Saturday 11 June 2011

Food superpower

Dan Gardner's piece in The Ottawa Citizen contrasts Canadian and New Zealand agriculture:
“Look at us,” [Agriculture Economist] Larry Martin suggests, “and look at New Zealand, sitting out there in the middle of the ocean, not close to anything.” In the world of food, New Zealand is a “superpower.” And yet, thanks to daring reforms in the 1980s, New Zealand’s farmers owe almost none of their income to government support. “You think, ‘if we could do even half of what they have done wouldn’t we be in great shape?’”

Good for us. Good for the world. If only the politicians would talk about it.
I'd noted before just how much bigger New Zealand is than Canada in dairy exports:
For most things, if you want to get a ballpark comparison from NZ to Canada, New Zealand is about order of magnitude smaller. Not on dairy though. 2007 dairy exports for New Zealand: $6.3 billion (about $4.5 billion Cdn). On that one, we're more than an order of magnitude bigger than Canada [at $255 million Cdn], or two orders of magnitude bigger than you'd expect given everything else about the two countries.
How to get out of the mess? I'd suggested paying the dairy farmers off. But New Zealand liberalized without that kind of compensation. Instead, and I hope Seamus can help me out on the timing on this one, I think the farmers received other forms of liberalization as compensation, including freeing up the ports from pretty heavy union control.

As much as western grain farmers might rejoice were Canada's newish majority Conservative government to put in place the kind of legislation* that would break the Longshore and Warehouse Union, I doubt it would do much for the Quebec and Ontario dairy farmers who are the ones that really need to be bought out.

*Here's an excellent model; here's a perhaps less ambitious but still reasonable alternative.


  1. I think the farmers received other forms of liberalization as compensation, including freeing up the ports from pretty heavy union control."

    Not immediately - one of the reasons the ag-sag of the 1980s was so bad was that farmers were dragged into the real world without similar reformation in other parts of the economy eg with labour laws and tariffs. Some freeing up started in the 80s but a lot of it didn't happen until the early 90s.

  2. On timing, the government devalued the NZ dollar by 20% (fixed exchange rate at the time) immediately on taking office in July, and so this was a big gain to farmers put in place a few months before the budget that implemented the removal of farm subsidies. As homepaddock points out, much of the other changes, such as phasing out tariffs were announced early but took time to implement, and the labour market changes took six years and a change of government to implement.

    I think the real reason for Federated Farmers to not fight the liberalisation and instead lobby for other changes was that the 84 Labour government signalled quite early that they were playing a different kind of politics and traditional lobbying for special favours was not a productive route to anything. Given that Labour was not traditionally the party that favoured the farming sector, it was pretty clear that there was no mileage to be gained from lobbying against liberalisation.

    Even so, it still amazes me how enlightened the FF leadership was at the time.