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economy lab

Danny Johnston

There are few places in the world where farming is a truly free market activity -- least of all the United States.

A new report finds that $62 of every $100 that U.S. farmers earn comes from one level of government or another. In 2009, that added up to a staggering $180.8-billion (U.S.).

"The U.S. continues to provide massive -- sometimes unreported to the World Trade Organization -- support at the federal, state and local government level to U.S. agriculture," said Ottawa trade consultant Peter Clark, who wrote the report for the Dairy Farmers of Canada.

The report identified a number of indirect subsidies to U.S. farmers via programs for irrigation, export credits, nutrition food aid and loan guarantees.

Nearly $20-billion of the $180.8-billion flows to U.S. dairy farmers, or fully half of their revenues, according to Mr. Clark.

He concludes that global and regional trade talks are doomed to failure as long as "rampant, misclassified and unreported domestic" subsidies persist.

To be fair, Canadian farmers also enjoy massive subsidies -- from government, and in the case of dairy farmers -- from consumers. Domestic producers of milk, cheese, eggs and chickens are protected behind a high tariff wall that inflates the price of imports, indirectly pushing up the price of products produced in Canada.

Canada has been shut out of the Trans-Pacific Partnership talks, apparently because it refuses to put these "supply managed" sectors on the table. The United States, Australia and New Zealand have long pushed for Canada to dismantle its tariff regime.

Over the past 20 years, direct payments to farmers by the federal and provincial governments have tripled, and total spending on agriculture now tops $8-billion (Canadian) annually.

The bottom line is that millions of farmers worldwide would be out of business without rich government support.

We all pay for it, one way or another. Have a glass of milk.