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					         Chap 2 -
History and INSTITUTIONS
 History of Agricultural Policies

• Agri-food policy

  – how government influences agriculture
  – how agriculture influences government


  Policy Consequences

     • US agr policy - formal legal process
     • Canada, ad hoc farm programs
         Land Settlement
• US, early policy
  – Objective: land settlement
  – small scale (Jeffersonian ideal)

  1803 – 1850’s
     Louisiana Purchase (2 M sq km)
     Mexican Cession
     Oregon territory
     Republic of Texas

  Disbursement of lands (15 M sq km)


  Homestead Act 1862 (160 acres)
     •   current family farm structure
   Canada - Early Policy

– agriculture secondary to minerals &
  furs, fish, timber
– natural resources exported to home
  country in exchange for manufactured
  goods

1600’s Seigneurial system:
         - tenant farmers

   • 1763 Treaty of Paris
   • 1783 - American revolution

British interest in agr development
   • confined to eastern Canada
   • alternative source of provisions
   • concerns about the US
Late 1800’s – Opening the West

Hudson’s Bay Company (1670 - 2006)

Radisson & Groseilliers – fur trade
Prince Rupert – expedition

1670 – King Charles II - Charter
    3.5 M Sq. km (Rupert’s Land)
           ownership of resources
           Trade monopoly
Rent – two elk & 2 beavers

1870 – sale of lands - gift to Canada
     300,000 pounds & land grant
    1869 – Manitoba rebellion
    1870 – Manitoba Act + province of Manitoba


Dominion Lands Act (1872)
   MacDonald’s National Policy

• 1880’s - Western settlement
   – cheap land
   – railroad
   – national tariffs (1879)

• Agr. export orientation
   – to pay for imported manufactures

• Tension:
   – export oriented west
   – protectionist east

• Late 1800’s early 1900’s
   – Large migration to the west
   – Calgary           4,000 (1901)
                      56,000 (1916)


• Rural Communities:
   – Many came and went during the 20th Century
   – Role of technological change
                  Canadian Population


                       Millions                Rural (%)

•   1867               3.5                     81
•   1900               5.3
•   1910               7
•   1930               10.2                    45

Alberta

1901                   73 thousand

1931                   731 thousand

•   Statistics Canada: Historical Statistics of Canada.
            2.1.3 Agricultural Trade
Importance of trade

          Large resource base (comparative advantage)
          Small poplulation
          Trade Barriers: Tarrifs and NTB’s
                                      NAFTA – GATT/WTO


US – Early history

   regional differences - conflicts
         – south supported free trade
                   cotton and tobacco exports

> 1800’s – trade interventions (tariffs) politically motivated
         > tariffs: source of revenue - trade impediment
         1862 – Lincon tarrif of 48% - Fed Res./Gold

1890 McKinley Tariff
       - support from western farmers
       - Sherman Silver Act

Period of tariffs   (1850 – 1935)
   Early Canadian Trade History
1800’s
         - agr becoming more important (furs and timber)
         - early 1800’s – wheat to UK - from Upper Canada

1822 - Canada Trade Act - Brit. colonial free-trade

         Merchants – promoted St. Lawrence system

1820     – Corn Laws – preferential treatment
         - US grain marketed through CA

1846     - repeal of Corn Laws
         - impacts on Montreal merchants
                  Montreal Manifesto (1849)

1854-1866 Reciprocity treaty

         - US - annexation was the carrot
         - Increased US-CA trade (5x)

         - US tariffs on live cattle from Canada (20%)
                   - shift to British markets
                   - 1892 - 30 year import ban
                              (pleuropneumonia)
1891 - Free Trade election I

          Macdonald opposed (conservatives)
          Sir. Wilfred Lauier supported

                     "unrestricted reciprocity"
                     Laurier - supporter of annexation

1911 - Free Trade election II

1891 - Macdonald died
1896 - Liberals win, and again in 1908

          > economy doing well
          > early 1900's wheat boom

1911 - Laurier defeated - (support of H. Bourassa)

1879-1913 – increased tariffs on both sides

          1890 - McKinley Tariff
          1921 – Forney-McCumber tariff
                     (average protection 40%)
          1930 - US Smoot-Hawley tariffs (60%)

Canadian tariffs increased (US)
       - increased trade with Britain
       - end of WWII - 1945
         2.1.4 Transportation (rail)
    Long distances to market
    Transport important - agr development

1880's - patchwork of small railroads and companies

Transcontinental railway importance

•   Western economic development - profit for the east
     – encourage settlement and agriculture
•   discourage North-South trade
•   feed the St. Lawrence system – exports

Canada Pacific Railway (completed 1885)

    Condition of Confederation (BC)
         1873 – Scandal, Proroged Parliament

       $100 million Federal funds
       Land grants (25 million acres)
       Tax exemptions
       Monopoly
• 1882 Unintended impact
     • arrival of CPR in Manitoba
     • land boom and bust
     • independence for Manitoba


• 1897 Crowsnest Pass Agreement

     • Access to BC interior (resources)
     • Federal subsidy CPR to build
     • Low freight rates on wheat, agr machinery +
       settlers' effects



• 1984 Western Grain Transp. Act
     •   raise statutory rates
     •   Fed. Government to pay subsidy
     •   1988/94 $700 million/year
     •   AB/SK/Mn and fed: 15,000 cars


• 1995 - RIP WGTA + FFA Act
     • $1.6 billion compensation
     • $300 million adjustment payments
   2.1.5 Great Depression - 1930's

1929 crash tariffs were increased - depression


Canada

• Stabilize output - protect soil resources

    – Prairie Farm Rehabilitation Act -1935
    – Prairie Farm Assistance Act -1939
    – income transfers became significant mid1980's



• US - Agricultural Adjustment Act - 1933

        •   First "Farm Bill"
        •   Crop Insurance and deficiency payments
        •   Significant income transfers
        •   Continue today
    Agricultural & Resource Goals


National Goals

•   Higher real incomes
•   Stable prices and incomes
•   Equitable income distribution
•   Full employment
•   Balanced economic development
•   Quality of life
•   federal and provincial relationships
•   international relationships
    Broad Agricultural Goals

• Consumer oriented
  – Stable prices, adequate supply, high
    quality, safe and nutritious food


• Producer Oriented
  – Fair and stable returns
  – reduced economic disparities in
    agriculture


• Broadly oriented
  – Rural quality of life, balanced
    rural/urban pop., conservation and
    international commitments
  2.2 Political Process and Institutions
                  (Chap. 2 Brinkman)




• Agr policy influenced by various factors
       • socio-economic
       • political
       • Institutional (rules of the game)


• Different countries - different political &
  administrative processes


• Canada – 1867 British North Am. Act
          - 1982 Canada Act
       constitution regulates the interrelationships
     Canada - Constitutional Monarchy

•   Queen - Governor General
•   GG – Prime Minister
•   PM – cabinet – introduce bills, spend money
•   House of Commons (308) & Senate (105)
     – HOC - elected - representation (population)
     – Senate – appointed by Gov. General (PM)
                  - provincial/territorial representation
•   Agr. Policy
     – Minister of Agr (AAFC bureaucrats) – cabinet
     – House of Commons & Senate


                       United States

•   Elected president (electoral college)
     – Cabinet (Sec. of Agriculture – USDA)
•   Congress
     – Elected House of Representatives (435)
     – Elected Senate (2 per state = 100)

•   Policies determined by
          • Congress (legislative branch)
               – senate and house agricultural committees
         • Administration (executive branch)
         • Judiciary (interprets legislation)
       Agriculture and Agri-food
             Stakeholders
  –   Farmers
  –   Input manufacturers and suppliers
  –   Food processors
  –   Food marketing organizations
  –   Food Service industry
  –   Food Traders & Retailers
  –   Consumers


  Effective Rent-seeking
      - access to machinery of government
      - lobby groups


• Government Obligations
  –   International and domestic obligations
  –   Trade agreements
  –   Fiscal Deficits
  –   Political considerations
     Policy Formulation Process
•   Minister identifies critical issues
•   presents to cabinet committees
•   Full cabinet
     – Full cabinet discusses
          •   political, fiscal issues and policy directions (goals)


• The Result in Canada

     – Ad hoc agricultural programs
     – Political system makes it difficult for lobby groups
        • power rests with prime minister
              – hard to lobby
        • regional representation
              – unequal treatment
        • Federal-provincial partnerships
              – Political coalitions –
              – e.g. Mulroney-Devine late 1980’s’

• Party Discipline
          • Incentive to follow the leader
          • More power to the PM
                  US System
Farm Bill - every 5-6 years

   –   Farm programs
   –   Nutrition: Food stamps
   –   Environmental programs
   –   Rural development, foreign aid
   –   Research – extension


• Political system - easier for farmers to
  influence policy

        •   Senate Bill
        •   House Bill
        •   Reconciliation
        •   President – veto
        •   Intense political process (65:1 lobby)


• Political influence
        • Midwest farmers
        • Senate Agr. committee
  Federal - Provincial Jurisdiction


• United States:

   – agricultural issues
      • federal responsibility

• Canada, shared jurisdiction

   – provincial law/policies
      • should not contradict national policies
      • should flow from the constitution

   – conflict: federal policy prevails

   – federal can delegate powers/authority
The Constitution Act, 1867

AGRICULTURE AND IMMIGRATION

Concurrent Powers of Legislation respecting Agriculture, etc.

Section 95.

In each Province the Legislature may make Laws in relation to
Agriculture in the Province, and to Immigration into the Province;
and it is hereby declared that the Parliament of Canada may from
Time to Time make Laws in relation to Agriculture in all or any of the
Provinces, and to Immigration into all or any of the Provinces; and
any Law of the Legislature of a Province relative to Agriculture or to
Immigration shall have effect in and for the Province as long and as
far only as it is not repugnant to any Act of the Parliament of
Canada.

http://laws.justice.gc.ca/en/const/index.html
             2.3 Legal Framework
> policy is made within a legal framework

> constrains & enables

> confusion: who is responsible for what

Examples:        Agricultural legislation challenged
                 on constitutional grounds


       National Marketing Legislation
1934 - Natural Products Marketing Act

Farmers ask Federal Government

        - national marketing board
        - delegate authority to provincial boards
        - marketing, marketing fees, price equalization
        - struck down in 1937
        - interfered with provincial jurisdiction
1949 - Agricultural Products Marketing Act

         Similar in intent to the MPMA
         Cabinet to delegate marketing authority
         challenged as unconstitutional, upheld
1970's
         provincial boards: milk, poultry, fruits & veg
         control supply and price
         required inter-provincial cooperation

Chicken and egg wars" of 1970-71

         Ontario/Quebec egg pricing
         Ontario restricting chicken from Quebec

1972 - Farm Products Marketing Agencies Act

         > farmers to ask for a National Board
         > control supply through quotas
         > chicken, egg, and turkey boards
         > Others: established based on farmer votes

New board

 agreement by producers, provinces, and the feds
Several national boards during the 1970's

1973     Can. Egg Marketing Agency (CEMA)
         Canadian Turkey Marketing Agency (CTMA)

1978     Canadian Chicken Marketing Agency (CCMA)

GATT compliant

border controls accepted when a national supply management
system in place

1978 Supreme Court Decision:

Provinces can regulate price and supply, even though product
moved inter-provincially

Set the stage for today’s supply management system
 Structure of Supply Management

– National agency
– Provincial boards

– national government delegates power over
  interprovincial trade to national agency

– provincial government delegates powers over
  intraprovincial trade to the national agency

– national agency delegates powers to
  provincial agency to act as the agent in the
  province
     1982 Charter of Rights and Freedoms

1) CWB Challenge

Alberta barley farmers + Barley Commission
Charter challenge:
         freedom of association + mobility rights
         barley exports: CWB area in Western Canada
         discriminatory

2) CEMA Challenge

        Similar grounds for the case
        Egg producers in the North West Territories.
        Wanted right to market eggs into provinces
        Farmers had no quota
        Federal legislation upheld
            Intellectual Property Law

  IP law has had an impact on policy and agriculture

Protection: more R&D, lower costs, competitiveness

1990: Plant Breeders Rights Act (Seed Sector Review)
1993: Bill C-91
        patent protection from 17 to 20 years

          Classic Trade-Off for Policy Makers

Farmer’s right to save seeds, cost of production

R&D from patent protection, higher productivity, lower
  costs for consumers
            European Union



• Several bodies influence agricultural policy

    – The Agricultural Commission

    – European Parliament
        • (Elected members from each country)
    – EU council (Heads of states)
    – Agricultural Council (Agr Ministers)

    – Agricultural commission proposes policy
    – EU Parliament and EU council vote
    – EU council responsible for passing agricultural
      policies - with advice from parliament

				
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