? Or, conversely, if Canadian governments sincerely wish to achieve the goals listed above, what should their agricultural-trade policy look like?

In order to answer these questions, Canadian farmers and politicians should first look at what is working and what is not. Canada, and the other nations of the world, are in the midst of a farm income crisis unparalleled since the 1930s. Figure 1, below, shows that per-farm realized net income has returned to depression-era levels.

Figure 1. Canadian per-farm realized net farm income, adjusted for inflation: 1926-99

       Source: Statistics Canada and Agriculture and
	       Agri-Food Canada (projections)

It is provocative that this collapse in Canadian farm incomes occurred despite increased diversification, technology utilization, farm size, and increased agri-food exports. Farmers are farming more land, with state-of-the-art technology, raising exotic and high-value crops and livestock, and exporting four times what they did two decades ago. For this effort and investment, they have been rewarded with the lowest net farm incomes since the 1930s. Clearly, it is time to re-examine everything that we think we know about agriculture, trade, and rural prosperity.

For farmers, in New Brunswick, across Canada, and around the world, a single-minded focus on increased trade has not worked. Moreover, the deregulation of agriculture and the erosion and termination of farmers' marketing agencies-seen by many as a way to increase trade-has had numerous negative effects on farmers. Figure 2, below, compares New Brunswick's agri-food exports to its realized net farm income for the years 1988 to 1998.

Figure 2: New Brunswick agri-food exports and realized net farm income: 1988-98

       Source: Stats. Can. 21-603E; AAFC projections
	       for 1998 net income; AAFC Agri-Food Trade Service

In 1989, federal and provincial governments committed to double agri-food exports. They predicted that achieving this goal would have many salutary effects including increasing farmers' net farm incomes.(1) The graph above demonstrates that New Brunswick farmers have seen absolutely no benefit from increases in agri-food exports. Exports have nearly tripled over the last years and net farm income has declined.

Despite increased exports, the market has failed to provide fair and adequate returns to farmers. This is not a recent phenomenon or one uniquely Canadian. In the current crop year, the U.S. will provide its farmers with $22 billion in direct assistance and the Europeans will hand over between $50 and $70 billion. They must provide this money because the market fails to sustain their farmers. The message is clear: the market chronically fails to provide a fair and adequate return to farmers, this is true in every country, and trade seems to have no positive effect on this failure.

There are solutions however. While simply increasing exports does not help us achieve fair and adequate farm returns, healthy rural communities, and environmentally-sustainable production, there are some policies that do work. While the market alone, with or without increasing exports, fails to provide an adequate return to farmers, orderly marketing and supply-management systems do increase and stabilize farmers' incomes. It is striking that during this worldwide farm income crisis, Canadian milk, egg, chicken, and turkey farmers have remained relatively unaffected. Canada's supply management system has protected these farmers from income instability and decline and has, at the same time, provided stable supplies of safe, nutritious foods to consumers at prices equal to, or below, those in the U.S.

Supply management, rather than an impediment to world trade, may be a model for that trade. When farmers inquire as to why prices are so low, they are almost always told that it is due to world-wide oversupply. If there is chronic world oversupply, then systems which manages supply to prevent surpluses should be a number one priority at all international trade talks.

The current farm income crisis also reveals other insights: the negative impact of the income crisis is loosely proportional to the sectors' reliance on the export market. Grain and oilseed producers, heavily reliant on exports, have been hard hit. Hog producers, also reliant on exports, have likewise been hard hit. Moreover, it was a push to increase hog production for export and a concomitant collapse of those foreign markets which plunged pork prices to record lows and which has forced many farm families to abandon hog production. At the other end of the spectrum, milk, egg, and chicken producers who produce almost exclusively for the Canadian domestic market have not seen their prices fall. Production for export seems to leave farmers vulnerable to world prices which fluctuate wildly in the short term and decline inexorably in the long term and to markets which often and suddenly collapse. In light of this, governments' continued promotion of export-oriented agriculture seem misguided. Governments' seeming willingness to sacrifice supply-management and orderly-marketing agencies on the alter of increased exports seems doubly misguided. It seems clear that increased trade is moving us further from the goals identified at the beginning of this brief and that orderly marketing and supply management can move us closer. The government must not sacrifice the latter to gain more of the former.

That farmers should lose out in a deregulated, global, "free" market, trade-accelerating agri-food system should not be surprising. Within such a system, the farmer's role is to provide cheap raw product to exporters, processors, and retailers. Globalizing markets brings farmers into "competition" with ever more farmers in ever more distant countries. Global trade allows processors and exporters to play farmers in one country off against those in another. Agribusiness corporations, global in scope and outlook, have an overwhelming advantage over farm families who must focus on specific plants, fields, animals, and neighbors.

As a strategy to survive on ever lower margins, some farmers have chosen to develop economies of scale and to increase production. This approach requires huge capital investments. While this approach benefits banks, input suppliers, and machinery manufacturers, it jeopardizes surrounding farmers, rural communities, local institutions (marketing boards and farm organizations), the environment, and ultimately the food security of all Canadians.

In addition to economic and social effects, accelerating trade, increasing the distances that food travels, and severing the links between producer and consumer have environmental effects as well. The commodification of food and the ceaseless acceleration of its trade tends to wash away, not only family farms, neighbors and local communities, but also the life-sustaining fertility of our land.

When accelerating food exports, we should also ask: What are we exporting? When we produce and export food for less than the real cost of production, we are exporting Canadian resources and hard-won family-farm capital without full compensation. When we export food we are also exporting the nutrients of our soils. Before we attempt to maximize exports and maximize production on Canadian lands, we should ensure that we understand the lessons of the East Coast cod fishery. There may be wise and prudent limits to "resource exploitation" and these may lie below the economic optimum. Further, because maximizing production is failing to provide reasonable and sustainable returns to farmers anyway, we may want to explore levels of production below maximum output-below maximum export levels.

It is lamentable, but most Canadian economic and political leaders are incapable of reading the ecological signals which can indicate that there are problems in our relationship to nature. The classic ecological indicators-soil erosion, nitrate and pesticide ground water contamination-are today combined with the stark social indicators: the dislocation of farmers, the decimation of rural communities, and the loss of rural young people. If we do not possess the wisdom or the will to address these issues in the arena of national government, how can we hope to deal within the context of global trade regimes?

If we look at trade as a sustainability issue, it becomes clear that the accelerating, global agri-trade system fails to provide economic, social, or environmental sustainability. It will not sustain family farms, communities, or the fertility of the soil. Domestic government policies must work aggressively and immediately toward these ends. And these ends must inform the way food production, marketing, distribution, and trade system is organized.

The National Farmers Union recommends that the Canadian federal and provincial governments work with farmers, rural residents, and all citizens to establish a food production, marketing, distribution, and trade system in Canada and around the world which would ensure:

1. Agriculture and Agri-Food Canada's Sept. 94 publication, "Future Directions for Canadian Agriculture and Agri-Food" states that "for very $1 billion increase in exports...realized net farm income [will rise] $235 million." If this optimistic prediction held true, 1998 Canadian realized net farm income would be at a record $4.3 billion, not the $2.6 billion predicted by AAFC. Further, it implies that farmers capture almost 24% of the value of increases in agri-food exports. If this were true, New Brunswick realized net farm income would be double its current level.