This column affords me the opportunity to think back and forward about ranching and other farming and their place in our personal (family) lives, and the community of farmers world-wide.
Globalization has meant that foodstuffs and farm inputs are traded internationally. There have been attempts by some countries to reduce trade barriers for farm products in new and renewed trade agreements.
This “protectionism” is designed to protect the domestic farmers by putting up barriers to imports. Food security in that country might be one reason for a government to advance this policy.
The last Canada, US and Mexico agreement allowed for a small increase in the importation into Canada of dairy products. Some countries don’t like Canada’s supply management system where, since about the 1930s, there has been a system of quotas (limits to production) and the setting of prices set on real costs of production.
Some critics would argue that freer trade within Canada, for example between provinces, would be good for farmers who provide regional food stuffs, namely eggs, poultry, milk, pork and some vegetables.
Essentially, supply management regulates the right to produce a product and sell it at a modest profit. However, these quota producers are only paid the wholesale price set by their sectors governing board.
In times of shortages, as when dairies and poultry farms were flooded in the Lower Mainland they were able to make arrangement for surpluses from other provinces to be exported to B.C. But in normal times, there are limits (quotas) on how much can be produced in order that the prices not fall below a profitable level and thus force farmers of the products out of business due to financial losses.
There is a trade off here between lower prices for food when surpluses are sold below their cost of production and the constancy of supply to meet the general consumers demand.
Recently, the Dairy Council of Canada, which sets the cost of production nationally, did not raise the price of milk because of push-back by consumers who were experiencing increase in costs due to inputs into farms (fuel, grain) and the transportation cost of moving product from farms to processing facilities to retail outlets. This delay in the price of milk left dairy farmers in B.C. running with costs that challenged their profitability.
At present there are farms with quotas to produce milk which are on the market and not selling. In part this is because to retain their competitiveness they may have “over-invested” in modern technologies such as extensive robotics or higher interest costs on operating loans.
Market adjustments need to take place and one of these adjustments will be a probable increase in the price of milk. B.C. stands out as a high-cost producer in Canada in part because of the high cost of transporting feed grains from the prairies where it is produced to B.C.
Food price inflation is real but we need to think about the need for profitability for the farmers who produce the food. Staying in business locally (provincially and nationally), farmers will contribute to food security within our communities.
Local farmers must get a price that pays them to stay in business so we don’t become over dependent on supplies from afar.
An extreme example is that without protection to Canadian suppliers, one large US egg producer could supply all of Canada’s egg needs with a few days’ production. However, absent local Canadian supply, what would happen if that US supplier had an Avian Flu epidemic and had to quit production. Surely, we would be last on the list to be supplied after US local markets.
David Zirnhelt is a rancher in the Cariboo Chilcotin
