Farmers want subsidies restored The Toronto Star, November 2000 Mar zena Brzyszcz In the early 1990 s Ottawa had a $40 billion deficit, at which time it had slashed farm subsidies. Now that the federal government has eliminated the budget deficit, Canada s top farmer leader said, it is time to start helping farmers who are in need. The Canadian Federation of Agriculture president, Bob Friesen, says the government owes farmers at least $15 billion for what they have contributed to deficit reduction since 1992. Friesen, at a meeting with Jean Chretien, said farmers need at least $1. 5 billion more a year from both the federal and provincial governments.

That is more than double the money that would be spent on aid. Friesen has not yet given up hope for more money for farmers, but fears it may be tied to stricter environmental or food safety regulations. At the annual meeting of the Ontario Federation of Agriculture in Toronto, delegates to the meeting called on OFA to look into setting up an aid program in Ontario similar to the one in Quebec. It bases its payments on the cost of production. Ontario aid programs base their payments on historic commodity prices regardless of the cost of production. Setting up a system like Quebec s could cause several problems with the United States because it would not meet current world trade rules.

Economic Concepts 1) Government intervention. The federal government had first paid subsidies, then slashed them. Both the provincial and federal governments pay for the aid programs running at the present moment. 2) Subsidies.

The federal government had first issued subsidies to farmers taking into consideration the consumers. While making it easier for the farmers by making their time worth the work, the government provides low agricultural product prices for the consumers. 3) Demand and supply. Once the government agrees to provide farmers with the subsidies they demand, the suppl of agricultural products will increase to Q 1, thus increasing the equilibrium price to P 1. Questions 1) What was Ottawa s deficit in the early 1990 s$40 billion 2) Who is the current president of the Canadian Federation of Agriculture Bob Friesen 3) How much more aid a year does Friesen demand for farmers At least $1.

5 billion a year. 4) For what reason would setting up an aid system based on the cost of production cause problems between the United States It would not meet current trade rules. 5) Approximately how much did Friesen estimate the government owed farmers since 1992$15 billion.