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Canada's National Farmers Union has a devastating set of statistics
on how NAFTA "helped" them. I reproduce the report below.
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“Free Trade”:
Is it working for farmers?
Comparing 2007 to 1988
October 19, 2007 (This is an expanded and updated version of a report originally published in 2002.)
In January 1989, Canada implemented the historic Canada-US Free Trade
Agreement (CUSTA). In January 1994, Canada implemented the North
American Free Trade Agreement (NAFTA). And in January 1995, we
implemented the World Trade Organization (WTO) Agreement on Agriculture
(AoA).
We’ve had 19 years of “Free Trade.” How is it working for farm
families and rural communities? To help us find out, the following
compares economic indicators from 1988 (the year before we set off down
the Free Trade path) with those of 2007. Figures are not adjusted for
inflation. (read more)
1988 2007
Canadian agri-food exports $10.9 billion $32.65 billion
Canadian farmers have been very successful in increasing exports, in
gaining “access” to foreign markets. We’ve tripled exports since
1988; exports are seven times higher than in 1975.
Realized net farm income $3.9 billion $1.5 billion
Despite rising production and exports, net income is down. Like
the other numbers in this report, these figures are not adjusted for
inflation. If we adjust for inflation, the picture is worse—net
farm income is down 77%. But the story gets worse still.
Taxpayer-funded farm support payments will total $3.7 billion this
year. Thus, farmers’ 2007 net income from the markets—with the
masking effect of publicly-funded support programs subtracted—is
projected to be negative $2.2 billion.
Farm debt $22.5 billion $54.0 billion
Farm debt is up 2_-fold since we implemented the Canada-US Free Trade
Agreement. Today, interest payments on the debt exceed net farm
income. Banks are taking more in interest than farm-family owners
are earning in income.
Number of farmers in Canada 293,089 229,373
During our 19-year Free Trade experiment, a combination of government
policies and agribusiness practices have forced nearly a quarter of our
farmers off the land.
Number of young farmers in Canada 77,910 (1991 data) 29,920
Corporate and government policies have cut the number of young farmers
(under 35 years of age) by 62%. This expulsion of young farmers,
if not reversed, will push our farms over a demographic cliff; if there
are few young farmers, we face a precipitous drop in the number of
farms within a generation.
1988 2007
Corn: farm price, Ontario. $3.28/bushel $4.24/bushel
Prices are for #2 Canada Eastern yellow corn, loaded on a railcar,
Chatham, Ontario. Prices are up 26%, but down 20% when inflation
is factored in.
Corn flakes: grocery store price $3.70/kg $5.93/kg
While the price of corn is up 26%, the grocery-store price of corn
flakes is up 60%. Seen another way, in 1988, Kellogg’s and others
were turning 13¢/kg corn into corn flakes that sold in the grocery
store for $3.70/kg, with Kellogg’s and retailers taking $3.57/kg over
and above what they paid farmers. Today, Kellogg’s is turning
17¢/kg corn into $5.93/kg corn flakes, and the company and retailers
are taking $5.76/kg over and above what they pay farmers. Farmers
are making an extra 4¢; Kellogg’s et al. are taking an extra $2.00.
Cattle: A1 Steers, Alberta 80¢/pound $88¢/pound
Cattle: A1 Steers, Ontario 87¢/pound $99¢/pound
Cattle: D1 & D2 Cows, Ontario & Alberta 59¢/pound $41¢/pound
Steer prices are up 10%. Adjusted for inflation, they’re down
28%. Cow prices are down, inflation-adjusted or
-unadjusted. The drive to export has left Canadian farmers
dependent on US markets. Between 1988 and 2002, the value of live
cattle and beef exports increased 6-fold. But when BSE triggered
a border closure, farmers suffered huge losses. For those
farmers, Free Trade has brought neither high prices nor dependable
markets; it has certainly not brought prosperity.
Steak: sirloin $5.04/pound $7.05/pound
Hamburger: regular $1.57/pound $2.68/pound
While steer prices are up 10%, steak prices are up 40%. And while
cow prices are down 31%, hamburger prices are up 71%.
Wheat: farm price, Saskatchewan $4.93/bushel $6.44/bushel
Prices are for #1 Canadian Western Red Spring wheat, 12.5% protein,
Saskatoon net (freight and elevator tariff subtracted). Though
grain prices are surging now, adjusted for inflation, prices are down;
the inflation-adjusted 1988 price is $7.93/bushel. Further, input
costs have doubled or tripled (see next page).
Bread: grocery store price $1.12/loaf $2.07/loaf
In 1988, Canada had a Two-Price Wheat (TPW) program. That program
set a price for wheat used in Canada that was higher (but more stable)
than world prices. In ’88, Canadian millers were making
$1.12/loaf bread out of $7.00/bushel wheat (the domestic price under
the TPW program). Today, they make $2.07/loaf bread out of wheat
that is approximately the same $7.00 price. The TPW program put
thousands of dollars per year into the pocket of an average-size wheat
producer. Bread price data indicate that the program cost
consumers nothing (when millers were paying more, under the TPW
program, bread prices were lower). The TPW program was cancelled
in 1988 in anticipation that it would violate the then-pending
Canada-US Free Trade Agreement.
Potatoes: farm price, Canada average 8¢/pound 9¢/pound
Down 30%, when inflation is factored in.
Frozen French fries: grocery store price 83¢/pound 91¢/pound
As with other combinations of farmgate foodstuffs and grocery store
products, processing potatoes into French fries is a game of selling
for a dollar what processors buy for a dime.
1988 2007
Fertilizer: nitrogen (anhydrous ammonia) $383/tonne $958/tonne
Fertilizer: nitrogen (46-0-0 granular) $244/tonne $607/tonne
Fertilizer: phosphate (11-51-0 granular) $360/tonne $622/tonne
Trade agreements and globalization have facilitated and triggered waves
of agribusiness mergers. These mergers have decreased competition
between the dominant corporations and, thus, increased their market
power. Also adding to their market power, North America’s
dominant fertilizer companies have grown exponentially. Terra,
Agrium, and Potash Corporation of Saskatchewan are all more than ten
times larger than they were in 1988. Potash Corp. is 15 times
larger. IMC Global and Cargill merged their fertilizer operations
in 2004 to form Mosaic.
Diesel fuel: Alberta 25.0¢/litre 71.97¢/litre
Diesel fuel: Ontario 28.4¢/litre 82.0¢/litre
Since the launch of the Free Trade era, Canadian farmers’ energy costs
have nearly tripled. Canada’s leading fuel
refiners/retailers—Shell Canada, Petro-Canada, and Imperial
Oil—recorded record profits in 2004, 2005, 2006, and (probably)
2007. Over this same period, farmers racked up record
losses. Exxon owns 69.6% of Imperial Oil shares. Royal
Dutch Shell owns 100% of Shell Canada—recently purchasing the 22% it
previously did not own. Petro-Canada is a widely-held,
publicly-traded corporation (the Canadian government removed
foreign-ownership restrictions on Petro-Canada in 2001 and sold its
remaining 20% stake in 2004).
Freight rates : wheat, western Canada $6.23/tonne $39.22/tonne
When Ottawa took away the Crow Benefit grain transportation subsidy in
1995, it pointed to the need to comply with the then-new World Trade
Organization (WTO) Agreement on Agriculture.
Handling & elevation: wheat, western Can. $7.94/tonne $17.79/tonne
In 1988, western Canada had 1,770 country elevators conveniently
distributed in communities throughout the agricultural region.
Today, just 337 remain. Despite dramatic consolidation (reducing
the number of elevators by four-fifths) and despite promises that
farmers would benefit from “efficiencies” and lower costs, grain
company executives have instead doubled their companies’ handling and
elevation charges—raising them far faster than inflation. Taken
together, grain company and railway charges cost farmers $1.60/bushel
today, up from 39¢/bushel in 1988.
Seed: canola, conventional, treated $42.70/bushel $237.47/bushel
Seed: canola, GM herb. tolerant, treated n/a $273.99/bushel
plus TUA
In addition to the export push, the past 19 years have been a time of
deregulation and privatization. Until the 1980s, plant-breeding
and seed development in Canada were publicly funded (corn seed was one
of few exceptions). Seed, gene, and chemical companies pushed
governments to transform our seed system into a private, for-profit
venture, funded by farmers. This privatization, coupled with
corporate consolidation, multiplied farmers’ seed costs. Assuming
farmers plant canola at 5 pounds/acre, their seed cost in 1988, for
conventional canola, would have been about $4/acre. Today,
conventional canola seed costs nearly $24/acre. With a Technology
Use Agreement (TUA) fee of $15/acre included, farmers’ cost for
genetically-modified (GM) herbicide-tolerant (HT) canola seed is about
$42/acre. Corn seed prices have similarly jumped—Ontario farmers
are looking at nearly $100/acre for some GM varieties. Finally,
while canola seed prices have jumped 5- to 10-fold, the price of wheat
seed—still developed primarily by the public sector—has only doubled.
1988 2007
Grain handling: # of farmer-owned co-ops 4 0
In 1988, 4 farmer-owned co-operatives handled the vast majority of
western grain (Alberta Wheat Pool, Saskatchewan Wheat Pool, Manitoba
Pool Elevators, and United Grain Growers). Today, Viterra (the
corporate successor of those 4 privatized co-ops), Pioneer, and Cargill
control two-thirds of western grain-handling capacity.
Dairy: % processed by farmer co-ops 66% 39%
Large corporations are consuming our farmer-owned dairy co-ops.
Saputo Inc. (Quebec-based; $2.8 billion annual revenues) took over
Dairyworld Co-op in 2001. Parmalat (Italian-based; approx. $4.1
billion annual revenues) is another major corporate player. The
three largest processors handle 75% of Canada’s milk, and only one is a
co-op—Agropur/Gay Lea.
Flour mills: Canadian ownership 50% of cap. 28% of cap.
One US-based transnational, Archer Daniels Midland (ADM), owns 42% of
Canadian flour milling capacity. Another, Cargill, recently
bought Robin Hood mills and now owns 21% of Canadian capacity.
ADM and Cargill owned 0% before the Canada-US Free Trade Agreement.
Beef packing plants: Canadian ownership 100% of cap. <30% of cap.
As with our flour mills, the US takeover of our beef packing sector
coincides with Free Trade. In 1989, Cargill built a beef packing
plant in Alberta. IBP/Tyson followed. Prior to the Free
Trade Agreement, the Canadian beef packing industry was virtually 100%
Canadian owned.
Malt plants: Canadian ownership 95% of cap. 10% of cap.
Canada’s malt capacity is predominantly owned by foreign-based
transnationals such as Tiger Oats (South Africa), Cargill, and Rahr
Malting. Viterra (Sask. Wheat Pool) owns half of the Prairie Malt
plant in Biggar, Sask. This is the only significant Canadian
ownership.
Breweries: Canadian ownership 95% of cap. 10% of cap.
Pre-1989 brewing industry regulation provides an example of how to
manage trade to create jobs, support domestic ownership, decentralize
production, and minimize transport, all the while keeping international
borders open. Before Free Trade, any company could sell beer in a
province, so long as the beer was brewed there. Provincial laws
stopped beer from crossing borders. Thus, pre-Free-Trade beer
labels proudly proclaimed, for example: “Molson Breweries Canada Ltd.
Montreal, St. John’s, Toronto, Barrie, Winnipeg, Regina, Prince Albert,
Edmonton, Vancouver; Union Made.” Our breweries were Canadian,
they created jobs, and beer was affordable. Today, global giant
InBev owns Labatt’s, and Carling and Molson’s have disappeared into
Coors-dominated Molson-Coors.
Number of major machinery companies 6 3
In 1988, a Canadian farmer could buy a medium-sized tractor from
Ford/Versatile, White, Massey Ferguson, Case IH, John Deere, or
Deutz/Allis Chalmers. Today, CNH (an amalgam of Case,
International Harvester, Ford, NewHolland, Steiger, and others) and
John Deere dominate major machinery sales with annual revenues of $12
billion and $22 billion respectively. AGCO (Massey Ferguson,
Heston, Gleaner, White) has sales of $5.4 billion annually.
Hog farming and pork production: A case study
Canada’s hog and pork sectors provide clear case studies for the
effects of Free Trade and an increased focus on export production—a
“fast-forward” view of food system globalization and
corporatization. Over the past two decades, the system that turns
feedgrains into hogs into grocery-store pork chops and bacon has been
rapidly, and often ruthlessly, transformed. Gone are the small-
and medium-sized family farm producers and many of the local packing
plants. In the wake of the Free Trade agreements, Canada set out
to transform itself into a global pork powerhouse; the results are
illuminating.
1988 2007
Number of hog farmers 33,760 10,810
Of the farms that were raising hogs in 1988, corporate and government
policies have since forced 68% out of production—Statistics Canada
lists 10,810 farms “reporting pigs” in July 2007. But even this
68% decline dramatically understates losses in the hog production
sector. Today, unlike in the 1960s, ’70s, or early ’80s, a few
dozen very large hog producers produce 80% of Canada’s hogs—the five
largest produce nearly one-fifth of Canadian pigs.
Pork chops: grocery store price, Canada avg. $6.88/kg $9.52/kg
Canadians are told that fewer and larger farms will result in “higher
efficiency.” The benefits of that efficiency are elusive,
however. While corporate and government policies have reduced the
number of hog farmers by more than two-thirds, packers and retailers
have increased grocery-store pork chop prices by 38%.
Hogs: farm price, Ontario $1.45/kg $1.38/kg
While grocery-store pork chop prices are up 38%, farmers’ pig prices
are down 5%. Seen another way, while hog farmers are still
receiving more-or-less the same $1.40/kg, packers and retailers have
increased their margin (the difference between the price they pay to
farmers for hogs and the price they charge consumers for pork chops) by
$2.64/kg. (See pork chop price, previous section.)
Packing plant pay, Manitoba (starting wage) $9.38/hour $11.65/hour
When adjusted for inflation, starting wages at many plants are down
sharply—earning $9.38/hour in 1988 is equivalent to earning $15.08
today. Packers are using their growing market power to push up
prices to consumers, push down prices to farmers, and push down wages
for workers. In the wake of NAFTA, packers have argued that
Canadian wages must be competitive with U.S. wages. US
wages, in turn, must be competitive with Mexican wages. Some
Canadian packers, unable to attract workers, are bringing in workers
from Mexico, Central America, and elsewhere.
Employment in agri-food processing 277,300 jobs 255,700 jobs
Politicians said Free Trade would create jobs in value-added food
processing. Rapidly increasing imports of processed food from
low-wage countries indicates the opposite is true. Free Trade has
been as much a bust for workers and rural communities as it has for
farmers.
Sources and Notes [1988 source / 2007 source]
Page 1
Exports: Agriculture and Agri-Food Canada (AAFC) Agri-food Trade
Service (ATS) / Same; projection based on ATS data—2006 exports were
$27.9 billion; Jan.-June 2007 exports were 17.2% higher than same
period 2006.
Net income: Statistics Canada (Stats. Can.), Agricultural
Economic Statistics, Cat. # 21-603 / AAFC, Farm Income Forecast, Jan.
2007.
Debt: Stats. Can., Agricultural Economic Statistics, Cat. #
21-603 / Projection based on Stats. Can. data (2006 debt was $52.3
billion).
Number of farmers: Stats. Can., Census of Agriculture, 1986 /
Census of Agriculture, 2006 (1986 Census data used as a proxy for
1988; 2006 Census data used as a proxy for 2007).
Young farmers: Stats. Can., Census of Agriculture, 1991 / Census of Agriculture, 2006.
Page 2
Corn: Prices obtained on request from AAFC / Same.
Corn Flakes: Stats. Can., Consumer Prices and Price Indexes, Cat. # 62-010 / Stats. Can., CANSIM table 326-0012.
Steers: Stats. Can., CANSIM table 003-0084 / Same.
Cows: Prices obtained on request from CanFax / Data available for download from CanFax website.
Steak and Hamburger: Stats. Can., Consumer Prices and Price Indexes, Cat. # 62-010 / Stats. Can., CANSIM table 326-0012.
Wheat: Saskatchewan Agriculture and Food, Stat Facts, #10.03 /
Canadian Wheat Board, Pool Return Outlook, September 27, 2007.
Bread: Stats. Can., Consumer Prices and Price Indexes, Cat. # 62-010 / Stats. Can., CANSIM table 326-0012.
Potatoes: Stats. Can., Potato Historical Series / Same;
projection from 2 quarters of 2007 data, completed in consultation with
AAFC.
French Fries: Stats. Can., CANSIM table 326-0012 / Same.
Page 3
Fertilizer: Alberta Agriculture and Food, Statistics and Data
Development Unit, Alberta Farm Input Prices / Same (July prices).
Diesel fuel: Alberta: Alberta Agriculture and Food, Statistics
and Data Development Unit, Alberta Farm Input Prices /
Same.
Diesel fuel: Ontario: AAFC, Market Commentary: Farm Inputs and
Finance, December 1988 / Ontario Farm Input Monitoring Project, June
20, 2007.
Freight rates: Sask. Ag. and Food, Stat Facts, #10.03 /
Government of Alberta, 2007/2008 Western Rail Rates- Saskatchewan, on
the Alberta Agriculture and Food website. (Quoted values are the
average of Saskatoon to Vancouver and Saskatoon to Thunder Bay.)
Handling and Elevation: Sask. Ag. and Food, Stat Facts, Canadian Wheat
Board Final Price for Wheat, basis in store Saskatoon / Canadian Grain
Commission, Licensed Primary Elevator Tariffs, Crop Year
2007-2008. Quoted tariffs are for Sask. Wheat Pool, a leading
western Canadian grain handler (recently merged into Viterra).
SWP numbers are $12.94 plus $4.85.
Canola seed, conventional: Alberta Agriculture, Food, and Rural
Development, Alberta Farm Input Prices, January 1989 price / Same, July
2007 price.
Canola seed, GM: n/a / Alberta Agriculture, Food, and Rural Development, Alberta Farm Input Prices, July 2007 price.
Page 4
Grain co-ops: Corporate annual reports and various articles in the Western Producer / Same.
Dairy: Government of Canada, Co-operatives Secretariat, Co-operatives in Canada (2003 Data), March 2006 / same.
Flour mills: Sosland Publishing Company, 1989 Milling
Directory/Buyer’s Guide (November 1988) / Sosland Publishing Company,
Grain and Milling Annual: 2007.
Beef packing plants: George Morris Centre, Evolution of the North
American Beef Industry, November 2004, p. 13. See also AAFC,
Implications of Foreign Direct Investment for the Canadian Food and
Beverage Manufacturing Industry, March 1995, p. 23. That paper
estimates the 1988 share of meat and poultry products sold “by
foreign-controlled firms” at just 1% / Canfax, 2006 Annual Report,
January, 2007.
Malt plants: Based on several sources, especially AAFC, Bi-Weekly Bulletin, July 11, 1997 and June 22, 2006 / same.
Breweries: Paul Brent, Lager Heads, HarperCollins, 2004 / Steven
Poirier, May 14, 2007, speech in Saint John, NB (as cited in Chris
Morris, Canadian Press, “Moosehead president says Canadian beer
industry disappearing”, May 13, 2007) See also David Friend,
Canadian Press, “Miller and Molson Coors join hands,” Oct. 10, 2007.
Machinery companies: Survey of mergers and acquisitions,
conducted online and through corporate annual reports, 1987 to current.
Page 5
Hog farmers: Stats. Can., Livestock Statistics, Cat. # 23-603 / Stats. Can., Hog Statistics, Cat. #23-010.
Pork chops: Stats. Can., Consumer Prices and Price Indexes, Cat. # 62-010 / Stats. Can., CANSIM table 326-0012.
Hog prices: Stats. Can., Livestock Statistics, Cat. # 23-603 /
Stats. Can., Hog Statistics, Cat. # 23-010. Prices are for Index
100 hogs, dressed, weighted average in Ontario using a six-month
average (January-June).
Packing plant pay: Collective agreement with Burns Foods Limited,
Brandon plant / Collective agreement with Maple Leaf Foods Inc.,
Brandon plant (semi-skilled 1).
Employment: Available on request from AAFC, based on Stats.
Can.’s Labour Force Survey / Same. See also: AAFC, A Profile of
Employment in the Agri-Food Chain, April 1999.
Why isn’t Free Trade working for farmers?
Farmers have doubled and re-doubled exports, adopted new technologies,
switched to high-value crops, and poured billions of dollars of
investments into our farms. At the initiative of our governments,
we’ve become signatories to trade agreements. Farmers did
everything Free Trade and globalization advocates recommended.
And the result is the worst farm income crisis since the 1930s.
Question: Why hasn’t Free Trade yielded the predicted benefits for farmers and rural communities?
Answer: These agreements don’t just shift trade flows, they shift power.
For farmers, so-called “Free Trade” agreements do two things simultaneously:
_ By removing tariffs, quotas, and duties, these agreements erase the
economic borders between nations and force the world’s one billion
farmers into a single, hyper-competitive market.
_ At the same time, these agreements facilitate waves of agribusiness
mergers that nearly eliminate competition for these corporations.
Economists agree: when competition increases—as it has for
farmers—prices and profits decrease. And when competition
decreases—as for agribusiness corporations—prices and profits
increase. Thus, trade agreements and globalization predictably
decrease farmers’ prices and profits and increase prices and profits
for the dominant agribusiness corporations.
“Free Trade” agreements may increase trade but, much more importantly,
they dramatically alter the relative size and market power of the
players in the agri-food production chain. For farmers and their
net incomes, increased exports may be one of the least significant
effects of trade agreements and globalization. Much more
significant—perhaps completely overwhelming any potential benefits from
increased exports—may be the effect these agreements have on the
balance of market power between farmers and agribusiness corporations,
because this balance of market power determines the distribution of
profits within the agri-food production chain. Profits are not
made, they’re taken.
This graph shows that farmers have not benefited from Free Trade or
rising exports. Despite such evidence, the federal government
continues to push for a new World Trade Organization (WTO) agreement
that will, it says, help end the farm crisis. The government also
wants to expand NAFTA to the tip of South America with the “Free Trade
Area of the Americas” (FTAA). Help reverse this destructive
course. Help the NFU get the message to Ottawa: “Free Trade helps
Cargill and Monsanto, not farmers.”
The National
Farmers Union
The NFU speaks for family farmers and rural and urban citizens who want to build a better food system.
When other organizations are talking about farmers’ corporate
“partners” and getting along in the agri-food “industry,” the NFU is
clear: the interests of farmers, rural communities, and Canadian
families are often very different from those of Monsanto, Cargill,
Agrium, and John Deere. Government policies must rebalance power
and profits within the food system. And they must create a more
sustainable food system.
The preceding analysis of the effects of Free Trade on farmers and
communities is just one example of our work on behalf of
Canadians. We hope you find this work of value. If you do,
please join the NFU.
Farm families can become members of the NFU by paying $150/year.
Non-farming Canadians can become part of a progressive movement to
build a better food system by paying $50/year to become an Associate
Member.
There are three easy ways you can join:
1. Phone (306) 652-9465 and ask to join. You can pay by credit card or send in a cheque later.
2. Send your name, address, phone number, and a cheque to:
National Farmers Union
2717 Wentz Ave., Saskatoon, SK S7K 4B6
We will phone you to get additional details later.
3. Go to www.nfu.ca and sign up online.
If you can’t become a member today, please support our work by making a
donation. Donate online, or by sending a cheque, or by calling in
with a credit card.
Rural and urban Canadians, by working together, can build a better and more sustainable food system.
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