Hello.
My name is Kevin Wipf. I'm the executive director of the National Farmers Union, and we surely welcome this opportunity to come here today and present to you.
The NFU is a direct membership, nation-wide organization made up of farm families. It was founded in 1969, and chartered in 1970 under a special act of Parliament. The NFU and its predecessor organizations have always worked to implement policies that help to ensure that agriculture is socially, environmentally, and economically sustainable. While NFU members produce a wide range of commodities, we believe the problems facing farmers are common problems and that producers of various commodities must work together to advance effective solutions. The NFU believes that the pursuit of only individual self-interest leads inevitably to self-destruction.
For our membership, Growing Forward represents a concern. We basically see it as a continuation, apart from minor details, of an agriculture policy that's actually been carrying forward since the 1970s. A lot of it has to do with the idea of having fewer farmers in the countryside, and allowing input suppliers and big agribusiness companies to get bigger and bigger and actually to grow to dominate the industry.
We feel that if we're going to talk about BRM, one of the things that must be addressed is this problem of farmers not being able to draw much income, if any income at all, from the market, especially since the late 1980s. One of the things that we see is that while farmers have been extremely effective at increasing production and the value of their production, and while we have been extremely effective at increasing exports, it's an incredible paradox to us that farm income has essentially remained flat. It has even disappeared into negative territory in many of the recent years.
One of the questions that we have about business risk management is what is its purpose. In the mid-eighties we saw, what I'll call for now, farm assistance payments increase to over $3 billion. There was an effort by government at that time to really pursue trade agreements and start making the industry more competitive by increasing exports. There was an effort at the time to try to decrease farm assistance payments in what is now called BRM. So they dropped under $1 billion by the mid-nineties, but then something happened. Farm assistance program spending went up again in the late nineties, and it has increased. It actually surpassed $4 billion in the early 2000s. I think it was over $3 billion last year.
Our question is why do we have these programs that are actually about taxpayers transferring money to farmers who can't draw income from the market? Why isn't this business risk management, and why isn't the discussion today about why farmers aren't actually able to draw income from the market?
The other phenomenon that's been happening—and this doesn't fall into the category of business risk management—is that farmers have actually been engaging in their own business risk management, if you will. Off-farm income has actually become a major portion of farm income. It's being calculated in and counted as farm income at times, when in fact it's a form of self-subsidization of your farm operation. Even the largest farms are counting on as much as 40% of their income coming from off-farm income. The question is why are farms not able to draw income from the market. We believe we need to start focusing on programs and policies that will actually tackle this problem.
One of the things that we've seen—and it's common knowledge, as farmers from all farm groups will talk about it—is that farm returns from a box of corn flakes have essentially been flat, yet retail prices are increasing. Why is that? Why aren't farmers seeing an increase in pay like everybody else? A lot of the corporations that are controlling the input and retailing sectors are realizing record profits, but farmers are not.
One of the things we've seen in BRM, as we call it now, is an incredible investment of time and energy by governments and farm groups in trying to work out the details of these programs without actually addressing the bigger problem at hand, why farmers aren't able to draw adequate, fair incomes from the market. We believe that is what you would see in a healthy industry.
In fact, when we run into trade problems, like we saw with BSE, a lot of the questions become ones about the border. Well, what about the fact that perhaps there was a hypersensitivity in the industry because we were too dependent on one trade partner for us to actually deal with economic hardship when it came? Then, again, the question was thrown back of trying to figure out farm assistance programs that would solve that problem, without actually tackling the heart of the problem itself.
I'll leave my comments there.