Winnipeg Free Press

Winnipeg Free Press (Newspaper) - June 18, 1981, Winnipeg, Manitoba Focus milk buyers pay producers Ottawa should startle some Consumers to learn that they Are pay ing million a year in higher prices or per family to support the Dairy Industry in Canada and that As tax payers they Are providing another million to Dairy Farmers. Those Are the figures presented by the economic Council of Canada in its report on government regulations a report requested three years ago by prime minister Trudeau and the 10 premiers and released earlier this month. As described by the Etc the Dairy Industry in fact All farm marketing boards represent but a Small part of the total Cost of government regulations. The transportation Industry for example places a much heavier Bur Den on the Economy. But farm marketing boards tend to be More controversial simply because More people Are More concerned with rising food prices. So the Etc report has stirred up something of a hornets nest. The report has already been attacked by the Cana Dian federation of agriculture with a vehemence that is perhaps indicative of the value of marketing boards to producers. Government intervention the Etc notes that both Federal and provincial governments intervene extensively in the agricultural sector through subsidies commodity support programs stabilization schemes crop insurance financing assistance Stor age freight assistance re search information testing Trade pro motion services and marketing boards. Direct Federal expenditures on Agri culture amounted to billion in fiscal 1978-79, and direct government pay ments comprising mostly Industrial milk subsidies accounted for Over 13 per cent of net farm income. But the report notes the most significant policy instruments Are not direct government expenditures but the Agri cultural marketing boards. There Are several different types of commodity boards. They Range from promotional boards such As the Alberta cattle commission which Are the stringent and merely impose a Small Levy on producers to finance their activities to Supply management boards which allocate quotas and de Termine output and thereby control entry into the Industry and Price. In Between Are negotiating boards such As Many fruit and vegetable boards Central Selling agencies such As fruit and vegetable boards and most hog boards and boards that regulate prices and output such As the Canadian wheat Board which influences output by setting delivery quotas and some provincial fruit and vegetable boards. Farm incomes up the Etc reports that agricultural boards have improved incomes for Farmers largely by helping to balance the age old problem of Many Sellers and few buyers of farm products. It is the Supply management boards which Are quite rightly the main tar get for the Etc s criticisms. Supply management was until the mid-1970s, confined to tobacco in Ontario and fluid milk in All provinces. Supply management of Industrial milk became effective in 1976. There Are now National Supply management boards with the Power to set provincial Levels of production for eggs turkeys and chickens. Commenting on milk and Dairy pro duts the Etc claims that fluid milk production peaked in 1965 and has declined slowly since. Fluid milk con sumption has not kept Pace with popu lation growth and except for some cheeses Yogurt and ice Cream manufactured milk products have also faced declining demand. Peter Thomson Ottawa editor since 1974, Canadian Dairy product prices have risen twice As much As those in the United states partly be cause of the removal of a Canadian fluid milk subsidy and partly because of the pegging of the Industrial milk subsidy in 1975, of the Industrial milk subsidy at per hectolitres. The Etc suggests that Supply management and assured pricing have made Canada s Dairy Industry less efficient. While milk yields per cow Are roughly comparable to those in other developed countries they lag by about 30 per cent behind . Yields and this difference has been widening. With yield and Price disparities widening Between Canada and the United states despite the substantial subsidies flowing to Canada s Dairy Farmers it is not surprising that the latter have been attracted to import controls to production limits and to administered prices to maintain stability in their the Etc report states. As the Supply management system works prices Are set administratively to provide higher prices for fluid milk and Are typically determined by for Mulas based principally on costs. Quotas set for fluid milk production exceed estimated demand by one Quarter or one fifth. Consequently fluid milk producers in meeting their quotas Are actually providing fluid milk plus some Industrial milk. Since fluid milk prices Are higher than for Industrial milk Access to this Market is desirable and fluid milk quotas have become valuable assets. Still a surplus of milk is being produced. The support prices for butter and skim milk powder have created a surplus of the latter which is then exported at a net loss while import barriers deny Canadian Consumers a Cess to lower prices. In general no direct subsidies Are paid on fluid milk and the gains that Are realized by producers derive mainly from higher prices. Supply management As a method of redistributing income is particularly attractive to legislators the report notes because there is no apparent costs to government or to taxpayers. Without present Dairy regulations Are expensive. The report says at least million a year is lost As a result of measured inefficiencies. The unmeasured costs Are Likely to be substantial As Well. In addition producers Benefit by Over million and Consumers lose about that amount due to regulated pricing and taxpayers incur a loss of Over million. The Council recommends extreme caution in authorizing further Provin Cial regional or National agricultural marketing boards with Power to control both output and prices and with the support of import controls. It also recommends that production quotas be gradually enlarged Over a five to 10 year period to enable quota values to fall to a reasonable level and that appropriate adjustments be made to the pricing policy of Supply managed commodities to allow Market Clearing of the expanded production. There Are numerous other recommendations All aimed at weakening Supply management and arbitrary if implemented there is no doubt that Supply management of food products would be ended in Canada. Not since Beryl plump re and the food prices review Board has the agricultural Community been so shaken by comments on Supply management. No wonder the Canadian federation of agriculture leaped into the fray in defence of Supply management. The key question or course is what is Likely to happen As a result of the Etc report. The Safe answer is for the moment nothing it is no secret that some very influential Public servants including privy Council Secretary Michael Pitfield Are strongly opposed to agricultural sup ply management. It can be assumed there will be no More commodity groups Given the Powers now enjoyed by producers of milk eggs broilers and turkeys. It is not that the Trudeau government is opposed to regulated production and pricing it is just that the Trudeau government is extremely sensitive to food prices and Public opinion and with a huge deficit does not have funds to throw to other commodity groups. In the future however As a result of consumer pressure there could be some reduction in Supply management p Owers of marketing boards. What has happened and is happening at a faster rate is that commodities such As fluid milk Are advancing in Price much faster than incomes. That is Why consumption is declining to the detriment of the health of the nation. As strains on the family budget grow the government will be pressed to pull some of the props from under Supply management schemes. The people who have cried so loudly to have Supply management and administered prices put in place will cry even More loudly As they discover that prices can be administered downward As Well As up and that there Are As the government already knows Many More Consumers than producers in the country. Dairy Industry costs per family for higher prices plus million in subsidies. Non proliferation efforts Are failing by Emest in nine a nation must find a Smirra it a panne. . I ___., by Ernest Conine los Angeles times Israel is taking a lot of flak for its preemptive air strike against a nuclear installation in Iraq and with some reason. Even Many friends of the Small jewish state wonder if the military Triumph will not prove to be a political disaster in terms of the corrosive effect on american support for Israel. Before coming Down too hard on the israelis for smashing a nuclear facility before it could be used to make atomic bombs for their intimidation or destruction however we should face an unpleasant fact Israel would not have Felt compelled to undertake its do it yourself non proliferation program if International efforts to head off the spread of nuclear weapons had not been so plainly failing. The nuclear non proliferation Effort such As it is is running out of time. Yet the Reagan administration shows Little sense of urgency about getting it on the track and the governments of most other nuclear supplier nations show even less. For years Many experts have said that unnerving As the balance of terror Between the United states and the soviet Union May be a deliberately planned nuclear attack by one on the other is unlikely. The greater danger is that some third world country will use nuclear weapons against a regional rival or foe. If the area involved is of strategic importance to the big Powers the ultimate result could be escalation into a global holocaust. Some background is in order. In order to develop nuclear weapons a nation must find a source of weapons Grade fissionable material either plutonium or highly enriched uranium. Neither exists in nature but both unfortunately Are closely associated with civilian research and nuclear Power reactors. Every reactor to one degree or another is a potential bomb factory. Diversion problem the Challenge has been to erect Safe guards to prevent nuclear materials allegedly committed to peaceful nuclear programs from being diverted to bomb making. The explosion in 1974 of a nuclear device by India using nuclear technology supplied by Canada for Only peace Ful purposes dramatized the fact that concern Over the spread of nuclear weapons was Well founded. At about the same time there was a worldwide Rush toward greater dependence on nuclear Power generation As a result of the Arab Oil embargo. The proliferation of nuclear Power stations around the world provided a convenient cover for any country that was Harbor ing ambitions to build nuclear weapons. In 1977, president Carter building on a foundation Laid by president Ford began seeking agreement among sup plier nations for tougher controls on global Trade in nuclear fuel and technology. Canada and Australia co operated. Carter had some Success with the West europeans. France for example backed away from plans to Supply nuclear reprocessing plants for Pakistan and South Korea. Basically however the existing anti proliferation Effort american and multilateral is not working. And developments in the Middle East and South Asia provide the Best Case in intended target of its prospective Rucle v a capability the compulsion for Jeru it has been obvious for years that Salem to launch a preemptive strike is Pakistan living under the threatening understandable Shadow of India was determined to join the nuclear club. The late prime minister Zulfikar Ali Bhutto once said that his country would have the bomb even if his people had to eat grass to get it. Pakistan has managed to obtain sensitive nuclear hardware from Western Europe from neutralise peace Loving Switzerland. As a result the pakistanis May be capable of Mak ing several nuclear bombs by the end of next year. India in turn is talking about cranking up its nuclear weapons pro Gram in response. Meanwhile Libya which provides material support to terrorist groups All Over the world is widely reported to be in the Market for an off the shelf nuclear Arsenal of its own. As for the research reactor bombed by the israelis near Baghdad it had been recognized As a nuclear proliferation threat for years. Yet France not ing Iraq s signature on the nuclear non proliferation treaty had gone through with the Sale of highly enriched bomb ready uranium. Italy sold the iraqis three hot cells suit Able for plutonium extraction. Before the israeli raid Iraq had the theoretical possibility of fabricating its first nuclear weapon this year. Certainly it would have been Able with in a few More years to produce More. Given the fact that Israel is believed to have had a Small nuclear Arsenal for several years it was hardly in the Best moral position to object. But since Iraq itself had suggested that Israel was the serious questions indeed does anyone doubt that India May be sorely tempted to launch the same kind of preventive attack on Pakistan s nuclear Complex will the world really stand idly by if Libya gets its hand on the bomb what would the United states do if Fidel Castro were found to be on the verge of going nuclear obviously a better answer is needed. The Reagan administration is expected to unveil the outlines of its anti proliferation policy later this month. From what is known so far it is expected to emphasize the Carrot rather than the stick in seeking the cooperation of other nations. Obviously it is too Early to pass judgment but sceptics suspect tha t the net effect is going to be a More Permis Sive even less effective american policy than we have now. Meanwhile there is no indication that France West Germany Italy and Switzerland have grown any less willing to Swap nuclear materials and hardware for Oil. The problem is that the nuclear Industry both in the United states and abroad is highly organized and politic ally persuasive with its talk about jobs profits Energy Independence and the balance of payments. As Victor Gilinsky of the . Nuclear regulatory commission once observed nuclear controls have never had any constituency but the old fashioned common sense fear of blowing up the How pcs once viewed my a salary demands almost four years ago the Manitoba medical association cheered when the tories came to Power. It seemed that Good times were just around the Corner after eight difficult years with the nip. It did not work out As expected. While there May have been less acid in the atmosphere Little else changed. The doctors still complained about the government s failure to recognize legitimate needs while the government continued to maintain that there was a limit beyond which it would not go. The relationship Between the two groups has been painful regardless of which party was in Power. In 1973 the tory critics took great Joy in blaming the trouble on the nip government when the Mma wanted a five per cent increase to fight inflation and the nip insisted there was no justification. With opting out threats on one Side and increasing rigidity on the other Side there was a climate of hostility. However it was excellent fodder for the opposition and Bud Sherman accused the government of jeopardizing the morale of doctors and threatening the level of health care in the province because of its refusal to bargain in Good Faith. Undoubtedly those words were familiar to him eight years later when he was on the receiving end of those accusations. Under the dome Arlene Billinkoff instead the dispute Between the government and the Mma continued for Many months during which doctors threatened to disrupt service and talked about the nip s sinister plans to turn the medical profession into a group of state employed salaried robots. By the end of the year the situation became so serious that the Mma held an emergency meeting and most doctors offices were closed for a Day. Finally after More threats and counter threats an agreement was reached for increases of six per cent in 1974 and five per cent in 1975. Unfortunately the doctors began to clamor for More and by november 1975, negotiations had bogged Down with the Mma asking for a 15.6 per cent increase. That request did not fit into the Federal wage and Price controls and was rejected. While the Mma was willing to accept a lower fee increase it wanted More than the 4.8 per cent offered by the government. Both sides continued to alter their position but there was Little agreement. Once More the Mma threatened to withdraw All but emergency services while the government insisted there would be no More talk. While the planned strike was called off and negotiations were resumed suspicion fears and threats remained. The government talked about the need for a new spirit of Harmony co operation and under standing but All that occurred were More accusations about bad Faith resistance citizens protesting and Doc tors opting out of medicare. Not until the end of the year was an agreement reached for a seven per cent increase. With the election of the tories in 1977, there was Hope for change. Sterling Lyon had talked about four years of Greener pastures and the doctors were optimistic about better relations. That optimism was Short lived. As some noted the new administration had Learned negotiating tactics from its predecessor. Caught in their own web of restraint the tories were reluctant to loosen purse strings for anyone. The Only difference from the nip years was the attitude. Despite an apparent deadlock in negotiations there were no confrontations at the beginning and the Mma was willing to be patient despite its belief that the government was deliberately stalling negotiations. Eventually a Compromise was reached with a 6.8 per cent in crease for the remainder of the year. But a negative mood was growing. As one official said the Premier was Al most paranoid about Cost restraint and the doctors could not have done worse under the nip. At least they were attempting to bargain in Good Faith and in 1979, reluctantly agreed to another 6.8 per cent increase. Things also moved smoothly in 1980 bargaining and by february a two year contract was approved with increases of 8.9 per cent for 1980 and 8.8 per cent for 1981, with the second year open to renegotiation if the consumer Price Index exceeded 10 per cent. The Index did Rise and so did the Mma demand. In March it said a 49.3 per cent increase was needed to offset the erosion of real income under medi care. That goal soon shrank to 31.4 per cent but the government offer had Only increased to 10.45 per cent. Even when that figure Rose to 14 per cent and the Mma demand fell to 16.27 per cent 70 per cent of the doctors rejected the offer and began to talk about a work to Rule Campaign. While there was a return to the bargaining table dissatisfaction grew. The Mma which had suggested a com Promise of 15.5 per cent reverted to the higher figure and doctors throughout the province closed their offices in order to discuss methods of persuasion. By the beginning of this week the Public was inconvenienced some Doc tors were losing income and no one was benefiting. As recent history has proven there is no easy Way to resolve the Issue. There were legitimate reasons for the doctors desire for increased in comes and equally legitimate reasons for the government s refusal to spend beyond a certain limit. Eventually some Compromise would be reached on the current dispute but regardless of the government s political colors the problem was Likely to return. Doonesbury , t 1 Fly ;