Smith, Anne M.

Smith, Elwin G.

Young, Douglas L.

English

Research Papers in Economics

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3rd Quarter 2005 • 20(3) CHOICES 207
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The Sweet Smell of Subsidies Revisited
By Doug Young, Elwin Smith, and Anne Smith
For a given region, annual and perennial cropping deci-
sions often depend on relative prices and commodity sup-
port policies. Given that the United States and Canada are
major traders in agricultural products, relative prices in the
two countries should be similar and track over time. Dif-
ferences in cropping practices along the border might then
be attributed to different agricultural policies. A stark dif-
ference in land management along a small segment of the
border has been used in the popular press as proof that
U.S. wheat subsidies have encouraged the conversion of
rangeland into annual cropping of wheat to collect govern-
ment payments (see quote in side box). Harper’s Magazine,
where the quote appeared, with a circulation of over
200,000, is the oldest continuously published monthly
magazine in the United States and addresses current politi-
cal and cultural issues for a sophisticated readership. A sat-
ellite photo in the Harper’s article captured a small section
of the border area with parts of Hill County, Montana to
the south and southeast Alberta to the north (Figure 1).
The Milk River (enhanced in turquoise) snakes across the
border (solid white horizontal line) toward the southeast.
The false color composite Landsat 7 satellite image shows
a solid mosaic of wheat fields south of the border and
mostly unbroken grassland to the north. The solid blue-
grey areas represent rangeland and other uncultivated
land. The rectangular strips are fields in annual cropping.
The red strips are green vegetation, primarily spring
grains. The yellow and brown rectangles are mature cere-
als; some have been harvested. The blue-green rectangles
are fallow. The cross-hatching overlay on the photo indi-
cates areas where soil or other site factors limit cropping as
discussed later. This short segment of the border seemed to
provide irrefutable evidence that wheat subsidies in the
United States have encouraged more intensive wheat pro-
duction on marginal lands south of the 49'th parallel. 
Why does the Landsat image of a small border region
in Figure 1 depict such contrasting land use? Are there
other factors beyond imputed policy differences which
contribute to the dramatic difference in land use along this
small segment of the Canada-U.S. border? Detailed inves-
tigation of the small area captured in the image considers
two additional aspects, land quality and land ownership.
Land capability class information was superimposed
on the Landsat image (Government of Canada, 1968;
USDA-NRCS, 2004; USDA-NRCS, 1997). Land capa-
bility classes defined as having “severe limitations to crop-
ping” by both countries are crosshatched in a northeast-
southwest direction. The limitation along the Milk River
is steep slopes and surface rocks. The major limitation to
cropping in the remainder of this post-glacial landscape is
soil-related. These can include undesirable structure, salin-
ity due to wetness, low moisture holding capacity,
restricted rooting, and low permeability. The areas without
crosshatching are classified as cultivable provided appro-
priate conservation practices are imposed. 
The cross-hatched area in Figure 1 shows that land
with severe limitations to cropping dominates the Cana-
dian side of the border (Government of Canada, 1968).
There are small pockets of cultivable land near the border
in Alberta, but most of this land is used as rangeland. The
isolation of these cultivable pockets might discourage
cropping if all surrounding land is managed for livestock
grazing. On the U.S. side of the border, most land is suit-
able to annual cropping and is indeed cultivated. As
“...[the boundary] remained invisible until the 1930's, 
when [U.S.] federally subsidized wheat made it real. ...Pol-
itics created the border; subsequent differences in agri-
cultural policy created the two landscapes...Albertans 
leave unproductive land in prairie for grazing. But for 
decades Hill County [Montana] farmers have grown the 
only major subsidized crop viable here--wheat--on every 
inch of available land, and here’s why: When world mar-
ket prices fell below a certain mark, the U.S. made up the 
difference based on historic yield rates of the acreage 
each farmer enrolled in the subsidy program. Farmers, 
therefore, had no incentive to diversify or rotate crops...” 
(Manning, 1996, Harper’s Magazine).208 CHOICES 3rd Quarter 2005 • 20(3)
observed in Figure 1, pockets of land
with severe limitations to cultivation
in Montana occur along the Milk
River Canyon, in some strips run-
ning from the northwest to the
southeast, and in a larger area around
Wild Horse Lake, the large lake in
the northeast corner of the Montana
section adjacent to the border
(USDA-NRCS, 2004). While some
of the severely restricted land in
Montana, especially that along the
Milk River Canyon, is not cultivated;
Figure 1 shows several pockets of
cross-hatched poorer quality land
adjacent to cultivable lands that are
in crop production. Most of the poor
quality land near Wild Horse Lake is
also cultivated. 
Land quality differences north
and south of the border explain some
of the general differences in land use
observed in this small border region,
but land quality is not the defining
reason. The razor’s edge contrast
requires further explanation. There is
a key coincidental difference in land
ownership along the border in this
region caused by differing land own-
ership and land use policies. North of
the 49'th parallel, the province of
Alberta owns the majority of the land
in this image and these public lands
are managed only for leasing to live-
stock grazers (AAFRD-PLD). Some
of the area was cropped in the 1920s,
but cultivation was abandoned and
families relocated during the 1930s
Dust Bowl era. The land eventually
reverted to the province and was con-
verted to public grasslands. Gray
(1967) provides a vivid description of
erosion, land abandonment, and
severe social stress in Canada’s south-
ern prairies during this era, and of
Figure 1. Landsat 7 ETM+ false color composite satellite image of west-central Hill County, Montana and southeastern
Alberta. Image acquired July 22, 2000. Red indicates growing vegetation, brown-yellow is mature or harvested cereals,
blue-green rectangles are fallow, and large blue-grey areas are rangeland. Land with severe limitations to cropping has
white cross-hatching and land without severe limitations is not cross-hatched.3rd Quarter 2005 • 20(3) CHOICES 209
the government’s vigorous responses,
including conversion of abandoned
cropland to community grazing
lands. 
Hill County, Montana, in con-
trast, has more land suitable for culti-
vation and private farmers have
owned and farmed most areas since it
was settled in the early 20'th century.
Most of this land was settled under
the Homestead Acts which granted
farmers title to public land if they
satisfied specified development con-
ditions (Malone, Roeder, & Lang,
1996). As on the Canadian side of
the border, settlers in Hill County
and other areas of Montana suffered
intense economic hardship due to
declining prices which followed
World War I and, especially, the
recurring severe droughts of the
1930s. In many cases, land vacated
by financially stressed farmers was
held by counties for a period due to
tax delinquency, or by banks due to
foreclosure. However, on the Mon-
tana side of the border most land
vacated by farmers due to natural and
economic forces returned to the mar-
ketplace; however, some land was
placed in the National Grasslands
Program during the 1930s. Most of
the National Grasslands were eventu-
ally sold to farmers (Knight, 1991).
The resale policies of counties, banks,
and the National Grasslands Pro-
gram, and the generally better quality
land on the U.S. side, contributed to
its return to private ownership. Con-
sequently, the razor’s edge difference
in land use along the international
border emphasized by Manning
(1996) is primarily due to national
differences in land ownership and
land use policies, rather than wheat
support policies. Continuing land
ownership and land use policies
maintain the status quo. 
National farm commodity sup-
port programs are important, but
they are not the sole determinants of
land use. Land quality differences
and historical policies influencing
land ownership and use can play a
dominant role. Certainly, some mar-
ginal areas have likely converted to
and remained in grain production--
rather than grazing--in the North
American plains due to commodity
subsidies, subsidized crop insurance,
and transportation subsidies. How-
ever, generalizations about policy-
induced cropping diversity cannot be
inferred from a snapshot of one small
segment of the landscape. Coinci-
dental differences in natural fertility,
topography, and institutional policies
influencing ownership and use can
sometimes explain visually dramatic
differences in land use.
For More Information
Alberta Agriculture, Food and Rural 
Development. Public Lands Divi-
sion (AAFRD-PLD). (undated). 
Map of Public Lands in the Leth-
bridge District. Unpublished.
Government of Canada. (1968). Soil 
capability for agriculture: Canada 
land inventory, foremost 72E. 
Ottawa: Queen’s Printer.
Gray, J.H. (1967). Men against the 
desert. Calgary: Fifth House Pub-
lishers.
Knight, D.H. (1991). Congressional 
incentives for landscape research. 
Bulletin of the Ecological Society of 
America, 72(4), 195-203.
Malone, M.P., Roeder, R.B., & Lang, 
W.L.(1976). Montana: A history 
of two centuries. Seattle: Univer-
sity of Washington Press.
Manning, R.(April 1996). The sweet 
smell of subsidies: The grass may 
be greener in Canada, but U.S. 
farm policy spreads the green 
around. Harper’s Magazine, pp. 
64-65.
Smith, E.G., & D.L. Young. (2003). 
Cropping diversity along the 
U.S.-Canadian border. Review of 
Agricultural Economics, 25(1), 
154-167.
U.S. Department of Agriculture, 
Natural Resources Conservation 
Service (USDA-NRCS). (2004). 
Soil Survey Geographic (SSURGO) 
database for Hill County, Mon-
tana, 2004.    Available on the 
World Wide Web: http://Soil-
DataMart.nrcs.usda.gov/ Veri-
fied 2/14/05.
U.S. Department of Agriculture, 
Natural Resources Conservation 
Service (USDA-NRCS).  [Land 
capability class definitions] 
(1997). Available on the World 
Wide Web: http://
www.nrcs.usda.gov/technical/
land/meta/m6175.html Verified 
2/14/05.
Doug Young (dlyoung@wsu.edu) is
professor, School of Economic Sci-
ences, Washington State University,
Pullman, WA. Elwin and Anne
Smith are bioeconomist and remote
sensing application specialist, respec-
tively, Agriculture and Agri-Food
Canada, Lethbridge Research Centre,
Lethbridge, Alberta, Canada. Part of
this article is condensed in popular
form from a more extensive statistical
comparison by the first two authors in
the Review of Agricultural Econom-
ics, Vol. 25, No. 1, 2003. The satel-
lite image and associated analysis,
which receive central attention in this
manuscript, were not included in the
RAE article.

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