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Agricultural Policy

Policy is a set of guidelines, which includes ethics, economics and law, among others, agreed upon by the public through the political process. Canada has a liberal democracy, which determines the political process: thus policy is determined by elected politicians. Policies are converted, often poorly, into government programs by civil servants. Most government programs are a direct result of government legislation, which are implemented through the various economic instruments available to governments such as taxes, subsidies and regulations. The impact of government policy is the influence that government programs have on individuals or firms in the nation.

Within the Canadian Constitution both levels of government have responsibility for agricultural policy. Generally speaking the responsibilities are assigned in the Constitution so that provinces are responsible for activities that are confined within the province, with the federal government responsible for national and international issues. At times the responsibilities, such as parts of the farm income safety net, overlap. In this case there is a joint responsibility, and the two governments must work together to develop and deliver the agriculture program. One example of this joint responsibility is the crop insurance program.

To comprehend policy one must first understand what motivates government in creating policies. For example, Why did the Saskatchewan government create legislation to limit the ownership of farmland? Why does the government charge less than the market rate for government-owned land leases? Traditionally, one thinks of the government creating policies for the public good, which are then converted into programs that benefit the public. This fails to explain the many programs which transfer financial benefits to a few, at the expense of the general taxpayer. A superior explanation is that governments create the policies and programs in order to respond to both the public need for intervention and the lobbying influence of special interest groups in society.

Provincial agricultural policy originates with the Minister of Agriculture, Food and Rural Revitalization. Examples of agriculture policy include land ownership policy, subsidization of farm income, and technology use policy. The policies may come forward to the government from the general public or from the agricultural industry. When the government develops agricultural programs, it does so in order to support policy objectives which have been agreed to through the political process. One of the major provincial policies is the protection, use, and ownership of farmland.

Two of the most far-reaching farmland policy changes were introduced in the early 1970s. In the first, the New Democratic Party (NDP) government introduced the “Land Bank” as a means to aid the intergenerational transfer of farmland. This policy did aid the intergenerational transfer but had the side effect of a large amount of land being accumulated by the government. When the Progressive Conservative Party came into power in 1982, it abandoned the Land Bank, to which farmers had objected. The second change took place when the Farmland Security Act (FSA) was introduced in 1974 by the NDP, placing limits on who could own Saskatchewan farmland. The FSA restricted non-Saskatchewan residents to owning up to 160 acres, a figure which was later increased to 320 acres; non-Saskatchewan corporations were restricted to 10 acres. This restriction was relaxed in 2003 by a different NDP government, owing to political pressure from farmers.

An early example of a joint farm income program is Canada-Saskatchewan Crop Insurance, which subsidizes the premiums and the administration cost of crop insurance. This was followed by a large number of farm programs aimed at raising farm incomes through direct subsidization of commodity prices, production margins, and farm income programs. Initially, from 1958 to 1989, the cost of the farm income programs was borne by the federal government, with small farmer premiums after 1974. The province started to subsidize crop revenues in 1989 with the introduction of the Net Income Stabilization Account (NISA) and the Gross Revenue Insurance Program (GRIP). With the introduction of these two programs the province was into the business of directly supporting crop farm incomes for the first time.

The province has provided both grain and livestock producers with various forms of price and revenue support. In the 1970s the Saskatchewan government introduced the Beef Stabilization Program. This program had the objective of stabilizing the revenue from cow-calf and fat cattle production. In the 1970s a hog stabilization program was introduced, which provided price support to hog producers. In the 1980s these programs were rolled into national programs known collectively as the National Tripartite Stabilization Program (NTSP). The NTSP programs were funded by federal, provincial and producer contributions. They were discontinued in the early 1990s due to countervailing actions by the United States government.

The creation of farm policy and the development of supporting programs are an ongoing process. In the future the most important question will concern the role that government sees for itself in supporting farm income through subsidization.

W. Hartley Furtan

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Further Reading

Schmitz, A., H. Furtan and K. Baylis. 2002. Agricultural Policy, Agribusiness, and Rent-Seeking Behaviour. Toronto: University of Toronto Press.
This web site was produced with financial assistance
provided by Western Economic Diversification Canada and the Government of Saskatchewan.
University of Regina Government of Canada Government of Saskatchewan Canadian Plains Research Center
Ce site Web a été conçu grâce à l'aide financière de
Diversification de l'économie de l'Ouest Canada et le gouvernement de la Saskatchewan.