THE WTO DAIRY EXPORT DECISION: WHAT NEXT FOR GROWTH IN THE CANADIAN DAIRY INDUSTRY

The Canadian dairy industry received the most unwanted of all presents just prior to Christmas 2002- a clear loss on the dairy export issue upon final WTO appeal. This leaves the Canadian dairy industry with protracted challenges if it is to grow in the future. It appears to be the final chapter in the long running WTO-Canadian dairy export saga, which we first analyzed in a George Morris Centre Special Report about 3 years ago. Now the challenges associated with the implications of the WTO decision must be faced. The purpose of this paper is to outline the basic points advanced by Canada, and by New Zealand and the US in the WTO appeal, and to illustrate the importance of the WTO decision in the context of growth in the Canadian dairy industry. Finally, the apparent challenges laid down by the WTO decision are analyzed in the context of needs for new marketing research to reform the milk marketing system.International Relations/Trade,

TO TELL THE TRUTH ON FARM SUBSIDIES

There has been a lot of public discussion about farm incomes in Canada and the role of agricultural subsidies. Lawrence Solomon of the Urban Enterprise Institute has been at the forefront of these discussions. His argument is that as a result of exorbitant subsidies, the government is sponsoring the industrialization of agriculture, which threatens the family farm at untold environmental costs. This is a surprising line of reasoning, given that the more common argument is that subsidies misallocate resources in such a way that smaller, less efficient farms can persist when they otherwise couldn't, and that subsidies cause farmers to more intensely farm an acre of land. In fact, it is primarily the small farm advocates that argue for more subsidies. In any case, the significant claim made by Mr. Solomon is that government subsidies exceed the value contributed by agriculture to the Canadian economy. This claim is patently false, and only serves to confuse the public's understanding of the current income situation of Canadian grain and oilseed farmers. This misconception must be corrected.Agricultural and Food Policy,

Firm-level Forces Underlying Concentration in Agriculture

Although industry concentration in agriculture has a long history, the analysis of concentration and normative recommendations on it are a source of ongoing controversy in agricultural economics. The received approaches to the study of industry concentration are based on the structure-conduct-performance model or on the “new†empirical industrial organization literature which explicitly models competitive behaviour. However, each of these approaches wants for analysis of the specific firm-level decision processes that produce its predicted outcome. An alternative approach is to analyze the internal motivations for vertical and horizontal integration that exist within firms and that ultimately result in market concentration. From this perspective, market concentration results from more than simply competition among firms for economic rents.Environmental Economics and Policy,

FIRM-LEVEL FORCES UNDERLYING CONCENTRATION IN AGRICULTURE

Agribusiness,

IMPACT OF THE APF-BUSINESS RISK MANAGEMENT PROGRAMS ON ONTARIO AGRICULTURE

Risk and Uncertainty,

CANADIAN DAIRY EXPORT SUBSIDIES AND THE WTO APPELLATE DECISION: DAIRY MARKET EXPANSION IN LIMBO

The dairy industry in Canada was turned on its ear by the release of the WTO decision last fall that Canada's Special Milk Classes constitute an export subsidy. Dairy processors fear the loss of established export markets. At the same time, the decision threatens the role of supply management authorities as the sole marketers of farmers' milk. Will farmers market milk for export directly to processors? What consequences could renewed marketing board involvement in exports have in the international trade arena? The industry is preparing for conflict as it reorients itself in the international market. That conflict is embedded in proposals made by some of the milk marketing agencies and by some processor members of the National Dairy Council(NDCC). Because of the immediate importance of this case and the issues it spawns, the George Morris Centre is releasing this special report. It addresses the following topics: - The nature of the challenges to the Special Milk Classes scheme - The WTO decision Implications for the dairy industry - Marketing boards' proposal for export pricing reform - NDCC proposal for export pricing reform - Evaluation of the alternativesInternational Relations/Trade,

CAIS Program Structure and Performance: Evidence from Ontario

The Canadian Agricultural Income Stabilization (CAIS) program was approved in late 2003. It now serves as Canada’s sole farm safety net program, having replaced the Net Income Stabilization Account (NISA), Canadian Farm Income Program (CFIP), and provincial companion programs. However, the mechanisms of operation and actual performance of CAIS in providing stability to farm incomes are relatively unknown. In particular, to develop expectations of future farm costs and returns and to determine their support for CAIS as the sole safety net under the federal-provincial Agricultural Policy Framework (APF), farmers and their representatives need a concrete understanding of how CAIS can be expected to work relative to its predecessors.Agricultural and Food Policy,

THE ONGOING BSE CRISIS: PERSPECTIVE ON THE SCIENCE, THE LOGIC OF REGULATION, AND FOOD SAFETY

Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety,

AN INCOMPLETE CONTRACTS MODEL OF DAIRY ENTERPRISE ORGANIZATION

An empirical incomplete contracts approach is used to analyze optimal integration schemes in a Minnesota dairy farm supply chain that transfers feed and manure. The results show that the forage enterprise is the constraining factor. The preferred ownership structure is for a forage producer to own cropping and dairy assets.Industrial Organization, Livestock Production/Industries,

MINNESOTA SHIPPERS AND STATE TRUCK SIZE/WEIGHT REGULATIONS: A REPORT SUBMITTED TO THE MINNESOTA DEPARTMENT OF TRANSPORTATION

Motor carriers face a number of regulations in carrying on their business. Trucks are typically regulated as to their length, width, height, load (in terms of gross vehicle weight), and axle weight. The purpose of these regulations is to promote public safety and protect the quality of road surfaces. Highway regulations affecting motor carriers are primarily a state-level responsibility in the United States. Minnesota has its own set of truck size and weight regulations as do neighboring states and Canadian provinces. Because states set their own regulations on truck size and weight, the commercial trucking industry measures the appropriateness of Minnesota regulations to a large extent based on their congruence with those in adjacent states. The object of this study is to determine the extent to which major shippers, the clients of commercial motor carriers, feel constrained by truck size and weight regulations in Minnesota and whether their needs are being met.Public Economics,