Canadian Farming Industry - Term Paper Example

CANADIAN FARMING INDUSTRY In rural Canada, farming has become a way of life on hereditary. The agriculture families have deep roots in the annalsof their community. Farmers of Canada are not only providing food supplies but also allowing other industries to sustain. The railways, retailers’ restaurants, fertilizer companies, pesticide companies, equipment dealers etc. depend on the annual crop and harvest to make a gain and profit. Despite the need of produce of agriculture for growth of national economy, the farmers are being sent away from rural land ownerships at alarming rate in Canada whereas the statistics reveal that prices of chemicals seeds, fuel and other items has increased about five times since 1974 but not food prices of agriculture products. Before arriving at a conclusion on Canadian agricultural amongst different types of farmers. This distinction could be made by the banks between various types of farmers while evaluating their loan applications. Canadian heritage in agriculture depends on an integral role played by the traditional or life style farmers. The traditional farmers are alarmingly closing their hereditary agricultural business owing larger competition from larger farmers and increasing costs of inputs. In Canada, the rural migration is on increasing level since 1991. The average persons in general, who leave small town of rural area, possess higher educational qualification. It is clear that rural areas in Canada are not behind in terms of services and quality of work available. Farmers are subject to variable weather conditions of natural disaster should save and keep investment during the period of profit so they may or do not become bankrupt during the period of downswings. Despite of assistance from organizations such as income disaster assistance program, the agricultural farmers ability to stand up their legs is not improving since the profit of small farmers are shrinking so quickly as the expenditure put on harvest grows every year. Revenues form farm products are not keeping pace with escalating cost of equipments, fertilizer, transportation and pesticides. The prices food items are quietly unrelated to the expenditure put in cultivating, transporting processing and selling the food. Recent floods and droughts have made the established farmers to become debtors though they have borrowed money and invested the same in equipment and land. There are delays in getting government funds, which are in adequate to meet these types of natural calamities. There are no private insurance companies to cover insurance of farms from weather-related catastrophes. The small farmers are the looser of these natural calamities in rural Canada. Like any other traders or businessmen, farmers can ensure long term growth and stability through proper planning in changing market conditions during the periods of floods and drought so that they may not depend on the assistance and support of government. The banks are prepared to advance loans to farmers for expanding their farms or starting farms under close supervision of bankers to put the farmers on right path to success though great risk is involved. The bankers visit farms once in a year assess the progress of the investment by farmers. The farmers with a formal, viable business plan are likely to get funds form banks. In farm field, many problems are attributed to Canadian consumers refusal to recognize and pay for value added to the products produced by the small farmers. Because of this, the farmers are not able recover their investments and expenses through sales which tends them to expect government subsidies to support them. The farmers are not in a position to bear the smallest price increase in power tariff. Ontario federation of agriculture are successful in lobbying in reduction of sales tax on farm products, working with county federations to reduce or remove municipal development charges on agricultural on to buildings, reduction in electricity charges. In Canada there are two types of economic nationalism. The first protection in trade is represented in establishing a system of rates and tariffs in favor of goods of domestic production and discourages foreign imports. This kind of protection is desired to encourage establishment of industrial base in Canada by saving small and infant industries against the competition of larger and well-established firms in abroad. 2. The second economic protectionism is a post world war –II phenomenon that is related to the proprietorship as Canadian businesses by foreign traders and investors. Multinational companies have been set up after world war–II due to immense investments of foreigners in Canadian business. Multinational companies thought that they could evade tariff restrictors in Canada by introducing their own branches plants and subsidiaries, which allowed them to go to markets, mobilize resources and capital and get favors with Canadian government. These kinds of investments have created to the economic nationalism due to expansion of multinational companies. The foreign owned companies could not take central over economic decisions from their head office from outside Canada. The economists in Canada are compelled to demand for bringing out a legislation to oversee the activities and restrain the growth of foreign ownership in Canadian economy. Canada is one of the members of many international groups; one amongst them is g-8, the eight largest industrial democracies. The G-8 countries of heads of governments meet once in a year to discuss on international issues framed in the agenda eliciting a consensus. Finance Ministers of these countries meet often to discuss monetary and fiscal policy. The groups of quadrilateral trade ministers meet every quarter and address trade issues such as progress of negotiations in the GATT, bilateral issues like trade disputes between Canada and Europe. The emphasis is reaching consensus, on good policies, and bring Government power to bear on trade disputes. The organization for economic co-operations and development (OECD) based at Paris monitors and reports the growth of economy through out the world. It recommends the management of economics to the government. The OECD has further moves ahead to study their trade problems and express its views to resolve solutions. Infrastructure is one of the growth factors in the third world. The Canadian program in developing countries through the Canadian international development agency assists the exporters. C I D A’s objectives are to encourage the growth of small firms and business in poorer nations and contracts are also awarded to Canadian companies to provide technical assistance as well as equipment. Trade is carried out either by nations or people to get the mutual exchange of benefits. People are expertise in production of certain kind of goods and services. The scale of economics depends on such specialization, which carries the benefits of learning. Mercantilism is nothing but a trade theory established in Europe around seventeenth and eighteenth centuries. This trade access assumed that a nation state tries to increase it is exports to other nations, at the same time tries to limit their imports. One of the aims of trade were to increase or maximize exports while limiting imported goods and services so that they can gain more foreign exchange or revenue as much as possible. The emerging nation states get transfer of as much wealth as possible. The theory of mercantilism is popular even today. Japan’s success in trade depended on strategic trade theory. In the beginning the economic theorists thought that the mercantilist theory (and strategic trade theory is basically unsound but in the long run, an economy acquires and sustains wealth based upon its productive capacity. If a nation could not withstand the international competitiveness, whatever foreign exchange is accumulated will certainly fall down. The system of free trade is welcome as per economists. There is a theory of absolute advantage of nations while developing the theory of comparative advantage the factors of production. This theory is based upon the nations who expertise in areas, which are best, suited to their production capabilities and will then exchange with other nations. Both the nations or people or parties gain from trade in the Ricardian model of people or nation are in expertise in the areas within which they have a comparative gain, people or nation could without exchange can produce more goods and services. The excess production can be used to exchange with other people or nations for goods and services in which they have specialized. The Ricardian model advocates that comparative advantage is based upon a people or national productivity factor. Ricardo measures productivity in terms of labor factor. The trade data and unit cost of labor is a relatively good predictor a country or nation or people’s capacity of production of goods and services and exchange them through international trade. After world war-II, the economists reexamined the determinants of trade in manufactured products between developed countries. Traditional theory was stressing the importance of technological change developed borkenonut on new methods of trade. Technology innovation was a source of trade as per Michael Posner. Technology gap theory of trade is relatively held in one industry in one country comparatively same industry in another country, as per Michael Posner. This method gives an absolute advantage and a monopoly in trade to the innovating country for its products and process of innovations but this monopoly is only temporary. After passage of time, the firms in other countries in which these products were introduced, will try to imitate it. In order to maintain its trade advantage, the innovative countries should continue to generate new innovations to avoid facing initiative products from other countries. 3. Role of Interest Groups History reveals that factors like overtime and returns of production tend to equalize n nations that exchange with each other. Countries lacking resources can import goods and services from other countries. The more imports of goods tend to decrease returns or gains whereas the returns are more when imports are in less quantity. There are our factors, which have an affect on international trade and investment. They are country advantages, industry structure, organizational structure and strategy and government policy. The standard economic theory of comparative advantage depends on industry structure and competition in the market. Multinational companies will have a little chance to influence trade patterns in this regard. Multinational enterprise behave strategically buying market share and wait profits for a relationally long period of time. The roles of senior management personnel and the board of directors of the corporations depend upon the structure and strategy of organization. Interested groups have spent much of their efforts in seeking to influence new legislation, as the great deal of law is no enacted by the legislature. The policy making number of policy making processes but they have one common thing each process operates within a legal frame work authorized in statute or in subordinate legislation. The interest groups or firm donate some funds to political parties, in term, the political parties provide them a tariff which monopoly in setting standards, to define the terms of licenses, to fix rates that come be charged for services extended and so on. In Canada, the political exchange process and exchange of policy favors for political and campaign contributions are condemned and termed as immoral behavior. The contributions to political parties and candidates never exceed $50,000/- if an M.P or public servant accepts money from beneficiary of government funds, is treated as violation of criminal code. Elections in Canada, the party’s candidates can spend money towards election expenses when the legal limits during official campaign period. The names of the donors expected to be disclosed. The interested groups are acting as advocates in heir own cause. The interest groups is termed as an organized body of individuals who share some goals and who try to influence public policy and have some autonomy from government and political parties. The interested groups are multi-member organizations, individual member, firms or other organizations. Enrolment of membership is voluntary. Enrolment of membership is restrictive but members who desire to leave are not prohibited from leaving the interest groups involve members to take active part in joining and conducting their activities. The interested groups have a little focus of concern than that of a political party. Interest groups may well represents and defend minority interests and may be able to control the tyranny of majority Canadian Federation of Agriculture is also lobbyist who regularly meets politicians requesting them to resist the efforts to dismantle supply management marketing boards. The rights of intellectual property to the world’s genetic heritage have been entrusted to the world trade organization. The big Agri-food organizations have restricted the role of agriculture cence upon a time it was the role of the world trade organization to supply food for people but it is now providing profits for food corporations. In a span of very short period, these giants of corporate sector have determined that food and agricultural products ripe for genetic engineering. The rules of international trade will control any government or society, which opposes them. He farming community is made to depend on these transactional corporations for everything from seeds to fertilizers, pesticides and herbicides. Now farmers around the world have become slaves to these companies, trapped into heavy debts of endless cycle loosing conscience and soul. Recently, the corporate sector has identified water is the best source of incomes and to be exploited for profit. Much giant transnational water, food, energy and shipping corporations are sailing towards controlling the delivery of water services and start trade prominently. The aim of these transnational organizations is to make water a private commodity, which can be sold and traded on the open market. They wish to use of private capital by investment agreements and global trade. References Andrew Sutherland. (2003). "Cultivating Cash How to Grow a Farming Business in Canada." Between Public and Private: Readings and Cases on Canadas Mixed Economy. North York: Captus Press Inc. pp 397- 428. James M. Gillies. (2001). "Globalization and Canadian Economic and Industrial Strategy in the Twenty-First Century." Canada And The New World Economic Order. North York: Captus Press Inc. pp 178-204. W.T. Stanbury and Sean Moore. (2003). "Role of Interest Groups in Influencing Public Policy in Canada." Between Public and Private: Readings and Cases on Canadas Mixed Economy. North York: Captus Press Inc. pp 217-265. David Barrows and John A. Cotsomitis. (2001). "International Trade and Investments." Canada And The New World Economic Order. North York: Captus Press Inc. pp 144-177. George E. Eaton. (2003). "Liberal Democracy and Its Ideological Underpinnings From Laissez-faire to the Welfare State and Beyond?" Between Public and Private: Readings And Cases on Canada’s Mixed Economy. North York: Captus Press Inc. pp 4-53. Charles J. McMillan and Eduardo M.V. Jasson. (2001). "Technology and The New Economy: A Canadian Strategy." Canada And The New World Economic Order. North York: Captus Press Inc. pp 386-402. David Barrows and Tom Wesson. (2001). "The Changing Role of the Public Sector." Canada And The New World Economic Order. North York: Captus Press Inc. pp 253-282. Ed Hooven. (2001). "The New World Order: In a New Millennium." Canada And The New World Economic Order. North York: Captus Press Inc. pp 101-143. H.T. Wilson. (2001). "The Quagmire of Industrial Policy." Canada And The New World Economic Order. North York: Captus Press Inc. pp 413-420. David Barrows and John A. Cotsomitis. (2001). "Canada’s Global Competitiveness." Canada And The New World Economic Order. North York: Captus Press Inc. pp 3-33. Tom Wesson. (2001). "The Sectoral Structure of Canada’s Economy." Canada And The New World Economic Order. North York: Captus Press Inc. pp 58-80. Diane Jurkowski. (2003). "Federal Government’s Industrial Strategy to Regional Economic Disparities." Between Public and Private: Readings And Cases on Canada’s Mixed Economy. North York: Captus Press Inc. pp 379-396. John H.G. Crispo. (2001). "Canada’s Prospects." Canada And The New World Economic Order. North York: Captus Press Inc. pp 403-412. Maude Barlow. (2001). "Global Showdown: The Future of Democracy in The Era of Economic Globalization." Canada And The New World Economic Order. North York: Captus Press Inc. pp 389-402. John Saywell. (2001). "The Socio-Political Environment: The Quest for Accommodation." Canada And The New World Economic Order. North York: Captus Press Inc. pp 229-248. Donald H.S. Brean. (2001). "Canada’s Economy: Structure and Performance." Canada And The New World Economic Order. North York: Captus Press Inc. pp 34-57. Read More