Internationalization and Canadian Agriculture: Policy and Governing Paradigms (review)

Author Grace Skogstad, a political scientist at the University of Toronto, is one of the few non-agricultural economists who consistently studies and writes about agricultural policy in Canada. Her work is always refreshing because she can stand back and take a broad view of policy development in the sector. Economists do not tend to write books and as a result information on agricultural policies in Canada is scattered throughout a large number of sources. While I do not think it was Professor Skogstad’s intention, she has in the process of putting forth her thesis collected together in one convenient (and readable) place the history of agricultural policy in Canada since the Second World War. There has long been a need for such a book, and I will suggest that every one of my new graduate students read it. It provides a great way to “get up to speed” on how Canada ended up with its peculiar mix of agricultural policies, who the major stakeholders are, and how the policy-making process works.

As the title suggests, Professor Skogstad is interested in the effect that internationalization—latterly globalization—has had on agricultural policy-making in Canada. Her approach is to examine five major policy concerns in the agri-food sector: (a) low and fluctuating farm incomes, (b) the international marketing of grain—the Canadian Wheat Board, (c) supply management in dairy and poultry, (d) food safety, and (e) the regulation of genetically modified crops. Broadly speaking her thesis is that once established, policies tend to be “sticky”—they remain in place until there is a major paradigm shift. She examines the five policy areas, which have had very different outcomes, to see if changes in the international sphere have had sufficient influence to cause a paradigm shift.

She suggests that there are three broad paradigms: (a) the state assistance paradigm based on farming being an exceptional sector worthy of subsidies or other forms of income support; (b) the market liberal or competitiveness paradigm; and (c) a multifunctional paradigm whereby farms provide, in addition to agricultural output, a number of rural and environmental amenities that they are not compensated for due to market failures—and in which government intervention is justified on the basis of correcting the market failures.

The market liberal paradigm is set up as the straw man, and I am not convinced it is an entirely credible paradigm in the case of Canadian agriculture, although it may have taken hold in a few places such as New Zealand. Leaving aside multifunctionality for a moment, the issue in Canada, the United States, the European Union, and Japan is the degree of distortion that is acceptable. Policy interventions such as income support are not static, but dynamic. The types of policies that have been put in place in developed countries cannot accomplish their stated goals without ever-increasing budgetary expenditures (or rising relative consumer prices) and other externalities such as conflicts with trading partners. For example, the European Union’s Common Agricultural Policy, which was initially based on raising prices for farmers through import restrictions, set in motion a dynamic process that increased output substantially, leading to ever-expanding surpluses that required costly export subsidies. Large quantities of European subsidized exports led to direct conflict with US exporting interests. At some point these spiralling costs (both economic and political) had to be addressed. The subsequent scaling back of the degree of support is not evidence of an acceptance of the market liberal paradigm but represents only a reduction in support that entails to some extent a return to market mechanisms. One of the problems is that economists tend to use the competitive market solution as the benchmark against which to measure policy distortions, but this should not be taken as evidence of support for a policy paradigm based on market liberalism. Thus there has been a paradigm shift away from unconditional state assistance. This took place in Canada, as noted by Professor Skogstad, largely...