While the Union of Agricultural Producers (UPA) invites farmers to demonstrate and demand more money from the state, I would like to express severe criticism of the comments of Martin Caron, general president of the UPA. I am myself an organic field farmer, forced to pay heavy contributions to this organization which, in fact, does not represent me.
In his remarks, Mr. Caron deplores the drop in net income of our farmers, which is entirely true. However, the data he provides about state support, prepared by a consultant paid by the UPA, compares gross farm income and government support for different countries, arguing that Quebec is much less subsidized than others. However, for a business, gross income is of no importance compared to net income. What matters for a business is profit, not turnover.
That being said, if we compare government support with net income, we obtain a completely different conclusion, namely that state support largely exceeds the net income of farms in Quebec, placing our agriculture among the most subsidized in the world. planet. In other words, and this is valid for Quebec but also for all of Canada, if we remove state support, the vast majority of Quebec and Canadian farms have been in a chronic deficit situation for more than two decades.
It’s not me who invents it, it’s the observation of the Auditor General, the National Farmers Union and Statistics Canada, among others. Our farms are in the red!
It is not for nothing that Mr. Caron sticks to gross income data. In his analysis, this highlights greater government support for countries with smaller farm sizes, therefore having smaller sales volumes. Canada, like Brazil and Argentina, has focused on large areas, and therefore on higher volumes per farm. State support therefore appears to be minimized.
Again, for a coherent analysis, we must look at support in relation to net income. Let us use a simple example to illustrate the situation. Let’s imagine a farming business with a turnover of $2 million annually, but whose expenses would be $2,050,000 and which would receive subsidies of $100,000. We would obtain the following results: the net profit would be negative, at –$50,000, but, thanks to state support, the farm would have a surplus of $50,000. Relative to gross income, the support would be 5% ($100,000 versus $2,000,000). On the other hand, by comparing the support received and the net income, we obtain support of 200% ($100,000 compared to $50,000). And that’s exactly what’s happening. For 2023, Statistics Canada arrives at the following data for Quebec: net farm income: 486 million. Government support: 1.1 billion, or 226% of net income.
An envied system, but poor use
For half a century, the UPA’s message has been the same: putting even more money into the system, without changing anything and continuing to give full control to the UPA. Regarding stabilization insurance, Commissioner Pronovost already said in 2014 that it was throwing money out the window. And yet, the UPA has all the tools to change the situation and improve the situation of farms. Indeed, while it already controls joint plans in a monopoly situation, the UPA could improve the prices paid for farmers’ agricultural commodities. The UPA also has outsized influence over public agencies, such as the Régie des Marchés Agricole and the Financière agricole.
In principle, the famous supply management was supposed to be used for that: to secure the financial situation of farms. Instead, it has become a situation of privilege, managed in conflict of interest, accentuating the concentration of farms, increasing their value, pushing them into debt. But let’s move away from theory and imagine a possible scenario in the context of supply management. Take the example of milk. Why not give new production quotas to small businesses in the regions, when demand for dairy products increases, instead of distributing this quota to those who already have it? Why not give a quota for marketing and processing on the farm instead of sticking to large volume at wholesale prices? Why not establish differentiated milk prices, in line with variable production costs, depending on the type of production or the location of the farm?
Why not for grains? Why not floor prices guaranteeing profitability on the farm? A joint plan, in line with supply management, would make it possible, completely legally, to fix prices and even block borders to avoid competition with low-priced imports, as is already the case for a host of products, such as chicken, eggs, milk.
And I will not dwell here on the fact that the UPA systematically blocks, with the approval of the Agricultural Markets Authority, the application of the Act on the marketing of agricultural products. According to this law (article 63), “a joint plan does not apply to sales made by a producer directly to a consumer”. In other words, any farmer, as long as he does not use an intermediary, would have the right to sell eggs, milk or chicken, at the price that suits him, without holding a quota. And it is precisely the UPA which is obstructing the application of this law, to the great despair of small farms who would like to improve their income.
I personally met a delegation of German farmers, sent by their large agricultural organization (Deutsche Bauernverband), who came to Quebec to understand our supply management system. Currently, they would like to have the equivalent at home. We still have this envied system. It is only deplorable to make such poor use of it.
Free trade and globalization
As an organic grain producer, I have seen the prices I get for my crops drop, by about 40% over the past two years, despite the fact that my expenses have suffered from inflation and prices at the grocery store increase. How can I accept that speculators on the Chicago Stock Exchange determine my prices, based on factors completely unrelated to my situation? Agriculture is one of the few sectors where buyers determine prices.
It is difficult to imagine this situation for a host of professions, such as doctors, notaries, plumbers, etc. This situation stems in part from the fact that Quebec, like other nations, is fully involved in free trade and globalization. The UPA is right to deplore the inequity of standards when importing foodstuffs. But this speech is hypocritical when it is precisely the UPA which pushed us towards conquering foreign markets.
The large global organization of farmers, Via Campesina, bringing together 200 million people around the world, rightly calls for the exclusion of agriculture in free trade agreements. One might wonder why the salaries of Quebec farmers should be compared to those who earn the least on the planet. Why must we agree to sell tomatoes from Quebec at the low price of tomatoes imported from nations that do not apply the same wages or the same environmental requirements? And if it’s relevant to do it in agriculture, why not do it with other professions? Would our police officers, teachers, electricians, journalists, civil servants, engineers agree to be paid at the same level as the lowest salary in the world?
Generally speaking, farmers want to earn their income through the sale of their products and not by being dependent on state support. When we see the incredible gap between the prices paid on the farm and those that the consumer must pay at the grocery store, it is quite clear that the profit margins are not in the farmers’ camp. The level of support for Quebec agriculture by the state is extremely high, whatever the UPA says. It is simply a shame that all this money is largely poorly spent, without vision, without benefit for society as a whole.
So, before the European crisis crosses the ocean, there should be serious reflection on our agricultural system instead of leaving full control to the UPA, which is largely responsible for what is happening to us. However, this reflection has largely been made, notably with the Pronovost report, unfortunately shelved since its publication thanks to the UPA’s camouflage efforts. One of the major conclusions of this ambitious report, denouncing the suffocation of our agriculture, was precisely to abolish the UPA monopoly. In the meantime, I must resign myself, as a farmer, to enduring the speeches of this organization which makes me appear as a seeker of subsidies.
There is an income problem in agriculture, but we are not going to solve it simply by asking even more money from taxpayers.