Voluntary Report - public distribution

**Date:** 6/18/2004

**GAIN Report Number:** CA4045

CA4045

**Canada**

**Agricultural Situation**

**Off to the Polls Canada Goes: Implications for Agriculture**

**2004**

**Approved by:**

![](media/image1.wmf)Gary C. Groves

U.S. Embassy

**Prepared by:**

Christina Patterson

**Report Highlights:**

On May 23, 2004, Governor General Adrienne Clarkson dissolved the 37th
Parliament at the request of the Prime Minister, Paul Martin, sending
Canadians into a general election. The election date is set for June 28,
2004. At this point it is difficult to determine the outcome of the
election, although most observers believe that the new Conservative
Party, led by Stephen Harper, has a good chance of beating the Liberal
Party and obtaining power after nearly 11 years in opposition.
Agriculture policy would likely see dramatic changes under a
Conservative majority. For example, the Conservative platform calls for
the abolition of the Canadian Wheat Board (CWB) monopoly, and would
allow Canadian farmers additional choice over where they could sell
their grain. On the other hand, some polls indicate that the formation
of a minority government will be the more likely outcome. Under this
scenario the state of farm policy, and the future of the CWB, is far
less clear.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Ottawa \[CA1\]

\[CA\]

###### A Brief Overview of the Political System in Canada

Canada's Parliament is made up to two houses, the Senate and the House
of Commons. The upper house is the Senate, which contains 105 seats,
which are appointed by the Governor General on the advice of the Prime
Minister. The lower house is the House of Commons. As of April 1, 2004,
the House of Commons increased to 308 seats from 301. The people of
Canada elect the members in House of Commons.

There are four major political parties within Canada that occupy seats
in the House of Commons, but there are also several smaller parties who
put platforms forward and run candidates during the election. The four
major political parties are: the Liberal Party of Canada, the
Conservative Party of Canada, the New Democrat Party (NDP) and the Bloc
Quebecois (BQ). Currently the Liberal Party is the governing party and
the other 3 make up the opposition. In order to win a majority in the
House of Commons \--and thereby control of the government \-- a party
needs to win 155 seats.

Most political power in Canada is concentrated among the four parties.
The Bloc Quebecois is best known as the separatist party, and is based
in Quebec. The main objectives of the BQ are to establish Quebec as a
sovereign nation and to defend the interest of Quebec within the House
of Commons. The party is made up of people from across the political
spectrum, but the party on the whole is left of center. For example, the
BQ is opposed to the war in Iraq, as well as to increased spending on
Canada's military. The Bloc focuses heavily on agriculture as it applies
to Quebec. Since the Canadian Wheat Board (CWB) Act does not include
Quebec within its designated area, there is no mention of the CWB in
their platform. Another very important plank in their platform is
maintaining the current supply management system for dairy, poultry, and
poultry products.

The platform of the New Democratic Party (NDP) is considered to most
closely resemble those of the various socialist parties of Europe. The
focus of the NDP is on health care, education, affordable housing, or
other social issues. The NDP is generally against increased
globalization and free trade deals under the World Trade Organization
(WTO) or NAFTA. In fact, the NDP would like to reopen NAFTA in order to
renegotiate a better deal for Canada, or scrap it all together.

The Conservative Party is generally centrist to right-of-center, if
judged by U.S. standards. The party was established last year through
the merger of the Canadian Alliance (a party that was considered to be
farther to the right) and the Progressive Conservative Party of Canada.
The Conservative Party supports increased trade liberalization,
increased military spending, and better relations with the United
States.

The Liberal Party is considered by most Canadian political observers to
be the centrist party in Canadian politics. The party is made up of both
left wing and right wing factions, but the party attempts to present
moderate, middle of the road positions to placate both sides. The
Liberal Party has stated that it wishes to pursue more liberalized
trade, but the party has repeatedly stated that it will not sacrifice
the traditional Canadian agricultural policies of supply management or
support reform of the CWB in order to do so.

###### Party Platforms on Agriculture

Both the Liberal and NDP platforms are fairly close in their positions
vis-à-vis agriculture, especially in terms of supporting the family
farmer as well as advocating additional funding, protection, and support
for Canadian agriculture. Unfortunately, both clearly state that they
would continue to defend and maintain the monopoly powers of the CWB. In
addition, each party is committed to maintaining supply management. In
fact, current Liberal Agriculture Minister Bob Speller derives his
strongest base of support from Eastern Canada, where he has built strong
alliances with the supply-managed (SM-5) commodity organizations, and is
on record as stating that SM-5 should remain a "bedrock" of Canadian
Agricultural support. Moreover, the Liberal platform indicates that the
party will not modify Canada's negotiating position on agriculture in
the WTO, especially its less-than-ambitious proposals on market access.
These steadfast positions are also likely to keep Canada at odds with
the Cairns Group vis-à-vis a coordinated position on agriculture in the
WTO.

The Conservative Party is the only one on record pledging support for
abolishing the CWB monopoly. The Conservative platform states that it
would "*give grain farmers the freedom to make their own marketing and
transportation decisions and to voluntarily participate in producer
organizations*". On the other hand, the Conservatives also pledge to
support the viability of producers who operate under supply management
and the goals of supply management to deliver a high quality product for
a fair price. The Conservative Party supports NAFTA and the WTO to
promote free and fair trade. Although not in the platform, the
Conservatives would like to see increased trade liberalization through
reduction in tariffs and trade barriers, and elimination of export
subsidies.

As the designer and administrator of the Agriculture Policy Framework
(APF), the Liberal Party is committed to this program and the new safety
net programs that were designed to remove the need for ad hoc programs
in times of crisis. The NDP and Conservatives both support improving the
safety nets programs to ensure they provide farmers with the coverage
that they need, but would likely make certain changes to the APF. The
Conservatives have committed to ensuring that the programs comply with
Canada's trade obligations. The NDP would like to provide trade injury
compensation to Canada's grains and oilseed producers, to mitigate the
impact of foreign subsidies on their products. The Liberals and NDP have
both proposed selling the government's grain hopper car fleet to the
Farmer Rail Car Coalition. This may not be seen as a trade target, but
this could result in transportation issues for Canada's farmers.

All the parties claim they are committed to Canada's agriculture sector
and will work to ensure its viability. The parties' platforms can be
found by going to [www.cfa-fca.ca](http://www.cfa-fca.ca/) and clicking
on the Federal Election 2004.

###### Current Situation

As the election enters the final stretch, reputable Canadian polling
organizations find the Conservative Party has 36% support of the
Canadian electorate, the Liberal Party has 31%, the NDP has 16% and the
BQ has 12% (with this being support mainly in Quebec). If these numbers
hold until the election, the Conservative Party is in a position to win
a minority government at the least. During the course of the election,
support for the Liberal Party has dramatically fallen and support for
the Conservative Party has increased. If the trend continues, there is
the slight possibility that the Conservative Party could form a majority
government.

Recent polling indicates that farmers' support is solidly behind the
Conservative Party at 60% of the decided vote. National support among
farmers for the Liberals has dropped by a full 9 percentage points, from
32 % in the 2000 election to 23% currently. The NDP has 7% and the BQ
has 6% farmer support nationally (with 44% support for the BQ in
Quebec). There are several possible reasons for the drop in farmers'
support for the Liberal Party. In general, many across the country are
angry over the sponsorship scandal, which saw \$250 million of
taxpayers' money funneled to Quebec and Liberal friendly advertising
firms under the guise of promoting Canada and the Canadian government in
Quebec to prevent another referendum on separation. At least \$100
million of that money has not been accounted for. The scandal has
resulted in declining in Liberal support across the country, not just
farmers' support.

Despite the best assurances from the Minister of Agriculture that the
government is doing everything it can, the U.S. border still remains
closed to live cattle exports from Canada. Many farmers feel that the
damage caused by the Liberal government to Canada's relationship with
the U.S. has hurt Canada's ability to have any influence with our U.S.
counterparts, thereby hindering Canada's ability to speed up the
reopening.

The newly designed safety net programs have been a large bone of
contention with a lot of farmers across the country. Many are unhappy
that the Liberal government designed the programs without taking the
advice of producers in regards to what they wanted to see in the
programs. Despite changes to the new programs, a majority of producers
still feel the new programs are too costly and ineffective.

The firearms registry, which requires the registration of long guns by
their owners, has had a huge impact on Liberal support in rural Canada.
The firearms act came into effect in 1996, and has been a contentious
issue for the Liberal government ever since. The 1997 and 2000 elections
saw a significant portion of the rural and farmer support move away from
the Liberals because of this issue. The Liberal Party is refusing to
scrap the gun registry, despite its ineffectiveness and bloated cost
(originally projected to cost \$2 million and by the time it is fully
implemented it should cost around \$2 billion).

Through the last 10 years that the Liberal Party has been in power, Paul
Martin, as finance minister, enacted the deepest cuts to farm support
programs in Canadian history. The ongoing record of the Liberal
government to vote down additional money to farmers in times of crisis
(i.e. the drought) has led many farmers to question the sincerity of the
Liberal Party's commitment to agriculture and farm families. More than
twice as many farmers believe that the Conservative Party will be the
most helpful in meeting the needs of the agricultural community over the
Liberals (44% vs. 20%). 

Finally, in the 2000 election, the Conservative Party was split into to
different parties, the Canadian Alliance and the Progressive
Conservative Party of Canada. The two parties split the vote on the
right, allowing many Liberal members to be elected. The two parties
combined had 55% of the vote. With the uniting of the parties, this has
enabled farmers to move their vote from the Liberals and put their
support behind the new Conservative Party. Rural seats in Canada
typically support the Conservatives or the NDP.

###### Implications

If either the Conservative Party or the Liberal Party forms a minority
government, it becomes imperative for either party to form a coalition
with either the Bloc Quebecois or the NDP, depending on the seat count
of the ruling minority government and the issue being debated.

If either the Liberals or the Conservatives form a minority government,
many speculate that any potential coalitions would prove too fragile,
and that the Canadian electorate would be back at the polls within a
year. Under the assumption that the Conservative Party wins power and
attempts to live up to the promises it has made, it may pose a
significant problem in terms of timing with regards to the elimination
of the CWB monopoly. The Conservative Party has stated that they will
amend the CWB Act within their first term in power. However, a term can
last up to a maximum of 5 years. Significant reform of the CWB may not
be something a minority Conservative government would be able to achieve
if the voters are forced back to the polls early.

Finally, all parties are facing enormous pressure from the supply
management lobby, both at the provincial and federal level. In the short
run, this could have an impact on a new government's ability to pursue a
WTO framework agreement by the end of July. Over the longer term, the
shape of the new government may determine the winner of the
long-standing battle for power between the traditionally protectionist
supply-managed sectors, and the more export-oriented grains and oilseeds
sectors, especially in terms of who will benefit from an eventual deal
in the WTO agriculture negotiations.

It is clear that a Conservative government would try to forge stronger
ties with the United States in all regards, including on the trade
front. They would more likely attempt to deal with and resolve ongoing
trade irritants with the United States, such as possible duties on live
hog exports, softwood lumber, and wheat, as well as the BSE crisis.

###### Conclusion

Despite the various promises to farmers that each party has laid out in
their platforms, agriculture has thus far played a relatively quiet role
in the election. Nevertheless, behind the scenes the political parties
are clearly under pressure from the various farm groups, who in fact
have been extremely critical of all parties for the lack of visible
attention being paid to agriculture. Whatever party emerges as a victor
on June 28^th^, it is clear that the longstanding issues being faced by
Canadian farmers -- the CWB, supply management, BSE, and the WTO
negotiations, to name just a few -- must also be confronted by the
leaders that will undoubtedly owe their political livelihood in part to
this increasingly vocal sector of Canada's economy.

**Find FAS on the World Wide Web:** Visit our headquarters' home page at
[http://www.fas.usda.gov](http://www.fas.usda.gov/) for a complete
listing of FAS' worldwide agricultural reporting.

Recent Reports from FAS/Ottawa:

+----------------+---------------------------------------+------------+
| Report Number  | Title of Report                       | Date       |
+----------------+---------------------------------------+------------+
| ## CA4043      | This Week in Canadian Agriculture,    | 6/10/2004  |
|                | Issue 19                              |            |
+----------------+---------------------------------------+------------+
| ## CA4042      | This Week in Canadian Agriculture,    | 6/04/2004  |
|                | Issue 18                              |            |
+----------------+---------------------------------------+------------+
| ## CA4041      | Dairy, Semi-Annual                    | 6/03/2004  |
+----------------+---------------------------------------+------------+
| ## CA4040      | This Week in Canadian Agriculture,    | 5/28/2004  |
|                | Issue 17                              |            |
+----------------+---------------------------------------+------------+
| ## CA4039      | This Week in Canadian Agriculture,    | 5/21/2004  |
|                | Issue 16                              |            |
+----------------+---------------------------------------+------------+
| ## CA4038      | Provisional Anti-Dumping Duties on    | 5/18/2004  |
|                | U.S. Frozen Pizza                     |            |
+----------------+---------------------------------------+------------+

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