Farmers for economic freedom

Updates from the Prairie Centre/Centre for Prairie Agriculture in Regina, Saskatchewan.

Hot off the press! Don Baron's Jailhouse Justice and
Canada's Great Grain Robbery are now available at
http://www.ajagra.com/authors_comment/baron/baron.htm

web posted November 26, 2001

Promoting nonsense

By Craig Docksteader

It was the middle of November, and the protesters converged on Ottawa with purpose. This was the meeting of the G-20 finance ministers, an opportunity to make a bold statement and get their message out.

But exactly what the message was seems to be a little fuzzy. While their fanatical demonstrations and violent antics consistently get a lot of media attention, the protesters appear confused about what they believe.

One sign carried by a protester sums up the confusion best. "PEOPLE BEFORE PROFIT", it shouted in big, block letters.

In all likelihood, the statement is supposed to conjure up pictures of an overweight, cigar-smoking executive, feet on his desk, demanding payment from an impoverished family unable to pay their bills. The children cling to their mother as the executive’s evil laughter fills the room and echoes down the corridors of the multi-national corporation.

What we’re supposed to believe, is that corporations only care about profits, not people. Therefore, government should protect us through over-regulation and excessive corporate taxation. Get rid of free trade agreements, put up tariff walls around the country and don’t let foreign-owned companies sell us anything. If our standard of living has to drop, it will be worth it.

What the protesters don’t seem to understand is that there’s no such thing as "people before profit" because the two are not in opposition to one another. Profit is an essential ingredient in a healthy marketplace, and serves the interests of both consumers and producers.

That’s because profit is something which is earned. It’s not automatic and it can’t be demanded. If someone runs their business well, and serves the interests of consumers, they can make a profit. If they ignore good business principles or the wishes of their customers, their profit is going to disappear.

In this way, profit serves as a signal. It is a tangible indicator of something which by nature is very subjective and otherwise difficult to measure -- customer satisfaction. In a free market, profit tells the real story. Stable profits suggest consumers are being efficiently and adequately served and the business is sustainable. Diminishing profits warn the producer that something is wrong. The astute business person pays attention to these signals and adjusts his business accordingly.

But profit is more than a signal, it also serves as a referee. It not only reveals whether a business is serving people to an acceptable degree, but it holds the power to shut down those businesses that get a failing grade. Regular profits mean a business can continue to do what they’re doing, and even expand. Without profit, a business eventually folds, which is exactly what it should do.

Whether it’s because the product is priced too high, the business is inefficient, or the product simply isn’t in demand, no profit means the people have spoken. That’s why governments that prop up businesses with tax dollars aren’t doing anybody a favour. If a business can’t earn their profit by serving the consumer, government should stay out of it.

So what happens to profits? Do corporations hoard them in big, secret vaults where they sit and play with their money like Donald Duck’s rich uncle, Scrooge McDuck? Hardly. Profits are either invested or distributed. In fact all business rises out of investment, which came from someone’s profit. If you don’t have profit, you won’t have investment. And if you don’t have investment, you won’t have business or industry. This means you also won’t have jobs. And without jobs, you’ve got nothing to spend. It’s difficult to see how this would help people.

People before profit. It sounds nice, but they’re really promoting nonsense.

Craig Docksteader is Coordinator with the Prairie Centre Policy Institute.

]web posted November 19, 2001

Something's wrong with this picture

By Craig Docksteader

According to a recent report by the Farm Credit Corporation, farmland values are on the rise across most of Canada. The two exceptions to this trend are the provinces of Nova Scotia and Saskatchewan.

But while Nova Scotia's dip in farmland values is an unusual departure from its historic trend, Saskatchewan has been on the underside of the graph in five out of the last ten years. Even Saskatchewan's closest neighbours aren't sharing in the decline. Alberta has not seen a drop in farmland values since 1993, and Manitoba has seen only one in the same period.

According to the FCC, the discrepancy in land value can be attributed in large part to Saskatchewan's disproportionate dependence on traditional crop production. While values in Manitoba and Alberta were pushed higher by strong demand for land in areas with intensive livestock operations and special crops, Saskatchewan's dipped under pressure from low commodity prices and increased input costs. Under these conditions, purchasers in Saskatchewan have been reluctant to buy.

But there may be another factor in the equation. Saskatchewan is the only prairie province which has made it illegal for a farmer to sell agricultural land to non-Saskatchewan residents. While all three prairie provinces have legislation restricting the sale of farmland to non-Canadian residents, only Saskatchewan prohibits selling agricultural land to anyone who is not a resident of the province. In other words, Alberta and Manitoba farmers can sell their land to anyone in Canada. But Saskatchewan farmers can only sell to Saskatchewan residents, unless the buyer obtains an exemption from the Farm Land Security Board (FLSB).

As outlined in the FLSB's annual report, the purpose of these rules is straightforward: "The legislation is designed to ensure that non-resident or corporate control of Saskatchewan farm land does not negatively affect the interests of resident producers or the economic and social development of the province." Surprisingly, however, whether the legislation is accomplishing this mandate or not has never been objectively evaluated. According to officials from the FLSB, its impact has not been studied since the legislation came into force in 1974.

But while there is a stark lack of research on the issue, there are at least two solid reasons to suspect that the impact of the legislation may be the opposite to what was intended:

(1) Officials from the FLSB have indicated to the Prairie Centre Policy Institute that removing the restrictions on farm land sales could cause an increase in land values. In their view, this is undesirable because higher land values would negatively affect the interests of resident producers by making it more difficult for young farmers to get started. If that's good public policy, we should implement laws to depress the price of houses as well, to make it easier for first-time home-owners to get into the market.

(2) Experience demonstrates that the existing rules make it more difficult for older farmers to get out of farming by limiting the size of the market. In 1999, Lyle Straker, a farmer from Melville, Saskatchewan, had his 1,500 acre farm sold to another farmer who lived 60 miles east, just over the Saskatchewan/Manitoba border. The deal fell through when the FLSB nixed it.

Straker?s land remains unsold, and is still on the market today even though the same Manitoba farmer has indicated that he would still buy the land. Straker can?t sell it to him because of a policy which is supposed to "protect the interests of resident producers and the economic and social development of the province."

Something's wrong with this picture.

Craig Docksteader is Coordinator with the Prairie Centre Policy Institute.

web posted November 12, 2001

The Prairie Centre Policy Institute

By Craig Docksteader

Recent studies have identified a number of economic, social and demographic challenges appearing on the prairie horizon. Our population is aging, our agriculture sector is lagging, demands on publicly-funded services are increasing, there is a growing shortage of skilled labour, tax rates are uncompetitive, and the size or our labour force is shrinking relative to our total population (a rising dependency ratio).

But although all three prairie provinces are facing similar challenges, Alberta is clearly faring better than Saskatchewan and Manitoba. Alberta has the fastest growing economy in the region, the highest per-family income, the fastest population growth, the greatest immigration, the least out-migration, and the lowest dependency ratio.

Saskatchewan, on the other hand, is faring worst. In addition to having the slowest economic growth, least immigration, greatest out-migration, lowest per-family income, and highest dependency ratio, the province is losing its young people at an astonishing rate, has the longest health care waiting lists in the country, and boasts a private sector which comprises only 14 per cent of the population base. On the current trajectory, the size of Saskatchewan's private sector will fall to only 6 per cent of its population base by 2026.

In spite of our tendency to blame regional problems on federal policy, the disparity which exists amongst the three prairie provinces suggests that we should be examining provincial policy to determine the reasons for such disparities. As these are identified, we will be able to plot our strategy to ensure that each prairie province overcomes its challenges and we achieve our maximum potential as a region.

It was for this purpose that the Prairie Centre Policy Institute was established in the spring of 2001. As an independent non-profit organization, the Institute's mission is to advance ideas on wealth creation in order to enhance the economic and social well-being of the prairie region. This includes:

• Identifying opportunities for enhancing wealth creation on the prairies;
• Identifying factors which act as impediments to the creation of wealth on the prairies; and,
• Fostering a greater understanding of wealth creation and its relationship to the economic and social well-being of the prairie region.

To accomplish these objectives, the Policy Institute commissions and carries out objective, professional research to examine opportunities for and impediments to wealth creation in the prairie region. Once a study is complete, the findings are published in an easy-to-read format and broadly distributed across the prairie region.

Rather than simply sitting on a shelf, the information is then broken down into bite-sized pieces and given repeated exposure through the Institute's weekly commentaries, fax and email distribution network, Internet web site, press releases, and public speaking engagements. Luncheons, seminars and conferences are also utilized as part of the Prairie Centre's efforts to get information out, encourage informed discussion, and spark public debate on issues which are of vital importance to the future of the prairie region.

The challenges facing the prairies cannot simply be papered over. Substantive change requires considerable effort which eventually culminates in a change of attitudes at the grassroots level and a shift in policy at the political level. As a Policy Institute dedicated to the economic and social well-being of the prairie region, the Prairie Centre is committed to making an important contribution to this process.

Craig Docksteader is Coordinator with the Prairie Centre Policy Institute.

web posted November 5, 2001

Farming without subsidies

By Craig Docksteader

When Brian Chamberlin spoke at an agricultural conference in Saskatoon recently, his message was unusual: New Zealand farmers have been better off since the government quit subsidizing agriculture.

It's not a message you hear very often these days. On the contrary, a lot of ink has been spilt advocating that prairie farmers won't make it unless they receive subsidies equivalent to the U.S. or the European Union. Chamberlin suggests such a move could make things worse for prairie farmers rather than better.

Ironically, Chamberlin was once an avid supporter of subsidies. In fact, as a farmer himself and organizer of New Zealand's Federated Farmers Organization, he campaigned for subsidies on behalf of the country's farmers. It wasn't until the early ‘80s that Chamberlin realized the subsidies were doing more harm than good.

In his book, "Farming and Subsidies -- Debunking the Myths", Chamberlin goes into great detail about what New Zealand went through when they decided to remove all agricultural subsidies. It was not an easy journey, but fifteen years after the reforms took place, he is still adamant that New Zealand farmers are better off because of it.

Here's a few of the comments made by Chamberlin when he addressed the Re-Inventing Agriculture conference in October:

* On surviving without subsidies...

"It's not only possible to survive without subsidies, it's also possible to thrive and develop."

* On the effectiveness of subsidies...

"The value of subsidies very quickly gets capitalized into farmers' costs."

"One sector's protection is another sector's costs."

"If you stick with the supply management system, you will have a declining market share."

* On ensuring maximum farmgate returns...

"Competition [between buyers who want to purchase farmers' goods] has ensured that we get a reasonable share of the consumer's dollars."

* On looking to government to finance new ag ventures...

"Our view is that the best thing to do is get the government out of farming and keep them out of farming and do the financing commercially."

* On how their ag sector was revitalized...

"Most of the activity has come from a few entrepreneurs, not government planners or programs."

* On how the change started...

"Farmers initiated and drove the arguments of reform in New Zealand."

* On how to proceed from here...

"Take the situation into your own hands and don't rely on the politicians."

"The faster you can get rid of government [subsidies] the better."

Since the changes, farming in New Zealand has become profitable and ag exports are booming. This year alone, New Zealand's ag exports exceeded last year's by 24 percent. No wonder Chamberlin insists that New Zealand farmers would not return to farming with government subsidies even if the opportunity presented itself.

Craig Docksteader is Coordinator with the Prairie Centre Policy Institute.

web posted October 29, 2001

Papering over the problem

By Craig Docksteader

A few weeks ago, the Saskatchewan government announced a contest for young people. Entitled, "Only in Saskatchewan", the province's youth are invited to share their stories about Saskatchewan's successes and why they believe the province is an ideal place to work, live and study.

According to the provincial government, Saskatchewan's youth are leaving because the province has a poor self-image. This new campaign is supposed to fix that. As noted in a media story on the issue, the government figures that by sharing their dreams and success stories, "the program will get Saskatchewan youth excited about ‘planning for success in our province'".

Without question, the department of Economic and Co-operative Development, which launched the program, will receive many impressive entries. The entries will demonstrate the quality, caliber and optimism of Saskatchewan's youth. They will tell us what we have already seen and know to be a fact: Saskatchewan's youth have great potential and are already excelling in many fields of expertise.

Because of the parameters of the contest, the entries will also reveal that many of Saskatchewan's youth like living in Saskatchewan and would prefer to pursue their career within the province. They have grown to love the place they call home, and although they have watched many of their relatives leave for greener pastures, they would be prepared to stay. When the scores are tallied, the prizes distributed, and the winners congratulated, it will be good to have celebrated Saskatchewan's youth and the potential of the province.

But there's only one problem. The exercise will change nothing.

Saskatchewan has been exporting people since the 1930's. Although historians often attribute the out-migration to the mechanization of the farm economy, Alberta went through the same period of farm mechanization and never saw a drop in population. In fact, forty years after the mechanization began, Saskatchewan continued to lose people. Between 1972 and 1999, Saskatchewan lost 155,000 more people than it gained. Recently, the out-flow has been on the rise, with 43 per cent of those who leave falling between the ages of 15 and 29.

While celebrating the successes and potential of Saskatchewan's youth is a great idea, suggesting that it will stem the flow of out-migration is nonsense. Saskatchewan's exodus is merely one symptom of many that betray a deeper problem.

Not only are the young people leaving, but the work force is aging. As the baby-boomers begin to retire, the number of seniors in the province will spike upwards, while the province's work force grows relatively smaller. In addition, there is a growing shortage of skilled labour, rural communities are in decline, roads are crumbling, healthcare is failing, tax rates are uncompetitive, and the ag sector is lagging. Over the next forty years, the number of working-age aboriginals is expected to boom at a rate which far outstrips current job growth projections.

If you count up the number of net tax contributors in the province (those who pay more in taxes than they receive in payments from the government), they amount to 13 percent of the provincial population. This means that for every Saskatchewan taxpayer who contributes more than they receive, there are seven people who receive more than they contribute. By 2026 the ratio will be 1 in 17.

Saskatchewan's problems cannot be papered over. The province has spent decades chasing away jobs, capital, entrepreneurs and investors, through high taxes, excessive regulation, and anti-profit attitudes. The resulting malaise is not going to be fixed by another feel-good government program. What is needed, is a shift in attitudes at the grassroots level along with a shift in policy at the political level. Together, these must create a climate which is attractive to capital, investment, jobs and entrepreneurs.

If we do that, the youth will not only stay, they'll be coming back.

Craig Docksteader is Coordinator with the Prairie Centre Policy Institute.

Prairie Centre/Centre for Prairie Agriculture, Inc.
#205, 1055 Park Street
Regina, SK
S4N 5H4

Phone: 306-352-3828
Fax: 306-352-5833
Web site: http://www.prairiecentre.org
Email: prairie.centre@sk.sympatico.ca

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S0H 0T0
CANADA

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