The FCC VS the C.D. Howe Institute

The C.D. Howe Institute has painted a target on the back of supply management for a long time.  "Never let the truth get in the way" seems to be their mantra. For many years supply management and their farmers have fought to try to get this institution to use more balanced material and the farmers and their organizations  have failed.  They should be honoured that they are now not the ONLY target of this august institution of fiction.

 Recently the C.D Howe Institute also set its sights on the FCC (Farm Credit Corporation).  Now one would expect that all the facts would be available for anyone to research if they so desired.  In fact a few phone calls and a request to the FCC, would have elicited the information that the C.D. Howe Institute so obviously did not want to have.

Governments would do well to be cautious with information published by the C.D. Howe. This could have had serious consequences for the agriculture industry and the country.

The normally sedate and composed FCC  responded this past week with a letter to both the Ontario Farmer and the Financial Post. .

For your reading pleasure here it is in its entirety:


Letter to the Editor

FCC submitted the following Letter to the Editor to the Financial Post in response to an opinion item from the C.D. Howe Institute, published in the Financial Post on March 20, 2013. Letter content below:

At Farm Credit Canada (FCC), we believe that a healthy agricultural credit market offers customers choice from a range of financial institutions. We share this viewpoint with 100,000 FCC customers, as well as thousands of farmers and agribusiness operators who are not our customers.

That’s why I continue to be amazed at how opinions on this issue are being presented repeatedly as facts – without balanced opinions from multiple groups who are actually involved in the industry. The most recent example is the March 20 opinion piece that appeared in the Financial Post by academics Finn Poschmann and Phillipe Bergevin, authors of a recent C.D. Howe report on financial Crown corporations entitled Reining in the Risks: Rethinking the Role of Crown Financial Corporations in Canada. They use inflammatory and unsubstantiated words like "subprime," "dodgy," and "hypercompetitive" to describe FCC lending practices.

Here are some facts about FCC to add to the record.

FCC has been growing and profitable for more than two decades. We are a prudent and responsible lender. Our financial strength has never been better. More than 98% of our $25 billion portfolio is in good standing, which reflects the overall strength of the agricultural industry and a deep commitment and business savvy by our borrowers to run sound businesses.

FCC doesn’t receive money from the Government of Canada. FCC is self-financed and pays millions of dollars in dividends to the government each year. The Auditor General of Canada conducts FCC financial audits every year, which are available to the public. The majority of our profits are reinvested in additional lending and learning activities for our customers.

As with other federal financial Crown corporations, FCC borrows funds from the government. The accusation that this advantage is used to undercut the market is false. Where banks, credit unions and FCC compete for business, our research shows that, on average, our customers pay us a modest premium.

The authors have inferred that the best way to rein in FCC’s supposed "risky, hypercompetitive practices" would be to return us to a lender of last resort. Ironically, being returned to a lender of last resort is exactly the step that would expose taxpayers to more risk. Providing access to capital to customers of various sizes, in a wide range of sectors, all across Canada helps FCC keep its overall risk portfolio healthy.

FCC continued lending to agriculture through the financial crisis in 2008-09 when many other lenders did not. Some FCC growth occurred as a direct result of other lenders exiting the market at that time, and many involved in the industry today will say its current good health relates to the fact that access to credit was available through the 2008-09 period. In 2009, the banks collectively withdrew from an agricultural finance market that, overall, was still healthy, while FCC continued to provide new lending capital and grew its portfolio. FCC is in agriculture for the long run and this sets us apart.

Furthermore, the insinuation that FCC is not interested in enhancing risk management practices could not be further from the truth. Like it did with the Business Development Bank, the CD Howe Institute and the authors made no effort to contact FCC to express an interest in seeing the systems and processes we have in place to manage risk, which might have provided at least some balance or insight. We welcome the current Office of Superintendent Financial Institutions (OSFI) review, both to help us validate what existing practices are working well and to learn what new steps will strengthen our risk management even more.

Finally, the opinions and direct experience of FCC customers and the agriculture industry at large matter a great deal. We have more than 100,000 customers across Canada. Virtually every one of them also deal with other financial institutions for deposits and other financial services, neither of which are offered by FCC. In the authors’ research and commentary, the views of customers and the industry are completely absent. That makes one wonder exactly whose perspective they represent, and who would really benefit if their views were implemented.

We routinely send business to credit unions and banks across Canada, and partner with them on deals. We will continue to operate in a spirit of cooperation, no matter what mud-slinging and misrepresentation occurs about FCC.

Sincerely,
Greg Stewart
President and Chief Executive Officer
Farm Credit Canada

100 Good Reasons

I have decided I should post some of the 100 Good Reasons to look for the 100% Canadian Milk Symbol. They need to be even more visible to the public.  Share these if you can.-CG

Canadian dairy farmers follow strict regulations on the use of antibiotics

 

Canadian Dairy farmers work closely with veterinarians to ensure their cattle stay healthy. 

Unfortunately, just like humans, cows sometimes get sick, and when they do, they may  need  medications such as antibiotics.

When a cow needs antibiotics, the dairy farmer has to follow strict protocols. 

While the farmer continues to milk the cow, all of her milk is collected separately and discarded for a mandatory withdrawal period until her system is clear.

On the rare occasion that a load of milk does not meet the regulatory requirements
 when it arrives  at the processing plant, the entire load is rejected and disposed of. 

Since milk samples are collected at each farm, a farmer who supplies substandard milk
 is easily identified and held accountable.

Penalties for supplying milk containing contaminants such as antibiotic residues are severe, 
so dairy farmers take great care in making sure their milk is in its purest form.

For more good reasons to share : www.100goodreasons.ca

A Debate on Supply Management Part 2

Here is Ms.Findlay's post in its entirety.

Former Member of Parliament, Candidate for the Leadership of the Liberal Party of Canada

Yes, Supply Management (SM) harms consumers -- the average Canadian family is forced to pay hundreds of dollars more each year for the basics of dairy, poultry and eggs. Worse, the people who suffer proportionately the most are those who can least afford it -- low-income families with small children and Aboriginal families living in remote communities.

It harms smaller retailers as well as hundreds of thousands of Canadian restaurants. (Here's a classic headline from a few months ago.)

And here is a link to my major research paper published by the School of Public Policy, U of Calgary, last spring.

SM is a system of protection for dairy, poultry and egg farmers. It started in the 1970s to help the then 145,000 Canadian dairy farmers deal with price volatility. It was well intentioned at the time, but we now have barely more than 10,000 dairy farmers across the whole country, a drop of well over 90%. The average dairy farmer now earns significantly more than the average Canadian family, and owns over $2 million in assets. The underlying reasons for the system are long gone; instead, consumers, farmers, exporters all suffer. It is a government-sanctioned cartel that benefits a very few, to the detriment of many, that would never be allowed if proposed today.

The following counters some of the oft-heard arguments from the dairy lobby:

"Opposing supply management is 'anti-farmer'": On the contrary -- There are fewer than 15,000 supply-managed farmers; there are, however, over 200,000 other farmers in Canada, most of whom produce beef, pork, grains, oilseeds, pulses. Over 90% of Canadian farmers do not benefit from SM. On the contrary, they would benefit from greater access to the fast-growing markets, particularly in Asia, for their products -- access they are being denied because of SM for the few.

"We need SM to ensure food safety, for example to keep hormones out of our milk": I support greater food safety and am proud that Canada produces hormone-free milk. But the standards for Canadian-consumed food have nothing to do with the economic structure of supply management. We can control whether we allow growth-hormone enhanced milk by way of regulations, border restrictions, food labeling and inspection. The fact that we produce high quality, safe milk in Canada is exactly the comparative advantage that could benefit our dairy producers once we open trade. This is something the many dairy farmers who support dismantling this system reinforce -- they know they can compete and win because they are good at what they do.

"Supply management "supports" the family farm": This is completely false. The rate of consolidation in the supply-managed sector has, in fact, been higher over the last few decades than in virtually in all other Canadian agricultural sectors.

"U.S. prices are too low because the US subsidizes their milk": There are U.S. subsidies, but they are not nearly as high as the difference paid for by our consumers. None justify our exorbitant 250-300% tariffs. We can level the field using restrictions based on those U.S. subsidies, and we are in negotiations with Europe. But many other sources are now open markets, such as Australia and New Zealand, both of which completely freed their respective dairy markets over ten years ago.

"Supply management doesn't hurt our trade -- see the agreements we've been able to sign": This also a fallacy. Canada has been able to sign certain trade agreements, but in every case we had to give up concessions in other areas because of SM. This hurts allCanadians -- manufacturers, resource companies, service providers and, ironically, the majority of Canadian farmers who need access to other markets. Even though Europe has agricultural subsidies, we have less leverage than we would. However, the proposed Trans-Pacific Partnership Agreement is critical -- not only do the TPP countries offer huge potential markets for Canada, the agreement is also seen as an opening door to the major Asian Pacific markets such as China, India and Japan. Canada has been "invited to the table," but it is clear that Canada will not be accepted as a signatory unless we dismantle SM.

"Without SM the dairy industry will disappear": Nonsense. The same argument was used by those in the wine industry who feared a free market -- yet we went from a small industry producing less-than-stellar wine to a thriving, much larger industry. I have proposed a comprehensive compensation and transition plan. Not all will stay in the business (but as noted above, major consolidation is happening all the time anyway), but they will be properly compensated. Those who stay should be able to thrive, as will their suppliers, second level beneficiaries and their communities -- just as with the wine industry.

We can -- and should -- dismantle SM. It can be a win-win for all.

A Debate on Supply Management

Executive Director of Dairy Farmers of Canada, Richard Doyle recently faced off against Martha Hall Findlay, a former Liberal MP and a leadership candidate for the Liberal Party of Canada, in a debate posted in the Huffington Post.  

Ms. Findlay has become famous or perhaps infamous for her Anti-supply management research paper. The flaws in the logic of the document represent a total lack of understanding of rural Canada and the role supply management has played in providing economic stability for those regions.

 Some of the statistical analysis is way off base, as the 'assumptions' used are totally inaccurate and it is obvious the observation of the numbers cannot provide insight into what is going on , when one has no understanding of those rural communities.

Readers were invited to vote before reading the comparative posts.  A recent check shows the poll may still be active so readers are invited to follow this link and post your views at: http://www.huffingtonpost.ca/marni-soupcoff/supply-management-debate_b_2726857.html

Below is Mr.Doyle's blog posts.  Enjoy!! -CG

Richard Doyle Executive Director, Dairy Farmers of Canada



The price of a glass of milk in a restaurant can run about $2.50. It must be supply management driving up the cost, right? In fact, Canadian dairy farmers get much less than the tip on that glass of milk, about 20 cents.

OK, so then you stop off at the market to buy some Italian Parmiagiano Reggiano cheese (the most highly imported European cheese by volume) and marvel at the $40 per kilo price tag. It must be those huge supply management tariffs you heard about! Wrong again. The actual import tariff on that cheese was only three cents a kilo and the price at customs was only about a third of what you're paying at the cash register.

What do these two scenarios have in common? They show that supply management has very little to do with the retail price of Canada's dairy products. The truth is, the only price that supply management sets is what is paid at the farm gate, based on actual cost of producing milk in Canada.

Few people think of the benefits the system creates not only for Canadian dairy farmers, but also for the Canadian economy. A few facts:

Stability/Predictability: Farmers must be efficient to cover their costs under the current pricing system. But because of the stability, farmers are better able to plan and to reinvest in their farms, their employees and their communities. They are key drivers for the rural economy.

Northern climate: The costs of producing milk in a northern country like Canada are significantly higher than in a country like New Zealand, which benefits from 10 months of pasture for cattle. Some New Zealand farmers must produce year round to supply their liquid milk market. Their costs are much closer to Canadian costs. However, because of Canada's additional housing expenditures, costs are still higher here.

No volatility: Globally, dairy products are among the most volatile agricultural products. In recent years, we have seen the price double in three months or cut by half in less than six months. Not in Canada.

Some suggest supply management is to blame for consumer prices. The Hall Findlay report incorrectly claimed Canadian consumers are paying up to $9.60 for four litres of milk, a figure that was later retracted.

The truth is the current retail price of milk in Canada is higher than it is in the United States. But it's lower in Canada (about $1.45 per litre,according to AC Nielsen Consumer data) than it is in New Zealand ($1.65 a litre) or Australia ($1.55 a litre).

So, will the price of milk always be higher in Canada than in the United States? Not if history is any guide. In the mid-1990's, milk at retail came close to being 40% cheaper in Canada than in the U.S.

We often compare the prices of goods between Canada and the U.S. As a recent Senate report found, there are many elements that explain the price difference with the US (e.g. currency strength, economic conditions, wages, domestic policies such as healthcare, larger social safety nets, etc.). When Target opens in Canada its prices will likely be higher on most goods compared to the U.S. store. That isn't because of supply management.

Moreover, on February 14, Canadians had earned enough money to pay for food for the year, making Canada and the U.S. the countries with the most affordable food in the world.

What would happen if we were to abandon supply management? Australia is a country that some cite as a model for Canadian dairy. Australia deregulated its milk market in 2000, and almost immediately farm prices began to fluctuate wildly. An initial retail price drop was followed by steady increases, which were accentuated by a tax levied to help farmers with the transition. The end result of deregulation: prices are no better for consumers, and they pay an additional tax.

There is one final and most important difference between Canada and other countries. Where the dairy industry is subsidized, like in the United States and the European Union, consumers are essentially paying twice for their dairy products -- once at the store and again through their taxes that fund farm subsidies -- but it's still not enough for farmers to cover their costs. A 2010 study indicated that Americans pay the equivalent of 31 cents per litre in government dairy programs. Canadian dairy farmers are not subsidized, and do not rely on government handouts.

Canada has a lot of farmland. We also have a system in place that helps dairy farmers create jobs and contribute as active members of their local communities. Research tells us Canadians want their farmers to cover their costs, keep farming and providing jobs.

Supply management is not perfect, but it is the best agricultural system. When you strip away the hype and myths, it's clear that it's right for farmers and right for Canada.

Stand Behind Supply Management

The article below is a really well written piece designed to make people pause.  So it is somewhat dismaying to see the type of comments that were left.  Of note a U of Guelph Food, Ag.& Resource Economics, A. Boecker, also leaves his negative views there.  He doesn't think Mr. Muirhead knows what he is talking about. Someone has a lot of work to do. -CG

• Bruce Muirhead
• Sat Feb 23 2013 00:01:00

Canadians should stand behind supply management

With all of the hyperbole spouted about Canada’s supply-management system, it’s time to take a step back and remind ourselves of some well-worn but nonetheless true clichés.

First, what works in theory, doesn’t always work in practice.

In theory, free and unfettered dairy markets would ensure that consumers enjoy the lowest possible prices and dairy farmers receive a fair price for their product.

In practice, it doesn’t work anywhere in the world.

New Zealand is frequently touted as the free-market model for the world. Yet consumer prices for milk in New Zealand, which has the most favourable weather conditions for dairy farming on Earth, are significantly higher than those in Canada. Indeed, during the fall of 2011, the New Zealand parliament held an inquiry into the rising price of milk.

In the United States, taxpayer subsidies to dairy farmers can approach the retail price of milk. Consumers pay twice for milk, once in the store and a second time through their taxes.

Even with those subsidies, the United States Department of Agriculture reports American cheddar cheese costs $12.54 US per kilogram. In Canada the average national price for cheddar is $13.70 Cdn per kilogram. In Canada, dairy farmers receive no government subsidies.

Second, those who don’t know their history are doomed to repeat it.

Dairy supply management was first introduced in Ontario in 1971 to address a glaring disparity between farmers and processors. At the time, the (very low) farm-gate price was set by processors, allowing that sector to amass substantial profit.

Currently, three Canadian processors control 80 per cent of the consumer market for milk and dairy products. Eliminating supply management will eliminate the ability of farmers to deal with processors fairly, but it won’t eliminate the concentration of processors.

As Canadians, we know from experience in telecommunications and other sectors that concentration in a few hands means higher prices for consumers.

We have to ask ourselves if supply management has lived up to the promise on which it was launched 40 years ago,

I would say emphatically yes. In Ontario, dairy remains, by and large, a family operation — the average herd size is 78 cows — which doesn’t impose debilitating environmental costs on the land. In New Zealand, there is now talk that its system is unsustainable, the result of too many cows on too little land, moving into marginal areas of the country.

As well, supply management provides farmers with a reasonable income. In Canada, farmers are not getting rich, but they are getting by without government help, a situation that is very unusual in agriculture.

The Europeans are demanding access to Canada’s dairy market as the free trade negotiations come down to the wire. Canadian farmers cannot compete against European subsidies.

All Canadians who want to preserve this country’s rural economy and do not want their tax dollars used to pay massive subsidies to farmers should stand behind supply management. It works on so many levels.

Bruce Muirhead is an associate vice-president of external research at the University of Waterloo.

Powerful Words

One of the most talked about, viewed, watched and shared Super Bowl Commercials this year is about farmers.  It is a perfect example of advocacy, something that supply management would do well to consider.  Done right, it would provide balance and real information to the general public about the importance of the industry and the very real services it provides to Canadians. Below is a reprint of the Farms.com article about the commercial and what it achieves.

You can watch this wonderful you tube video again here:

“So God Made A Farmer” Super Bowl Commercial Gives A Boost To Agvocacy

Ram Pays Tribute to Farmers with Voice of Paul Harvey and Powerful Images

By Amanda Brodhagen, Farms.com

It’s the Super Bowl commercial that everyone in the agriculture community is talking about - Ram Trucks version of the famous 1978 speech with the voice of Paul Harvey known as “So God Made a Farmer.”

Not only was the commercial a great advertisement for Ram Trucks, but it also gave a boost to “agvocacy”. For those of you who aren’t familiar with the term agvocacy, it’s the combination of the two words – agriculture and advocacy to create the word agvocacy. The whole purpose of agvocacy is to communicate about agriculture with the non-ag audience.

One of the biggest challenges to being an impactful agvocate is ensuring that you are engaging with the non-ag audience and not preaching to the choir. Ram’s commercial was able to reach that non-ag audience, which helps set the stage for agvocates to connect with the average consumer. The message was bold, the images were powerful and it was a positive message about those behind agriculture production.  Thank you to Ram Trucks for their tribute to the American Farmer!

 Paul Harvey’s “So God Made A Farmer Speech:

And on the 8th day, God looked down on his planned paradise and said, "I need a caretaker." So God made a farmer.

God said, "I need somebody willing to get up before dawn, milk cows, work all day in the fields, milk cows again, eat supper and then go to town and stay past midnight at a meeting of the school board." So God made a farmer.

"I need somebody with arms strong enough to rustle a calf and yet gentle enough to deliver his own grandchild. Somebody to call hogs, tame cantankerous machinery, come home hungry, have to wait lunch until his wife's done feeding visiting ladies and tell the ladies to be sure and come back real soon -- and mean it." So God made a farmer.

God said, "I need somebody willing to sit up all night with a newborn colt. And watch it die. Then dry his eyes and say, 'Maybe next year.' I need somebody who can shape an ax handle from a persimmon sprout, shoe a horse with a hunk of car tire, who can make harness out of haywire, feed sacks and shoe scraps. And who, planting time and harvest season, will finish his forty-hour week by Tuesday noon, then, pain'n from 'tractor back,' put in another seventy-two hours." So God made a farmer.

God had to have somebody willing to ride the ruts at double speed to get the hay in ahead of the rain clouds and yet stop in mid-field and race to help when he sees the first smoke from a neighbor's place. So God made a farmer.

God said, "I need somebody strong enough to clear trees and heave bails, yet gentle enough to tame lambs and wean pigs and tend the pink-combed pullets, who will stop his mower for an hour to splint the broken leg of a meadow lark. It had to be somebody who'd plow deep and straight and not cut corners. Somebody to seed, weed, feed, breed and rake and disc and plow and plant and tie the fleece and strain the milk and replenish the self-feeder and finish a hard week's work with a five-mile drive to church.

"Somebody who'd bale a family together with the soft strong bonds of sharing, who would laugh and then sigh, and then reply, with smiling eyes, when his son says he wants to spend his life 'doing what dad does.'" So God made a farmer.

Throwing down the Guantlet

Wendy Holm-

Among all the shouters egging our Federal Government onward to dismantle Supply Management is Ms. Martha Hall Findlay, candidate for the Federal Liberal Leadership. Various people have responded to Ms. Findlay about her Economic report which is so badly flawed she had been forced to make 'corrections'.

One of the earliest defenders of the industry has been Wendy Holm.  She has been tweeting Findlay for a while.  You can find all of her tweets if you follow the link below.

Now the National Post has joined the fray, giving Findlay's erroneous economic study even greater exposure. With friends like this supply management does not need enemies.

wendyholm@wendyholm@MHallFindlay@monmills @TheTyee@dfc_plc @arzeenaWhere is this "corrected report" posted Martha?11 days ago · reply · retweet· favorite
wendyholm Martha I challenge u 2 a debate anywhere, anytime. U r dead wrong on supply management.@MHallFindlay@monmills @thetyee@dfc_plc #democracy15 days ago · reply · retweet· favorite