Corky Evans, the plainspoken man who is B.C.'s agriculture minister, spent the early days of September touring farms, chomping on fruit and getting his picture in local newspapers. The photo ops are an annual ritual now, part of a campaign to persuade B.C. consumers to buy locally grown food. But as the month drew to an end, it became clear there will be fewer B.C. products on the shelves this winter. Wet weather in early fall has ruined crops across the province, from grain in the Peace region to potatoes and carrots in the Lower Mainland and on Vancouver Island. Devastating losses had already occurred when July hailstorms pounded fruit farms in the Okanagan. In the worst-hit areas, growers lost nearly their entire crop.

Most farmers will be able to shrug off their bad luck and continue farming. A few, already suffering because of low prices or a poor crop last year, will not. Some of them will undoubtedly call for government bailouts, but giving emergency financial aid to farmers, a common occurrence in the 1980s, is now largely out of fashion, even in NDP-governed B.C. Several reasons exist for this: the need to stop the deficit spiral; international trading rules, which prohibit most anything that could be called a subsidy; and a recognition that such bailouts do little, if anything, to help farmers make it in the long run.

Still, Premier Glen Clark has a recent history of costly intervention in such industries as forestry and (last week) the movie industry, and may be tempted to bail out hard-hit farmers too. But that would be a major mistake, say free-marketers. Indeed, some observers say taxpayers, consumers and even farmers themselves could reap a harvest of benefits if government removed itself even further from the farm than it already has.

One proponent of this view is Don Cayo, president of the Atlantic Institute for Market Studies (AIMS), a think-tank based in Halifax. Mr. Cayo spent six weeks last year touring Canadian farms and researching farm policy, and concluded that most government forays into agriculture do more harm than good. "I'm not an ideological free-marketer, if you like," says Mr. Cayo. "[But] I don't think the level of subsidy and the track record of subsidy in agriculture is defensible."

Mr. Cayo did not specifically examine B.C., but many of the interventionist policies he disdains exist here. The most controversial is the supply-management system for milk. By allocating quota on the basis of historical production, it limits B.C. dairymen to less than 5% of the Canadian industrial-milk market, a key reason why it is often easier to find Quebec and Ontario cheese in the grocery store.

Consumers also pay a heavy price. Mr. Cayo estimates Canadians pay 10% to 30% more for supply-managed commodities—not just dairy, but eggs, chicken and turkey—than Americans do. "It's a tax on poor people," he says. It is also a boon to those farmers who are, in effect, protected from competition.

While the system works well for those inside it, it shuts out anyone else. Few people have learned that lesson harder than Grant Tocher, an Abbotsford dairyman. Mr. Tocher was one of 21 farmers who defied the system and sold milk without owning quota. Since 1984, his group had a steady customer in Bari Cheese Ltd., a Fraser Valley company that made ricotta and mozzarella cheeses and butter out of the renegade farmers' milk.

Throughout those years, Bari and the farmers fought with the B.C. Milk Marketing Board in court, and in 1996, milk board bureaucrats seized more than 4,000 litres of renegade milk. But late this summer, Bari announced it was tired of fighting and agreed to buy its milk through the regulated system. Mr. Tocher milked his last cow for Bari on October 15.

"We're all finished, broke—it's as simple as that," says Mr. Tocher, whose farm is up for sale. He estimates it would cost well over $700,000 to buy the quota for his 65 dairy cows, and even if he could afford it, "the banks won't work with us" because of his reputation as a dissident.

Mr. Cayo marvels at the economic waste of the quota system. On some farms, he notes, "the cost of quota exceeds the cost of land, animals, equipment—the whole shooting match. If that investment were to make food, we'd have a lot more food."

But while Mr. Tocher and his colleagues have been brought to their knees, the next century may bring real competition to farmers now protected by supply management. The Uruguay Round agreement of 1993 protected Canada from imports by allowing the imposition of tariffs as high as 350% on supply-managed commodities. The tariffs are a major source of irritation to the Americans, who challenged them in front of a North American Free Trade Agreement (NAFTA) panel and lost. It seems certain the U.S. will take aim at the tariffs again when the next round of World Trade Organization (WTO) talks begin in 1999.

"The prognosis for legal battles with the U.S. is enormous," says one Canadian analyst, who spoke on condition that he not be named. "We'll have some tough negotiations on our hands." Dennis Avery, a former agricultural analyst with the U.S. State Department, agrees, and says it is part of a wider trend towards freer trade in farm products, driven not so much by American politics as by the food needs of fast-growing Asia.

"When the U.S. delegation arrives at the WTO farm trade meetings in 1999, the focus will be almost unanimously on achieving a major liberalization of WTO farm trade rules," Mr. Avery wrote in the September issue of Outlook, published by the Indiana-based Hudson Institute. What's more, he added, other "significant trading nations" including Canada, Australia, Argentina and Brazil are "more enthusiastic about farm trade reform than ever. Now they, too, see the Asian market as the big prize for their agriculture and their trade balances."

Given that, critics ask whether Canada is hurting the prospects of its dairy, poultry and egg farmers by shielding them from competition. "I would say, that is the question," says the unnamed Canadian analyst. He predicts that if exposed to more U.S. competition, most dairymen will do just fine. "Our real costs of producing milk are not that much different from theirs."

Indeed, other farm sectors have taken advantage of freer trade with impressive results. The greenhouse vegetable business has blossomed into a $100-million-a-year industry that exports its high-quality tomatoes to California. Money's Mushrooms, a money-loser as recently as 1992, has turned around on the strength of sales to Washington, Oregon and Japan. Trade agreements such as NAFTA have also been credited with helping the West's cattle industry expand even as Canadians eat less red meat than before. With $184 million in farmgate sales in 1996, beef is second only to dairy in B.C.'s farm economy.

Yet removing trade barriers is only one way less government intervention could aid farmers. The province's tree-fruit sector is a case study in what can happen when government tries to do too much.

When the NDP government of Dave Barrett decided to establish an Agricultural Land Reserve (ALR) in 1973, it made a vague promise to support agriculture in return for taking away farmers' rights to develop their frozen land. For the Okanagan tree-fruit industry, that support has taken several forms: first, a farm-income insurance program; later, a program that paid growers to rip up their orchards and replant them with trees that produce more-profitable varieties of apples.

Last fall, as it tried to contain a ballooning deficit, the NDP government cut nearly $1 million out of the replanting program. It will be phased out entirely by 2000, or sooner. Yet the ALR straitjacket remains. As a result, some growers now say it is time Victoria allowed them some flexibility to manage their ALR land as they wish. "If they're going to kill the farmer by not supporting agriculture, the only thing you've got is to manoeuvre with your land a bit," says Kelowna apple grower Gordie Ivans. For example, he says, if a farmer could at least sell off a corner of a 20-acre land parcel, he could use the money to pay debts or replant his orchards.

But no one in Victoria seems likely to listen to Mr. Ivans' request for an independent review of the ALR issue. According to the Ministry of Agriculture, Fisheries and Food, 90% of British Columbians believe the provincial government should limit urban development to protect farmland. Many farmers agree with that. "The ALR is a good thing," says Terry Michell, a fifth-generation farmer who grows fruit and vegetables on the Saanich Peninsula north of Victoria. Yet while the ALR has ensured that farms do not become subdivisions, Mr. Michell says much of it is bought up by "hobby farmers" or urban types looking for a country estate. "It's pretty hard for farmers to buy more land," he notes.

Mr. Michell is one of the many vegetable farmers in southwestern B.C. who spent the early days of October pulling produce out of the mud by hand. The fields have been too wet to machine-harvest nearly half his carrot crop, and as Thanksgiving neared, any more rain could ruin $50,000 worth of them. He did not, however, buy into the government's crop-insurance program. "It's quite costly, for one thing," he says. "And we usually don't lose our crop."

But to some Peace River grain growers, who face a poor harvest for the second consecutive year, the lack of an adequate crop-insurance program is starting to sting. Victoria restructured the program this year to a "Basic Plus" format. Farmers can get the "basic" portion cheaply, but it kicks in only when a farmer loses more than 40% of his historical yield— a crop calamity. The "plus" portion, on the other hand, has never been more expensive. "I agree, the program does not meet the needs of the farmers," says Dawson Creek grain producer Jim Smolik.

As a result, farmers in both the Peace and the Okanagan are now musing about private insurance alternatives. It will not be easy to find willing companies, though. The only kind of insurance offered now by the private sector is for specific hazards, such as hail. Says Russell Husch, president of the B.C. Fruit Growers' Association: "Our premiums are around 18% of the value of the crop. My truck insurance—the value of that is around 1%. So you can see how risky our business can be."

Remarkably, Mr. Husch thinks as many as one-third of B.C. fruit farmers did not even buy "basic" crop insurance this year, even though it could be had for as little as $175. "I find that just phenomenal," says Jim Vercammen, an agricultural economist at the University of B.C. who has studied crop insurance. "I think it reflects the mistrust of those kinds of programs."

Mr. Smolik say many farmers distrust the government insurance scheme because they feel it is top-heavy with bureaucracy. The perception appears to be right. According to Ministry of Finance estimates, administration costs ate up 30 cents of every dollar in premiums in 1996-97. That is expected to decline to 21 cents this year, partly because overhead has been cut and partly because premiums are projected to rise by more than $2 million.

Still, Mr. Vercammen says no private insurer would offer all-risk crop insurance "because they can't make money at it." One reason is that crop insurance sometimes entices farmers to make bad decisions. For example, an uninsured wheat grower might avoid seeding a field in late spring because of the risk it will freeze before it can be harvested; an insured grower is more likely to plant that field, says Mr. Vercammen.

That sets a vicious cycle in motion: more claims are made and premiums go up. What's more, it is hard for insurers to determine which farmers are poor managers, so premium hikes tend to be widespread, forcing some farmers to drop out. Thus, government steps in and subsidizes premiums to encourage more farmers to join. This year, the provincial treasury will cough up $4.5 million to operate and subsidize crop insurance.

Of course, there may be times when government's role in farming makes sense. State-funded research, for instance, deserves much of the credit for the phenomenal gains in yields and animal health over the past 50 years, notes AIMS president Cayo.

It is when government acts to disrupt the natural flow of farm products—be it through subsidies, trade barriers, regulation or monopoly marketing boards—that it does the most damage. Ask the Fraser Valley dairy farmers who no longer have a market for their milk. Ask Peace River grain growers who must let bills go unpaid because their monopoly marketer, the Canadian Wheat Board, cannot move wheat fast enough. Says Doug Steinhauer of Calgary, a senior policy analyst with the Regina-based Prairie Centre, an economic research institute: "Let producers do what they do best. They'll see it in their pocketbooks...if they have choices."

—Derek DeCloet

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