AGRICULTURAL POLICY IN NORTH AMERICA: PAST, PRESENT AND FUTURE

Hartley FURTAN (University of Saskatchewan, Canada)

Agriculture policy took a major change in direction in the mid 1990s. In the United States the passing of the FAIR Act was seen as a start to move agriculture toward a free market. Target prices were discontinued and acreage set-aside was phased out. In Canada, the Western Grain Transportation Act was removed, which ended the largest subsidy to grain producers. However, by 2002 many of the subsidies have been replaced in the United States. The 2002 Farm Bill has increased payments to US producers. The government of Canada has not reduced tariffs on dairy, poultry and eggs and has started to increase subsidies to grain producers. What caused the change in direction in farm policy?

I argue that agricultural economists have under estimated the role of rent seeking by producers and agribusinesses in both countries. In order to understand farm policy it is necessary to incorporate the rent seeking activities of the various players in the food chain. It is unlikely that protection for agricultural producers will end any time soon in either Canada or the United States.