Iowa Public Television


Canada Increases Agricultural Subsidies

posted on June 21, 2002

While ample harvests are still anticipated, there is more uncertainty in the market than there has been in several years. Because so much of the American agri-industrial complex is geared to perform for the export market, policy and financial matters are of keen interest to market watchers.

A weakening dollar promises a boost to export sales. The dollar is now at a two year low against the Euro, and has weakened considerably against the YEN. A weaker dollar effectively subsidizes foreign sales – much to the annoyance of export competitors, who are already complaining about an American farm policy they charge subsidizes over production.

This weak neighboring Canada, announced some subsidies of its own.

Canada Increases Agricultural Subsidies

As part of the worldwide backlash to the recently implemented 2002 U.S. Farm Law, Canadian Prime Minister Jean Chretien (zhan kreh-TYEN') signed a 6-year subsidy package for Canadian farmers that totals 3.4-Billion dollars. The Prime Minister has promised the financial aid is not designed to distort trade but merely to give Canadian farmers a boost. Folded in to the law is a mandate for local governments to pitch-in enough funds to push the program to more than 5-Billion.

World leaders have criticized the U.S. for increasing farm subsidies by 67% percent over current levels. The new Canadian measure represents an increase of more than 400% over the modest supports currently offered by Ottawa.

The package will look strangely familiar to U.S. farmers as it contains provisions for taking environmentally sensitive land out of production, giving farmers income insurance subsidies and providing money for agricultural R & D.

Chretien (kreh-TyEN') is expected to reemphasize his views on U.S. farm policy when the G-Eight nations convene for talks next week in Canada.


Tags: agriculture Canada money news