US Dumping Corn in Canada?

[Wilber]

If the US government subsidizes US carrot producers, then its US taxpayers that are the losers. Canadian carrot consumers get to buy cheap carrots.

Untill there are no more Canadian carrot producers, then US carrot producers will be able to charge what they damn well please.

You are describing something called "predatory pricing". I know of no successful attempt to eliminate all competition by lowering prices and then raising prices later in any sector. It would be impossible in an agricultural setting. There are simply too many producers, and too many potential producers and it is simply too easy to exit or enter a particular market.

The day US producers tried to raise prices (assuming that were possible) to take advantage of their monopoly status (assuming that existed), Canadian (and other foreign) producers would quickly eye the market.

To pick one example, New Zealand can produce butter and deliver it to Canadian stores at lower cost than Canadian (or US) butter producers can. Needless to say, Canadian federal import quotas severely restrict butter imports and so you don't see Anchor butter at Loblaws.

The world is a big place and the idea of predatory pricing in agricultural products is untenable.

When it comes to monopoly pricing, I am far more fearful of domestic producers and their political clout with domestic governments. Foreign producers could not possibly be worse in their greedy rapaciousness.

August, I can see that you have no idea how much money is involved in setting up and running a modern farm. I will ask you the same question as I asked Charles. Who in their right mind would invest that kind of money if they knew that people like you are going to fall all over themselves to allow the predatory practices of other countries to make them unprofitable? Who in the Fraser Valley is going to turn sub divisions, parking lots and industrial parks back into farms because foreign subsidies made farming unprofitable at a previous time?

You and Charles are the protectionists but it is foreign producers you want to see protected in the form of subsidies so you can buy their goods more cheaply. Why is it that you can't show the same consideration for your fellow Canadians?

[Charles Anthony]

I think I understand the confusion. I concede that my questions may have seemed rhetorical when they were not meant to be and vice versa. That makes it seem that I am implying points of view that are contrary to free trade.

are you saying that subsidies and tariffs imposed by a Canadian government are protectionist but those imposed by a US government are not?

No. Not at all.

We can not change US government policies. We have to accept them. We may not even know what they are.

You said:

I do not support subsidies.

to which I asked:

Why not?

I was not questioning that they are wrong. I should have said:

"Neither do I. However, I can not change foreign policy. I can only change domestic policy to which I will not support domestic subsidies for domestic producers -- even if they are retaliatory to foreign subsidies. I will not support tariffs and quotas either for domestic producers -- even if they are retaliatory."

Saying "I do not support subsidies." if you are talking about foreign subsidies is ridiculous. Nobody can support a policy of a foreign country unless you are in that foreign country. I assumed that the point was obvious and thus moot. Obviously, it was not obvious.

Thus, when I ask "Why not?" I want you to say explicitly: "What is it that makes subsidizing traded commodities wrong?"

I am not questioning that they are wrong. I want to here from your mouth what it is that makes you think they are wrong. We may in fact agree but we may not. Again, I remind you that you brought up the morality of trade protection and you refused to define what you meant by morality. I did define my concept of morality. Since you refuse to define morality, I have to deduce it from you and pull it out piece-meal by asking to say what is wrong with subsidies.

I will back-track and rephrase my questions and answers more explicitly.

Why is a tariff that protects producers from a subsidy more immoral than the subsidy that made the tariff necessary in the first place?

Who cares? We can not change subsidization policies of foreigners.

I speak of tariffs as a response to subsidies, nothing else. If there is no subsidy, there is no need for a tariff. I do not support subsidies.

We can only make policy changes domestically. Therefore, we accept it.

Look at it this way:

If the foreign producers had figured out a new technology or method of cultivation that made it possible for them to be more productive, they could have the same effect on our domestic market. Would you still keep tariffs for domestic producers?

[August1991]

August, I can see that you have no idea how much money is involved in setting up and running a modern farm. I will ask you the same question as I asked Charles. Who in their right mind would invest that kind of money if they knew that people like you are going to fall all over themselves to allow the predatory practices of other countries to make them unprofitable? Who in the Fraser Valley is going to turn sub divisions, parking lots and industrial parks back into farms because foreign subsidies made farming unprofitable at a previous time?

Wilbur, there is no reason that Canada should continue to produce its own food at high cost when we could import cheaper food from elsewhere. Your argument that imports make us reliant on foreigners could just as easily be extended to everything else we import.

Should Canada have its own hard drive industry because foreigners might some time in the future take advantage of our dependent status? As you put it, who in Canada is going to turn parking lots into hard drive factories when foreign hard drive producers realize that they can take advantage of our situation?

Wilbur, by that logic, you should move to an island and produce everything yourself because if you don't, you'll be dependent on someone else for something.

In fact, if an American farmer tried to take advantage of a situation by raising prices, another American farmer would quickly step in and offer a deal. If another American farmer were prevented from doing so, a New Zealand farmer would do it.

The city of Montreal does not grow any food of its own (having long since turned farmland to a more profitable use) so it has to import everything. Does that mean that farmers take advantage of city people by holding them hostage and charging high prices? Well, no. Farmers can't do that. It is the Canadian federal government that imposes this monopoly pricing on city people. If anything, I have more to fear from Canadian farmers and Canadian governments than I could ever fear from foreigners operating in world markets.

The prices of milk, cheese, eggs, chicken, pork, butter are evidence of my point. I am particularly offended in the case of cheese because it means we have such a poor selection in Canadian grocery stores: cheddar, cheddar and cheddar.

----

Wilbur, in a country such as Canada where land is clearly not in short supply (compared to Japan and Holland for example), I am astonished that you would use "disappearing" land as an argument to justify protecting farmers.

[Wilber]

The city of Montreal does not grow any food of its own (having long since turned farmland to a more profitable use) so it has to import everything. Does that mean that farmers take advantage of city people by holding them hostage and charging high prices? Well, no. Farmers can't do that. It is the Canadian federal government that imposes this monopoly pricing on city people. If anything, I have more to fear from Canadian farmers and Canadian governments than I could ever fear from foreigners operating in world markets.

Unprotected and unsubsidized producers are not holding anyone hostage but you would have them held hostage to foreign producers who are. You can be held hostage by anyone who has a monopoly, It doesn't have to be a Canadian monopoly. I understand your motives and they are entirely selfish.

[Wilber]

Wilbur, in a country such as Canada where land is clearly not in short supply (compared to Japan and Holland for example), I am astonished that you would use "disappearing" land as an argument to justify protecting farmers.

In Japan and many European countries, agriculture is heavily subsized and agressively protected. I spent a good part of three years in Japan and I know that Japnanese rice production is one of the most protected and subsidized crops on earth. Despite Canada's size it does not have a lot of really good all purpose farm land and most of it is located near our most heavily populated centers because it is also the best place to live. The Fraser Valley is arguably the best farm land in the country and it is under tremendous pressure for developement even though its farms are profitable. Without our Provincial Agricultural Land Reserve legislation, it would have been pavement years ago.

[Charles Anthony]

You are not baiting anybody. I now understand why you do not answer any pointed questions: because you can not justify your retaliatory and protectionist policies with anything intelligent nor logical.

Despite Canada's size it does not have a lot of really good all purpose farm land

Canada can not also grow coffee beans and bananas on its land.

However, Canada can grow coffee beans and bananas in greenhouses. Should we screw the consumers and the taxpayers with subsidies and tariffs and quotas to support all of the greenhouse farmers?

[Wilber]

You are not baiting anybody. I now understand why you do not answer any pointed questions: because you can not justify your retaliatory and protectionist policies with anything intelligent nor logical.

Despite Canada's size it does not have a lot of really good all purpose farm land

Canada can not also grow coffee beans and bananas on its land.

However, Canada can grow coffee beans and bananas in greenhouses. Should we screw the consumers and the taxpayers with subsidies and tariffs and quotas to support all of the greenhouse farmers?

Charles, perhaps when you get it through your head that subsidies, wherever they come from, are about rewarding those who are less productive and penalizing those who are more productive, you will understand. Until then there is no hope.

Bye

[Drea]

Shouldn't a country have the ability to feed it's people? Should we not protect our food growth and production?

Being entirely dependant on foreign food, unforseen world circumstances (world war, drought in other parts of the world, alien invasion LOL, whatever) could cause us to lose the ability to import food. Then what?

All countries should be able to sustain their population's basic food supply.

Yes, we should import from others but still maintain our own agriculture base. It would be a shame, not to mention sheer lunacy, for our farmers to be run out of business by foreign imports.

[Wilber]

Shouldn't a country have the ability to feed it's people? Should we not protect our food growth and production?

Being entirely dependant on foreign food, unforseen world circumstances (world war, drought in other parts of the world, alien invasion LOL, whatever) could cause us to lose the ability to import food. Then what?

All countries should be able to sustain their population's basic food supply.

Yes, we should import from others but still maintain our own agriculture base. It would be a shame, not to mention sheer lunacy, for our farmers to be run out of business by foreign imports.

Most countries don't have the ability to supply all their food needs but it is lunacy to give away what they do have in the pursuit of a short term gain financed by foreign taxpayers. Eventually they will pay for it.

[Charles Anthony]

Shouldn't a country have the ability to feed it's people?

No. Not if it can produce something else more efficiently and trade for food.

Being entirely dependant on foreign food, unforseen world circumstances (world war, drought in other parts of the world, alien invasion LOL, whatever) could cause us to lose the ability to import food. Then what?

Well, in that case let us look at how bad things could really be.

Imagine living in the desert.

All that you have is sand, heat and oil.

All that you need is food and water.

What the hell would YOU do? Build greenhouses or trade?

Now, let us apply this principle to our Canadian corn dumping example.

Imagine you are the government of people living in the desert.

All that your people have is sand, heat and oil.

All that your people need is food and water.

What the hell would YOU do with all of the power in your hands? Force the entire population to pay for greenhouses to support your "friends" who happen to be farmers or let everybody trade freely?

[Drea]

We don't live in a desert.

Aren't you glad?

I live in the farming capital of Canada. I support my local farmers. Period.

Regardless of whether or not some OTHER country cannot supply it's own food does not mean WE need to sell out our farmers 'cause the country next door (or wherever) has the ability to sell food to us at a discounted rate.

[Jerry J. Fortin]

The whole idea of this thread was a discussion on dumping. It has morphed into subsidies. For my two cents,if a foreign country is dumping its products in Canada in competition with our own industry then we need to take a position to protect our own producers. If the country does not protect their producers, there won't be any.

Its okay to slap a tarrif on soft wood, or duram as long as it comes from Canada, but if it comes from the states its okay??? Give me a break.

Corn isn't the real issue here folks..........

[Charles Anthony]

We don't live in a desert.

Not only do we not live in a desert, but we do not have free trade.

Aren't you glad?

Not if our desert had oil. However, your level of understanding of trade seems to have stopped short at the word "desert" and thus I am sure YOU are glad.

I live in the farming capital of Canada. I support my local farmers. Period.

Do your local farmers need barriers to free trade?

Regardless of whether or not some OTHER country cannot supply it's own food

The benefits of free trade have nothing to do with what other trading partners CAN NOT do vis-a-vis what we can do. The benefits of free trade come from what other trading partners CAN cheaper than what what we can do.

does not mean WE need to sell out our farmers 'cause the country next door (or wherever) has the ability to sell food to us at a discounted rate.

If our farmers forcibly prevent us from purchasing products from a foreign competitor, our farmers are stealing from us. It would be more noble for them to beg for a handout from the consumer and let the consumer buy a cheaper product.

[Jerry J. Fortin]

There is nothing wrong with free trade, in fact its a good thing. The question is where do we find such an animal anyway?

There is another question that hasn't been explored properly and that is of the marketing boards. These things are two edged swords which can cut both ways.

The real issue in my opinion is what do we want the fed to do? How much control over our lives do we want to give them? Free trade would be an excellent place to start, and with that the agricultural sector. Look at the subsidies in agriculture all over the world! You want to make a democratic dent in the system start there.

[Drea]

a foreign country is dumping its products in Canada in competition with our own industry then we need to take a position to protect our own producers. If the country does not protect their producers, there won't be any.

Bears repeating...

I personally buy the local product, whether or not it is more expensive. That is my choice.

It's my opinion that we should protect our farmers from overly cheap competitors (read: mega-farms) who dump their product into our market.

Imagine the Fraser Valley completely paved over beacuse -- well geez -- we can get all the food we need from the states and at a cheaper price, so we don't really need our own farms.

[August1991]

For my two cents,if a foreign country is dumping its products in Canada in competition with our own industry then we need to take a position to protect our own producers. If the country does not protect their producers, there won't be any.

That comment shows a frightening ignorance of basic economics. Jerry, have you ever taken an economics course or read an economics book? If not, I strongly urge you to do so before you state more silliness.

[Jerry J. Fortin]

For my two cents,if a foreign country is dumping its products in Canada in competition with our own industry then we need to take a position to protect our own producers. If the country does not protect their producers, there won't be any.

That comment shows a frightening ignorance of basic economics. Jerry, have you ever taken an economics course or read an economics book? If not, I strongly urge you to do so before you state more silliness.

What is the state of the family farm in your area August? I like to buy as much produce as I can at a local farmers markets, when they are in season. I get some pretty good deals there too. But to answer your question, no I have never taken an economics course. I have read several books about the subject though. So lets examine this piece by piece.

That comment shows a frightening ignorance of basic economics. Jerry, have you ever taken an economics course or read an economics book? If not, I strongly urge you to do so before you state more silliness.

My point was simply that;

For my two cents,if a foreign country is dumping its products in Canada in competition with our own industry then we need to take a position to protect our own producers. If the country does not protect their producers, there won't be any.

Now once again, as a nation our government is required to protect its citizens, isn't that right? I do not advocate subsidizing our own industry you understand, I never said that. What I do advocate is providing our citizens with equal footing in matters of trade. Hey if you can produce something cheaper, and export it here, and then sell it here power to you. But if another nation has to subsidize that operation I declare that an unfair practice. Tell me what is so silly about that. Where is the economic wisdom that would allow such a practice to prevail in this context?

Speaking about economics, that is far from an exact science my friend. There are also several different views about methods and applications as well. So much so in fact that it rates up there with the split in opinion about global warming. Granted that there is in fact a mainstream opinion, but even that changes from time to time doesn't it?

[Wilber]

For my two cents,if a foreign country is dumping its products in Canada in competition with our own industry then we need to take a position to protect our own producers. If the country does not protect their producers, there won't be any.

That comment shows a frightening ignorance of basic economics. Jerry, have you ever taken an economics course or read an economics book? If not, I strongly urge you to do so before you state more silliness.

August, are you saying that we should leave our producers to the mercy of any tactics a foreign country may use? You seem to be saying that free trade is OK as long as the people you trade with are free to do anything they wish to compete, but your hands should be tied when it comes to reacting to those tactics. Is that your definition of "free".

To me free trade means having to compete in a market where the prices charged reflect the real cost of production, not one altered by government support or other interference. It has to apply equally to both sides or it cannot work. When one side does interfere, the other side is justified in trying to reestablish the balance. Sure consumers end up paying an artificial price but that is exactly what is happening when one side subsidizes a product so it can be sold at less than it's cost of production. It seems to me that you don't want a free market, you want a freebie at someone else's expense and the fact the freebie is provided by foreign taxpayers and could put Canadian's out of business is fine by you.

[Charles Anthony]

What I do advocate is providing our citizens with equal footing in matters of trade. Hey if you can produce something cheaper, and export it here, and then sell it here power to you. But if another nation has to subsidize that operation I declare that an unfair practice. Tell me what is so silly about that. Where is the economic wisdom that would allow such a practice to prevail in this context?

I will take the liberty of explaining what is silly about it.

The concept of right and wrong about the trade practice pivots around "another nation has to subsidize that operation" being known to us. From your argument, you are saying that if the U.S. simply had better farms and cheaper corn, you would accept free trade. From your argument, if they kept their subsidies secret and lied to us and told us that they were more efficient, you would accept free trade. From your argument, you are refusing free trade only because they subsidize their farmers.

The concept of "subsidies" is very very subjective.

If I give farmers extra money to pay their utility bills that is a subsidy. They could produce and sell at cheaper prices.

If I give farmers extra money to pay their education and training and the education and training of all of their children and employees and I pay their medical and dental insurance and their telephone bills and reduce the taxes on their home insurance and on their friends and families and I pay and pay and pay every ancillary business that indirectly deals with farmers etc. etc. etc.

I am able to hide subsidies and fool you.

[Jerry J. Fortin]

Augest may be an acedemic, but I am a realist who lives in the rural end of the world surrounded by crop and cattle farmers. These are tough time for our farmers. Low cereal crop prices don't properly reflect the added expense of rising fuel costs. BSE hurt the local industry atround here pretty bad, some fellas went under. Its not a glamours lifestyle being a farmer. Most of the kids move out to get jobs in the cities and there are farms for sale everywhere because of it.

With the government not at least trying to make family farm efforts fruitful enough to survive we will lose a part of our heritage. There is just no question in my mind about that.

[Wilber]

Charging a tariff equal to a subsidy given by a foreign government to it's producers, does not increase prices to Canadian consumers, it just doesn't give them an artificially low price and it transfers that subsidy to the coffers of the Canadian government at the foreign taxpayers expense. If you want to get rid of a subsidy, remove the reason for it to exist by removing the artificial advantage it provides. Theoretically it could lower Canadian taxes because some government revenue is now coming from foreign tax payers.

Governments hate subsidies because they cost them money. They like tariffs because they make them money. Some individual politicians like subsidies and tariffs because they can get them votes in their jurisdictions.

Charles, do we take the every social program and tax in every country and give it a value to each industry and then give every country the right to subsidize its products by a certain amount based on the tax structure and social programs of the country they are exporting to? Do we also count the average temperature of a region, hours of daylight, amount of rainfall, distance from markets, cost of transportation ad nauseum to determine what is a reasonable cost of production and whether subsidies should be given or not and what is or is not actually a subsidy?

If US corn is actually being sold in Canada at prices lower than the cost of production and the difference is not being absorbed by the producer but by the US government, that is protectionism, it is predatory and our farmers are entitled to protection. We have no control over what it costs an American farmer to produce and export corn and there is no reason why Canadian farmers should have to bear the burden of some of those costs.

Charles and August, I don't know what you do for a living so I can't be specific but let me present a scenario.

You work for a company, do your job well and your bosses are satisfied with your work. One day your boss comes along and says to you. "Government X has told us that if we employ (pick any group in our society to which you don't belong) they will subsidize their wages by 30%. We have an applicant from that group who is as well qualified as you and we're sorry, we like you but this is something we just can't pass on. Your company is happy because they are getting equal value for 30% less which gives them the option of increasing their profits or undercutting their competitors which will also make their customers happy. The guy who got your job is happy. Every one is happy except the guy who was actually producing more than he earned. You, you're unemployed. And of course the taxpayers who are paying for this exercise because they produce more than they earn as well. That's why they are able to pay taxes.

[Jerry J. Fortin]

Yup, that about sums it up nicely!

[August1991]

Low cereal crop prices don't properly reflect the added expense of rising fuel costs. BSE hurt the local industry atround here pretty bad, some fellas went under. Its not a glamours lifestyle being a farmer. Most of the kids move out to get jobs in the cities and there are farms for sale everywhere because of it.

With the government not at least trying to make family farm efforts fruitful enough to survive we will lose a part of our heritage. There is just no question in my mind about that.

We've lost the "heritage" of horses in city streets, and we've lost the "heritage sound" of a clacking typewriter. The phone booth, so delightful when shared by two, will soon be part of our "heritage".

I'm sorry. I'm willing to consider paying taxes to support the "heritage" of a Canadian movie but I'll be damned if I have to support the "heritage" of a Canadian corn farmer.

Charles Anthony is right. The argument of a subsidy is a canard. When your local grocery store offers a loss leader, do you refuse the eggs at $1.89 a dozen and go across the street to a competing store to buy your eggs?

[Wilber]

Charles Anthony is right. The argument of a subsidy is a canard. When your local grocery store offers a loss leader, do you refuse the eggs at $1.89 a dozen and go across the street to a competing store to buy your eggs?

When your grocery store offers a loss leader it is the grocery store that is accepting the loss. Why is this so difficult for you guys to understand?

[Charles Anthony]

I'm willing to consider paying taxes to support the "heritage" of a Canadian movie but I'll be damned if I have to support the "heritage" of a Canadian corn farmer.

I disagree with that! I would not support "heritage" movies either!

The argument of a subsidy is a canard.

I never knew that word was absorbed by the English language. At first, I thought you meant to use the word "connard" which may have also fit the same context of arguing for subsidies. You learn something new everyday!

As an aside:

When your grocery store offers a loss leader it is the grocery store that is accepting the loss. Why is this so difficult for you guys to understand?

That is understood completely. (What makes you believe that is misunderstood?)

The point is consumer choice and freedom.

In free trade, the grocery store should have that right. The grocery store is not forcing anybody to walk in and buy it a lower price. You can leave if you want to buy a higher price.

The grocery store has reasons for reducing prices that make up for the "loss" that you perceive in that one little "egg" sector of the economy. That is none of your business. The grocery store should have that right.

You take away and deny that right by making arguments of heritage and national security and the rest of it.

You can not claim that right without forcing consumers to pay more.

It would be more noble for the heritage farmers to ask for a charitable hand-out from the consumer (provided that the consumers are not forced) and let there be free trade. We could have change boxes at grocery store cash registers that say "Save our heritage." like we do for other worthy causes.