Out of balance?

[farmers_son]

Cowman has raised some very good points. NAFTA did take away Canada’s natural advantage of having oil and gas resources under its lands. Before NAFTA Canada did have in place energy policies that in effect created an advantage for Canadians with Canadian oil and gas. NAFTA took that all away. NAFTA in effect moved all the oil and gas under Canada and shifted it into the United States because after all if you have unrestricted access to something you basically own it. The U.S. does not care about the price of energy because the money basically all flows back to them anyway. Albertans and Canadians are really ill informed to think of “their” energy, the Americans have it all. Think of NAFTA as the U.S. directionally drilling into the heart of Alberta and pumping all of what was our energy south of the border.

NAFTA took away Canadians and Albertans birth right, the energy gift we were blessed with has been handed over to the Americans. We did this for free trade and in case you all have forgotten, the Yankees are still not buying our cows and cow beef. Maybe in 2007, this is still 2005.

Is that an example of a market economy? Is it an example of a market economy when an Alberta farmer sells a cow for $400 less than if that same cow was sold by a Montana rancher yet that Montana rancher drives a new pickup powered by gasoline that came from Alberta and pays less for that gas than we do.

Think of Poland or USSR? Better to think of Mexico because we are going to be no better than Mexicans if NAFTA is in place for another 20 years and our energy advantage is gone. Canada’s opportunity to lever our energy resources into a diversified and powerful economy disappeared with NAFTA. Thanks Brian Mulroney.

[cowman]

Farmers son: You astound me! You have to be the only guy in Alberta who thinks the free trade deal didn't benifit Alberta!
Think about it. Before the free trade deal you got the shaft daily! Everything you bought and sold went through the golden triangle! Yes there has been some trade problems brought on by people ...called R-CALF...and some other protectionist groups but you know very well, in the big picture, that we have made a pile of money out of this deal? Look at the trade figures...who has benifitted? Canada as a whole has kicked butt...in a big way?
Instead of condemning Mulrooney you should be thanking him everyday....maybe not as a farmer(right now)...but as a Canadian? It was one of the few things he did that was right for Canada.

[farmers_son]

I do not think there can be any doubt that NAFTA has been bad for Canadian farmers and Canadian primary industries in general. Canadian farmers are large energy users and did benefit pre NAFTA from a made in Canada cheap energy policy through cheap fuel, fertilizer, electricity and natural gas. Although there is a lot of outrage about the NEP it was about Canada taking ownership of its resources and using those resources to create a competitive advantage for Canadians, not Americans. And while one could point to benefits for the oil industry because of NAFTA for the most part that advantage has not be positive for agriculture.

Canadian farm per unit profitability has decreased since NAFTA, not increased. Since NAFTA the cash to cash live cattle basis between Alberta and Canada has grown wider to the detrmiment of all Canadian cattle producers. Since free trade there are tariffs on our wheat. Yes trade numbers have increased but we are exporting more for less. It is almost three years since our case of BSE yet our cows are still at bargain basement prices even though the U.S. has acknowledged their own case of BSE. Every time I see a cow sell in the market for less than half what that same cow would bring in the U.S. I am reminded of just what NAFTA has or should I say has not done for us.

Prior to NAFTA we were buying machinery, now we have to figure out ways to manage without machinery. Prior to NAFTA we had a choice of a half dozen packing plants to ship fat cattle to, now there is two. Prior to NAFTA we hauled our own grain to a local farmer owned elevator now we have to hire our grain to be shipped across the province to a terminal controlled if not 100% owned by Americans.

We farmers never had to struggle in the early eighties like we struggle today to stay afloat. Where is the NAFTA advantage for us? Trade numbers yes what about net farm incomes. Net farm incomes have been decreasing since NAFTA not increasing. Because of NAFTA the typical farmer and many average Albertans can barely afford to heat their homes when the natural gas is sitting right under our feet.

As I recall when CUSTA (later NAFTA) was proposed all the talk was about loosing our water resources. And while we stood steadfast about protecting our water we let the Americans take our energy. John Turner was right to say CUSTA was bad for Canada.

“Any country that is willing to surrender economic levers inevitably yields levers politically and surrenders a large chunk of its ability to remain a sovereign nation. I don't believe our future depends on our yielding those economic levers of sovereignty to become a junior partner in Fortress North America to the United States."
John Napier Turner, October 12,1988

If NAFTA worked, our cull cows should be worth 60 cents a pound not 15-25 cents.

[FarmRanger]

Yikes f_s, do you have your tongue in your cheek? You forgot the little winky face beside your post. We sell as much oil to the U.S. as we want, at the WORLD price, which has benefited us very well. The reason we pay more for gas here has nothing to do with undercharging the Americans. It has everything to do with the overtaxing (gouging, putting a drag on our competitiveness, you pick the words, they’re all true) of our own citizens to fund bloated government largess. Fuel is heavily taxed in Canada, it has nothing at all to do with free trade. The tax was supposed to pay for your taxdollar purchase of Petrofina, which incidently also had a huge increase in share price (doubling I believe?) before the Liberal government of the time announced a deal to purchase it costing the taxpayer extra billions (Déjà vu with the income trusts?). The tax was supposed to be removed when Petro-Canada was paid for, and fuel was supposed to be cheaper because of a state owned oil company. Neither happened. Someone got rich, but it wasn’t the Canadian taxpayer.

Quote from http://www.agr.gc.ca/itpd-dpci/english/trade_agr/fta.htm “The Canada-United States Free Trade Agreement (FTA) came into effect on January 1, 1989. The FTA provided for the gradual elimination of tariffs and reductions in non-tariff trade barriers on goods. On January 1, 1998, all tariffs on Canada and U.S. origin goods were eliminated, with the exception of a limited number of over-quota tariffs associated with tariff quotas on some agricultural products. These tariff quotas replaced earlier non-tariff measures and were implemented by both the U.S. and Canada in 1995 as part of the outcome of the Uruguay Round of multilateral trade negotiations. The Agreement also incorporated more effective dispute settlement processes.” Endquote

I guess some would like to argue that the unlimited ability to impose tariffs is a good thing, but simple economics has shown that tariffs hurt the country imposing them as well as the tariffed country. Case in point, the great depression of the 1930s.

While dispute settlement processes aren’t foolproof, they’re still better than none at all; especially with the Liberal government badmouthing Americans at every opportunity, for not so cheap political gain, at our expense.

[cowman]

Well Farm Ranger pretty well said it all? I rest my case.

[farmers_son]

Have you noticed that we are not selling cows to the Americans at the world price?

Obviously NAFTA has benefited the oil industry but that does not translate into benefits for farmers. I stand by my comments that NAFTA has not benefited primary agricultural producers. Canadian farmers in general are worse off after NAFTA than before.

Farmranger, some facts…

Since NAFTA Canadian farm debt has doubled while average Realized Net Farm Income fell 5% every year.
Average per farm debt in the US in 2003 was Cdn$113,402, average per farm debt in Canada in 2003 was Cdn$199,024.
Per farm income in the US in 2004 was Cdn$ 43,178, per farm Net Cash Income in Canada was Cdn$24,606.

Since NAFTA Canadian agricultural exports have continued to expand sharply, but Canadian net farm income from the marketplace has plummeted to record lows and has been negative five of the last six years. The beneficiaries of this trade has been American multinational corporations, not the primary producer.

If you are talking oil and gas, sure NAFTA has been good. But if we are considering agriculture we have to consider that maybe NAFTA has not been so good. The border is still closed to OTM live cattle and beef and trade barriers still exist regarding the trade of UTM live animals and beef. And for what good reason? Why are our NAFTA partners still blocking our cattle when they have had their own domestic case of BSE?

The oil and gas industry is quite capable of looking after itself but there is no reason cattle producers should be defending a trade agreement because it has been good for the energy sector. Where is the trade agreement that will see Canadian cattle producers enjoy record high prices? Where is a trade agreement that will see grain producers enjoy record high prices.

When prairie farmers remember the good old days those days are before NAFTA. Sure it is great that Alberta has a vibrant oil and gas industry but no one, and I mean no one, can say that our agriculture is vibrant. We get hammered by our U.S. NAFTA partners every single day whether we are trying to sell grain or cattle.

[FarmRanger]

Well f_s, if it was just the free trade agreement that was wrecking the price of our cows, I’d agree with you. Remember BSE, and your beloved Liberals who shot us in the foot with their bogus banning of Brazilian beef for the same reason our cows are being banned in the U.S. right now. We can’t even legitimately take the high road right now because of it. And the fact was, it was only because Chretian wanted to protect his buddies down at Bombarier that he sacrificed the cattle industry. Another fact - it’s not a tariff that’s keeping our cows out of the U.S. right now.

Sure, it’s pretty obvious that the rest of us in agriculture aren’t exactly raking in the bucks right now either. How do you link the cause to the free trade agreement? How has removing tariffs to agricultural goods resulted in increasing debt and lower incomes for Canadian farmers? Did Canadian (non-supply managed) average commodity prices fall more than average world market prices? Spouting (unreferenced) statistics with no argument as to why they are caused by free trade doesn’t exactly convince me you’re right. You may as well tell me that solar flares and UFO landings lowered farm income.

[farmers_son]

While I happen to agree with you on Brazil that has nothing to do with NAFTA. And you are correct to say it is not a tariff that is restricting access for our cattle and beef to our NAFTA trading partner. It is a non tariff trade barrier that is not science based.

I am not an economist. I can only offer my observations and opinion. The farm situation may have, probably would have, grown some worse without NAFTA. Perhaps NAFTA made no difference at all but the same could be said for the oil and gas. Why would you believe NAFTA benefited oil and gas as that industry boomed after NAFTA but cannot accept that NAFTA may not have benefited agriculture if agriculture in Canada declined from pre NAFTA days.

It is not solar flares to recognize that it is almost three years since BSE was discovered in Canada and still trade in cattle and beef has not returned to normal. It has been two years since BSE was discovered in the U.S. yet trade in live cattle has not returned to normal. The U.S. has acknowledged that they have BSE since last June too yet trade in live cattle and beef has not returned to normal. Japan has resumed trade in beef with both the U.S. and Canada yet our trade with the U.S. has not returned to normal.

It is not UFO sightings to recognize that since NAFTA the U.S. has placed tariffs on Canadian wheat where before NAFTA there was no tariff or very little. It is not UFO sightings to recall that the U.S. placed countervails on Canadian live cattle entering the U.S. for a period of time before that trade action got shot down in U.S. courts. Hogs have been threatened too. Off the top of my head I would suggest that every major Canadian agricultural commodity that is exported to the U.S. in significant volume has been the target of trade harassment by the U.S. since CUSTA/NAFTA came into effect.

I can only offer my opinion to suggest that the U.S. would not have taken these trade actions against Canadian agricultural exports if they did not have unrestricted access to Canadian oil and gas. I can only offer my opinion that before NAFTA our oil and gas provided a dispute settlement mechanism that worked faster and more effectively to see fair trade took place between Canada and the U.S. I can only offer my opinion that Canadian agricultural producers are vulnerable to these trade actions by the United States and that since NAFTA the situation has grown worse not better. If you want to say that is solar flares and UFO sightings go right on ahead. But I contend the situation of the Canadian primary ag producer has worsened as a result of NAFTA not improved.

[FarmRanger]

I would argue that agriculture would be even worse off with no NAFTA agreement. Have our commodity prices dropped more than the world price? At least we have a close market with less market restrictions than we’d likely have without NAFTA. The Americans quite correctly don’t purposely try to make themselves look bad internationally and going against the spirit, if not the lettering of the free trade agreement does make them look bad.

On the other hand, what if there was no NAFTA? If my neighbor called me a “bastard” and made cheap shots at my expense to try to make himself look good, I wouldn’t deal with the jerk anymore than I HAD TO either.

Bashing the Americans over Kyoto since our signing on, is hypocritical and disingenuous at best. We’ve increased greenhouse gas output about twice the percentage that the Americans did over the same time period. They’ve actually taken measures to do something, while the Liberal’s solution is to exhaust more hot air in Ottawa and write penalty cheques to 3rd world countries like China who don’t have to meet any emissions restrictions(and just burn the fuel we won’t be able to use). Martin’s cheap shots (and that is certainly not the only one) obviously don’t have be true, ethics don’t appear to factor into Liberal decisions, and the main stream media never seems question his verbal diarrhea.
Cheap cows is just one example of the damage inflicted, the cost being borne by the Canadians he claims to love. The more the Liberals damages American market relations, the more commodities we’ll have to ship on expensive ocean freighters with Bahamas flags.

It takes leadership to build bridges between countries, any idiot can knock them down.

[cowman]

farmers son: Without NAFTA we would have a situation where the Liberal government could put an export tax on our oil and gas to the detriment of Alberta? They could legislate that we would have to sell our resources at a cheaper price to eastern Canada than what we could get in the States? In other words the NEP? Thankfully NAFTA prevents them from doing this. Why should a Liberal government care one rip about what happens in Alberta...we don't vote for them? Probably also explains their less than robust attempt to get the border open?
I think you should remember that compared to some parts of the country you as an Alberta ag producer have quite a few advantages? A better CAIS deal, better crop insurance options, better calf set aside, better transition program for cattle, no provincial sale tax, cheaper income tax, $400 extra bucks in your pocket...and on and on? The money to pay for these goodies comes from the revenues generated by gas and oil? How many times has Saskatchewan told their producers they just can't afford the programs Alberta has?
We have these revenues because we have access to American markets guaranteed through NAFTA! The eastern Liberals can't shut down our markets for their benifit anymore? You should thank Brian Mulrooney everytime you get a provincial government check in the mailbox!
Lets not forget that it wasn't the USDA that dragged its feet on getting the border open? R-CALF has challenged the whole process through the courts? They have in fact delayed the process a lot and the USDA has no choice but to go through the legal hoops to get this done? That is just the legal situation down there.
In the big picture we'll do okay. The border will be open to cows this year hopefully and we'll come out of this in a strong position? I would think we will have better solutions in both countries to solve these sort of problems.