Wednesday, July 13, 2011


Criticism, if constructive can be useful in setting right things, that are not found in order. Unfortunately government agencies invariably shut their eyes and years to such criticisms under the perceived feeling that they are being faulted and they cannot go wrong! Some times it may be true because many critics love to hear their own voice or read their own writing and indulge in self-priming exercises through their motivated commentaries. In a democratic country one has 100% freedom to air one's views and there may be contradictory views making it difficult to separate grains from the chaff! Here is a well informed critique on Canadian food production which makes interesting reading.

But Martin found something startling when he compared the ratio of investment in agriculture with the depreciation of existing assets. Over the last decade, as China boomed and food prices soared, there was no rush to invest. "The ratio in Canada in eight of the last 10 years is less than one. So there's less new investment coming into the food industry than there is depreciation." "Canada has the third-largest endowment of arable land per capita in the world, after Australia and Kazakhstan," notes Martin. "We have, depending on the set of numbers you look at, nine per cent of the renewable fresh water supply in the world." Put those two facts together, add one of the greatest commodity booms in history, and money should be pouring into Canadian food production. In the United States, by comparison, the worst year in the last 10 saw 40 per cent more investment than depreciation. "It's just astonishing when you see these numbers. We think of ourselves as a great wheat exporter but our share of the wheat market is declining. During the '90s and early 2000s, we had between 20 and 25 per cent market share and it's gone down steadily to 15 in the last few years."Then there's "supply management," the 1970s-era policy which effectively turned dairy and poultry production into an industry-controlled cartel protected by import tariffs. It's good for existing dairy and poultry producers because it keeps prices high and stable. And it has made the lucky people with production quotas a lot of money: the quota for a single dairy cow can go for $30,000 and estimates of the total value of production quotas range between $30 billion and $50 billion. So what's the catch? Canadian consumers pay far more for dairy and poultry products than they would in a free market. Supply management also makes it difficult or impossible for producers to achieve the economies of scale needed to drive costs down. Perhaps worst of all, it impedes trade liberalization.The causes of the stagnation are many, Martin says. A big one is a regulatory system that stifles innovation. Martin recalls testifying at a parliamentary committee alongside a wheat breeder from the University of Saskatchewan. "He went through a whole list of wheat varieties that he came up with that are much higher yielding than the wheat varieties in Canada. He couldn't get them registered in Canada but they got registered in Montana and we now have to compete with them."

There are many constructive suggestions to act upon by the Canadian government and it will be good for that country to raise the investment on agriculture to realize its full potential. With vast land mass and abundant water resources, Canada can become the granary of the world provided right policies are orchestrated to empower the grower to adopt optimal blend of technology and management. Proximity to the super power, the US, should not come in the way of evolving policies which are pro-growth and supportive of world endeavors to augment food production. If there are man power constraints to expand the agriculture sector, there should not be any hesitation to go for bilateral agreements with some of the populous countries like China, India and others for optimum utilization of the agricultural land. One should not forget that in this era of land leasing across borders, common in Africa, Canada can put its land to better use through such collaborations.


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