The Farm Crisis and Corporate Power

April 25, 2001

OTTAWA--Canadian farmers are struggling with near-record low prices and many face bankruptcy unless the current crisis is adequately addressed by the federal and provincial governments. But governments are mistakenly blaming Canadian farmers' plight on the domestic agricultural subsidies supplied to farmers in other countries, primarily in Europe. They are ignoring the real cause of the crisis, which is the enormous imbalance in market power and income between the big agribusiness corporations and the family-owned farms.

This is the main finding of a new CCPA study, "The Farm Crisis and Corporate Power." Written by Darrin Qualman, executive secretary of the National Farmers' Union (NFU), the study bluntly states that "the market is failing to return a fair and adequate share of the consumer dollar to farmers. And it is failing to allocate to farmers a reasonable return on labour, management and equity from our agri-food system's huge revenue stream."

The study points out that a small number of large corporations dominate every link in the food chain, including seed, fertilizer, herbicides and pesticides, fuel and transportation, farm machinery, grain collection, beef-packing, food processing, food retailing, and restaurant chains.

"At many of these links, market power is close to monopoly levels," the study says, "enabling these firms to extract extremely high profits."

Using "return on equity" as an accurate criterion for measuring net income, the study found that the five-year average return on equity rate for farmers is just 0.7%, while for agribusiness corporations the rates range from a low of 5% to as much as 40%.

"Tiny returns are unique to farmers," says Qualman. "The other players in the food chain reap huge profits...Could it be that farmers are making too little because others are taking too much?"

Former NFU President Nettie Wiebe, commenting on the study, says that "it slices through the propaganda and market ideology with a fine edge of facts and analysis exposing the real problems. This study is not just of interest to farmers and economists or to anyone hoping to learn more about what is happening in agriculture, but also to the rest of us who buy, eat, and enjoy food."

Attached Documents: