Ontario Agricultural College Podcasts

Ontario Agricultural College, University of Guelph

Brady Deaton, Jr., the McCain Family Chair in Food Security in the Department of Food, Agricultural and Resource Economics at the University of Guelph, hosts the FARETalk podcast. The podcast provides engaging and enduring conversations about contemporary topics relevant to food, agricultural, and resource economics. The podcast has been running since 2011. OAC's The Why and How Podcast looks to answer big questions in agriculture, food, and the environment through casual conversations that are rooted in research. Host Josh Moran chats with graduate students, researchers and professors to learn more about the science behind today's hot topics and trends.

  1. 2025-03-14

    Food Prices - July 4th, 2011

    The Economics of Food: How Feeding and Fueling the Planet Affects Food Prices. Transcript Brady Deaton: Today my guest is Dr. Patrick Westhoff, and we will be discussing his book, The Economics of Food: How Feeding and Fueling the Planet Affects Food Prices. This book was published in 2010 by the FT Press. Dr. Westhoff is the Director of the Food Policy Research Institute at the University of Missouri in Colombia. He's had an active role in both academia, as well as in the legislative setting in the United States. Welcome, Pat   Patrick W.: Hi. Thanks for the opportunity.   Brady:  Pat, tell me a little bit about what inspired you to write this book.   Patrick W.: Well, during the summer of 2008, food prices were very much in the news. I was getting lots of calls from reporters around the country and around the world, trying to explain what was actually going on in those food markets. An editor gave me a call and asked if I wanted to try put those thoughts into a book, and I thought it might be a good opportunity, so I took advantage of it.   Brady: Now, your book focuses on the economics of food, but it orbits around the change in food prices between 2005 and 2009. Give me a little bit of background about food prices over the last little bit.   Patrick W.: Well, we've seen food prices increase in US over the last several decades at an average rate of about two and a half percent per year. For most of the last a couple of decades, food prices really weren't that much in the news. It was a relatively stable set of things going on in those food markets, and meant that food price inflation was very similar to overall inflation in the economy. But then came 2007 and 2008. We had big run ups in the prices for a large number of American cultural commodities, and a sharp increase in the overall consumer food price index in the US, and concerns about food prices around the world. It definitely got lots of folks' attention and then just in time for everybody to get excited about the really high price of food in 2007 and 2008, we had the global recession that made things go the opposite direction a year later.   Brady: Talk to me a little bit about it. When we talk about food prices, where that information comes from, where the data on food prices and commodity prices how do ...? We talk a bit about this in your book but where is this information coming from?   Patrick W.: Well, in the US the Bureau of Labor Statistics estimates consumer food price inflation by a variety of categories every month. We can find out what the average price of food was this month versus last month or versus a year ago. Every few weeks we get new information about that. [inaudible 00:02:28] can be more of a challenge to get information about consumer food prices in particular countries but individual countries do have their own statistical services putting out this information. In contract commodity markets are probably easier to follow. We have lot of information about futures markets for grains, oil, seeds, meat, sugar and a variety of other agricultural products where it's very easy to get information on a daily basis about what people think is going to happen to the price of those commodities.   Brady: I want to talk a little bit about why we are concerned, or the general public is concerned about these changes in food prices. I want to just back off a bit and talk about, economists usually look at changes in prices as really important to coordinating the market system. If prices go up then it may induce incentives to plant more corn if for example the corn price increases or, if price would go up we may conserve on food, or it may induce investments and importantly it will allow for local decision making. If a farmer wakes up, and he's learned that the price of soybeans is gone up then he may plant more soybeans. We are concerned about food prices. What are those concerns?   Patrick W.: You're absolutely right that the prices play a vital role in the agricultural economy, and the economy as a whole and helping folks decide what's the appropriate set of things to try to produce and what are the appropriate set of things to consume in any given point in time. Concerns of course come from the fact that food is such a vital part of people's standard of living. Consumers in some countries spend a very high proportion of their income in food each month. In some of the poor countries lower income folks can spend half or more of their income on food at any given time. When there is a big change in the price of food it can very directly affect their standard of living. A higher price for food can make it much harder for a low income family to be able to meet their basic needs. Of course, you have [inaudible 00:04:26] food is also a very big source of income for lots of people around the world. Higher income countries in Europe and North American and elsewhere the number of people directly involved in agriculture is relatively small and so the number of people directly affected by food prices in terms of their income is relatively modest. When you're talking about a lower income countries, developing countries around the world, quite often a very significant portion, some places as much more than half of overall population may be involved directly in agricultural production. The price of food can be important for them in terms of their incomes as well.   Brady: How does your work experience in Guatemala inform your understanding of that issue?   Patrick W.: Yes, I was a Peace Corp Volunteer in Guatemala a long time ago. It was very good to get the exposure to people who have much more limited means and a very different set of things that drive their daily decision making. The typical person I was working with may have only owned or operated a couple of acres, one hectare of land, which might just barely be enough to feed their own family, maybe not even enough to feed their own family. They would use the land that they operated to provide some of their basic needs for corn and for beans and then would have to rely on outside employment for whatever income they were going to have to be able to buy other necessities in life. For those people a change in the weather, a change in market prices could have a big impact on their standard of living.   Brady: Now, when you've talked about the change of food prices, you've directed your attention to a number of specific issues that you thought were important. I don't know that we'll have time to review all of them today, but I thought I would name them, and we can begin to discuss some of them. You mention of course biofuel production, energy prices, government policies, the weather, economic growth and changing diets and there is a focus a bit on India and China here, speculation and the changes in the value of the US Dollar. Of that list, is there any one of those or a couple of those that are more important?   Patrick W.: Oh I think over the long haul what's happening to the global economy is probably as important as anything else in determining where we're going to see food prices evolve to over the next several years and over the next several decades. Yet, the global economy is growing at a rapid pace. We're going to see more rapid increases in demand for meats and other socio products that people tend to consume when they have higher incomes. That's especially important in countries like India and China where we're seeing diets change very rapidly in recent years. If Chinese consumers for example are going to be consuming more meat and other high valued products in the future, that means that we're going to need to have more grain to feed those animals and that's going to have an effect on the global system. Likewise, global economic growth will affect the price of petroleum and other major energy inputs. As the price of petroleum changes it affects not only the cost of producing crops and livestock products that will be turned into food that people eat but it will also affect the demand of bio fuels and their demand for biofuels of course has risen very sharply in recent years, caused by a variety of factors, [inaudible 00:07:39] policy and the overall economy. Again, if I had to pick one thing that's really important for the longer haul in terms of determining food prices I'd probably say it's the general economy.   Brady: What about for the short run, the period between 2005 and 2009 that you focus on?   Patrick W.: Right. If you had to pick one thing that was really important during that period of time and continues to be important today, I'd say it's probably the weather. People who are involved in agriculture know this but, some folks who may not deal with agriculture production every day don't really understand to what extent agricultural producers are at the mercy of the weather. If we have a favorable set of figure conditions, we can have very large crops, larger than expected. Those large crops can have a major effect in driving down food prices in any given year. Supplies exceed the immediate need to consume that grain or those other products. On the other hand if we have a short crop caused by floods, drought, disease, or whatever we can have a very sharp increase in food prices as available supplies may come short of what desired levels demand might be. In 2006 and 2007, we saw crops that weren't quite as big as they'd been in 2004 in particular. That caused a draw down in the overall level of grain and other foods that were in storage to eventually we got to where the level of grains available for consumption were getting really, really tight relative to what demands were going to be. People got concerned about that and helped drive up the prices very sharply. Then, in contrast we got the 2008 and 2009. We had much bigger crops than we'd had the previous couple of years. That helped to restore global suppl

    41 min

  2. 2025-03-14

    Standards: Recipes for Reality - July 15th, 2011

    Dr. Busch argues that standards play a central role in constructing reality. Transcript Brady Deaton: My guest today is Dr. Laurence Bush. He and I will be discussing his forthcoming book titled Standards: Recipes for Reality. The book will be published by MIT Press. Laurence Bush is university-distinguished professor in the Department of Sociology at Michigan State University and co-directs the Center for the Study of Standards in Society. Larry, thanks so much for joining us.   Laurence Bush: Good morning, Brady. It's a pleasure to do so.   Brady:  Larry, after reading your book, I saw in every newspaper I picked up the issue of standards, and I found it was particularly relevant to the area of agriculture economics, but before I focus on those issues, I'd like to just start off broadly, and ask you about what you mean by the idea that standards are the way and the means by which we construct reality.   Laurence Bush: Yeah. The thing about standards is that they very, very quickly become taken for granted objects, whether they are texts, or they are physical objects, like for example, weights and measures. These things take on a taken for granted character, and as a result, become part of the reality that we expect. For example, if I get in a car that I've never seen, the cars are sufficiently standardized, and I can very quickly figure out how to drive that car. It doesn't require any special training. Once I've learned how to drive a car, I can drive any car.   Brady: In your book, you have a number of examples that are fascinating, and I wonder if you might just talk about some of the ways that we encounter standards that we might not think have found your discussion about time, and railroads, and the albino rats in the laboratory experiments particularly compelling. Could you pick a couple of those examples, and just discuss them?   Laurence Bush: Sure. Let's talk about the ones you mentioned, and maybe we'll move on to some others. If you take the example of railroads, obviously one realizes immediately that in order to have a system of railroads that crosses your entire country, you have to have the same track gauge. That part actually didn't occur in the United States until the 1880s, and was largely the result of building the transcontinental railroad, and deciding that a particular gauge was going to be used for that, and then gradually moving towards that being the standard gauge for all railroads. More complicated than that, and equally important, perhaps maybe even more important, was the fact that until something that used to be called railroad time, and that we today call standard time was developed, riding on trains was an extremely dangerous affair. Let me give you an example. Most railway tracks were single track lines, so that meant that if a train were to leave one end of the line, it had to arrive at a crossing somewhere, where there would be a siding. It would pull off, and wait for a train coming the opposite direction to go past. Since you didn't have standard time, that is to say, every little town had its own time, what that meant was that it was very difficult to predict where those two trains were going to come to the crossing point, where they have to go past each other. The result was an enormous number of head-on collisions. There were several ways to solve that. The most obvious way to solve that was to build two tracks, but to build two tracks was quite an expensive proposition, especially if there wasn't sufficient freight on the line to justify a second track. The ultimate solution was the creation of standard time, which allowed a given train to leave at a particular time that would be immediately knowable to people on the other end of the line and thereby to ensure that the trains would manage to pass each other at a point where there was a siding, and wouldn't collide head-on. I think that's just a few of the standards, but to that we would of course have to add that there needed to be standards for the track bed, so that trains that were heavier wouldn't sink into the mud. There had to be standards for bridges. There had to be just an enormous array of standards for the railways, and they had to be distributed across an entire nation, at the very least across an entire nation. In Europe, of course, they had to be distributed across many nations. Even today, there are several European nations that have standards that are not compatible with the most common standard, so Spain, for example, accepting its high-speed trains that have just recently been put in, all of the other lines in Spain are simply not compatible with the standards in the rest of Europe. You literally have to get off a train at the border, walk across, and get on another trainer. Obviously rather time-consuming and clumsy kind of thing to have to do. One of the other cases where you find standards is in science itself, so for example, in order to produce rat studies, of which there are literally tens of thousands now, you had to have standardized rats, and starting in the 1930s, it was a major effort to create standard rats. Standard rats were not your typical sewer rat. That would probably be rather nasty. It would be of enormous genetic diversity, would have a rather poor diet, and an enormously variable diet, and the idea was to produce rats that had a standard diet, had a standard amount of exercise, had a standard genetic base, and that were relatively gentle in their demeanor, and would not resist human care. Doing that required the actual production of a detailed manual that went through everything from cage size to the position of water dispensers in the cage, to the kinds of specific nutritional elements that needed to be in the feed, and specific genetic types that were desirable. Today, if you are a scientist who uses rats in the work, you will have to go and buy those rats from one of three or four companies that produce particular rats that are designed for particular kinds of scientific studies. Picking the rat that you find out of the sewer would actually make your results rather useless.   Brady: I think what's so compelling about those two examples is that if standards play a central role in coordinating our understanding of time, and developing our knowledge, i.e., the albino laboratory rat is central for scientific study, it's not surprising that we're seeing the role of standards in all of the issues that we're addressing. What this word standard, how is it ... How do you differentiate it? How is it associated with other similar words, like regulation, or law?   Laurence Bush: I think there's undoubtedly an irreducible ambiguity there. Standards, for example, may be produced. A good example would be building codes. The standards that are used in building codes are developed by the private sector. They're developed by architects, plumbers, electricians, and so on, and those are then adopted by government agencies and turned into law. There's a rather ambiguous border between standards and laws, but of course most standards are not legally required. That is to say, they're not written into law. They are at least in principle voluntary, although avoiding those standards is often nigh impossible, or extremely difficult and expensive. Even if the standard is not a legally regulated standard, it is necessary to pursue it. I think, again, I don't think there's any way you can clarify this. This is an ambiguity that's built into our behavior, so at certain times, certain things are seen as standards. For example, until recently, whether or not smoking was allowed in a particular restaurant was up to the owner. These days, in most cases, smoking is legally prohibited in restaurants, so what was a private standard, what was a voluntary standard, becomes a law. The reverse, of course, occasionally occurs, although that tends to be relatively rare, where things that were in law are deleted, and left to the product sector. The other point I would emphasize here, too, is that given the enormous amount of technology that's constantly being developed, enormous number of products, processes, services that are constantly being developed, that there is a continuing and extraordinarily important need for new standards, without which these things literally can't function. A good example would be all of the IT information that ... I'm sorry, all the IT products that are available, which require literally thousands of standards. If I developed a new super duper computer that could do many, many things that are currently unavailable on existing computers, but I couldn't plug that into the larger system, so I couldn't connect it to the internet, I couldn't make it talk to other computers, I couldn't share files and so on, it would be essentially useless. It's all those standards that allow compatibility, and what in the computer science community is known as interoperability, that make that kind of stuff possible. These are constantly changing, constantly being updated, constantly being modified as new technologies arrive.   Brady: Do you see that the role of standards has changed over time? Are there more of them, or are they changing in character, or have they always been this essential means by which we construct order in the economy, or amongst relationships between people?   Laurence Bush: I think there are two parts to the answer to that question. First, I think there's no question that over time, the number of standards has increased markedly. That's partially a function of the production of, mass production of various kinds of goods and services that starts in the 19th century. Once you start to produce things en masse, you wind up producing things that are in some sense standardized. Late 19th century, you see a huge movement to create publicly available standards, to do things like, for example, reduce the number of different kinds of screw threads, to

    41 min

  3. 2025-03-14

    Understanding Rural Canada - Octoboer 19th, 2011

    Ray Bollman discusses terms, trends, and policy issues relevant to understanding rural Canada. Transcript Brady Deaton: My guest today is Ray Bollman. He and I will be discussing issues related to rural Canada and policy. Ray has been the focal point in Statistics Canada for rural research and analysis since the 1990's. He initiated Statistics Canada's rural and small town Canada Analysis Bulletins in 1998 and there are 62 of these bulletins now available. We'll provide a URL to them on the website. Before his retirement, he was the Chief of the Rural Research Group at Statistics Canada. Hi Ray and welcome to FARE Talk.   Ray Bollman: Yeah, thanks for calling.   Brady:  Ray, let me begin by asking you, how should we think about rural? What is rural?   Ray Bollman: Well different people, we do it differently. I'm an economist, so I would look at the price of rurality and I would look at distance, density and the distance to density. And that's sort of the way the World Bank Rural Development in 2009 on Reshaping Economic Geography clearly stated the issue of regional geography as in density and distance to density. And so density then is the advantages of glomerated economies and the distance to density, there's economic distance, price and time to get there, but there's social distance and psychological distance to density. So I look at it as distance in density. Some people will talk about is as identity. So if you feel rural, even if you're living in a city, you might behave differently. I would say gee, you're facing the same relative prices in the city, whether you feel rural or not, so I don't think you'd behave differently. Maybe that's an empirical question.   Brady: So for some folks, when you talk about glomeration effects being associated with the density character of urban and then lower density in rural, what are we talking about? A glomeration effects occur in urbanized areas ...   Ray Bollman: It's because it's a lower cost of people living together and working together. Firms, if they're beside each other, in much the same industry have lower cost because they have better access to specialized labor force. Their employees would go to the same church, or drink at the same bars, or curl at the same curling rinks, and over the conversation just exchange of tasset knowledge. They would just exchange tidbits on how things are done in their particular occupation or their particular industry. And if that firm was in a more remote area, that exchange of tasset knowledge's could not take place. You could read on the internet the written knowledge but the embedded or tasset knowledge that the specialized workers have, that they do not write down, just cannot be exchanged over the internet, you have to do that at the elbow of the master, if you will, and that's a big advantage of a glomerations and having both people and firms being close together.   Brady: So, I guess, part of the idea, is if you're in an urban area, if you take the same person, or the same firm, from a rural area and move them to an urban area, they may be more productive. Because of the exchange of this tasset knowledge and the interactions with experts in the area.   Ray Bollman: Yep.   Brady: Yeah.   Ray Bollman: Yep. More productive or lower cost unit output, same thing. That's right.   Brady: Okay so that's part of the density issue of rural. And the distance, can we think about that, and you mentioned this is cost, takes longer to transport good and information to rural areas.   Ray Bollman: Yeah, to rural areas and from rural areas. So in some sense, the high price distance is an advantage for some rural firms, cause they have a distance tariff and so you might be able to set up a business in a rural area because it's too expensive to import that service, or that facility, yeah that service from an urban area. So the distance is a nice tariff barrier. But the other side is, if you're producing something in a rural area, it's going to cost you something to ship it to the urban market. And it's going to cost you something that you're gonna have a harder time finding out how that niche, or that product, or that market, is developing and how you should change your product. If you're living in the middle of the market, you have an intuitive feel how that market is changing but if you're living away from the market and shipping it to that market, you have harder time just being with the market and I don't know ... what color you have to do, what your promotion should be, how fast you have to change your good or service. So it's just not being aware of the changing market if you're at a distance and so there's a bit of higher cost on the market research side.   Brady: Now I notice in a number of your writings, and we'll makes these available on our website, but you make the point, I think it's a really important one, that rural is not necessarily low density and remote, sometimes it can be high density and remote. And talk to me a little bit about those two issues.   Ray Bollman: Yeah well, and one of the papers you might reference there set up a little grid, and so two by two table, and you could be, if we think of rurality as density and distance to density, so on the table, one dimension is from high density to low density, so as you get to more low density or more rural. But some of those low density places, those small villages, could be in the commuting shadow of a big city. So some of us, if we took our spouses to these small villages that are within the commuting shadow, they would see a cow out the front window and say gee, this is really a rural place. And your kids would probably go to a fairly small school and have the benefits of a small school, but maybe the cost of a small school. But there might be benefits of a small school. If you wanted to become the editor of the school newspaper, I'm sure you could get on the committee at least. And if you wanted to play basketball, I'm sure you could get onto the team. And but your spouse would have access back to the big city for a big city job, you know brain surgeon, NHL trainer, or whatever. So if you're a small community, small density, low density community, within the commuting zone of a big place, you have the benefits, if you will, of low density, and the advantages of short distance to density. So you could go the other way on that grid, from high urban, that's big places, to high rural, which would be long distance. So you could be a long way from a metro center and have a pretty dense town or city. And maybe you think Dawson, Manitoba, or Mattawa, Ontario, or places like that 6, 7, 8. 9,000 people, you might have two high schools in those places that are very competitive basketball teams, and you'd have trouble making the teams. But it's a rural, and small town economy, a small town labor market and there'd just be no jobs there for your professional [inaudible 00:07:34]. And if you became the teacher or the principal of the school and your spouse was a dentist, there's probably already one dentist in that town and there'd just not be a job for your spouse. And they'd be too far away from the metro area to commute. So there's a fairly high density place, looks a bit urban in some sense, but no distance, long distance to a metro job. So you can have small towns close to areas, or you can have big towns away from metro areas, two different types of rural places and different types of options, different types of opportunities, I guess different types of policy options too.   Brady: I think that's really important point. When I was working, in Central Appalachia from 1995 to 1997, I was confronted with this issue, that there were pockets of real dense housing in relative rural areas. And this was particularly challenging, because the issue that we were working with was trying to address sewage runoff into the river. And the primary way that was being thought about how you deal with this in rural areas, is to put in septic tanks. But in this area of Central Appalachia, where there were pockets of very dense housing, as a result we refer to them often as cole camp areas where houses were developed, basically row houses in a rural area, to house workers that were working in the mines, there wasn't the kind of space to put in a septic tank.   Ray Bollman: Right, right.   Brady: And when you met, often times, with people that were involved in it, their approach to the problem was, oh well this is a rural area, and the way you deal with a problem is to put in septic tanks. But the density was such, within this rural area in the sense it was remote from major cities, that the density was as challenging as any urban area.   Ray Bollman: Exactly. And the general rural observation is if you seen one small town, you've seen one small town. And they're all different. And if you're sitting in the 13th floor of the metro center worrying about rural policy, the capital city worrying about rural policy, rural areas are so heterogeneous that you just can't say, well if it's rural, obviously it's low density and sparse and therefore septic tanks. Because it's just a lot of differentiation out there. But trap sets the first law of statistics, right? The within variability is always than the between variability, so the between variability between urban and rural, on average, is not very big. But the variability within rural is big, and of course the variability within urban is big. Which is to say within variability is always bigger than between variability.   Brady: And I think it's also important to note, and you note this elsewhere, that if you go and you talk to residents of a quote unquote rural community, they will reflect that variation of understanding in their own discussion. So you might be in what you think is a rural community, and ask them what rural is and they'll refer to a different place in the

    45 min

  4. 2025-03-14

    The Canadian Wheat Board (CWB): Assessing the future of wheat marketing in Canada. - October 20th, 2011

    Dr. Murray Fulton and Dr. Brady Deaton discuss the Canadian Wheat Board (CWB) Transcript Brady Deaton: Welcome to FARE Talk where we set out to provide enduring discussions on contemporary topics relevant to our economy with particular emphasis on food, agriculture and the environment. My name is Brady Deaton Jr. Of the Department of Food, Agriculture and Resource Economics at the University of Guelph. I'll be your host. Today, Dr. Murray Fulton and I will be discussing what's going on with the Canadian Wheat Board. Murray is an agricultural economist and a professor in the Johnson-Shoyama Graduate School of Public Policy at the university of Saskatchewan. He has a long interest in Agricultural policy and in marketing systems. He is the co-author of a report by the Economic Council of Canada titled, Canadian Agricultural Policy and Prairie Agriculture, and has extensively studied the structure and behavior of the agricultural marketing systems. Murray, thanks for being with us.   Murray Fulton: Oh it's a real pleasure.   Brady: Murray, what's going on. How do we start this. How do we start to understand what's going on with the Canadian Wheat Board. Keep in mind there'll be people tuning in who aren't aware of the current situation.   Murray: Good starting point Brady. Here's what's going on. What we're seeing in Canada over this next year, I mean, by next summer, we will have in place in Canada a completely different marketing system for wheat and that includes Durum and Barley for human consumption, malt and barley. When I say a completely different system, I mean that in the strongest sense. What is happening is the replacement of a marketing system that, while it's evolved in some considerable ways, has retained the major fundamental structure that it acquired back in the 1930s and the 1940s. That's a mixture of an administrative and market system with Canadian Wheat Board playing a key role in that grain handling and transportation system for those grains, wheat and barley, in Western Canada. What we're going to have by next July is some kind of much more market oriented system without the Wheat Board, at least without the Wheat Board as a compulsory marketing agency, which has been the case since the 1930s. There is still a question, I'll come to this at some point about whether or not a voluntary Wheat Board might be in place. But regardless of that central role, that the Canadian Wheat Board was playing, will no longer exist. There is considerable discussion going on by farm organizations, the industry participants, these are the railways, the elevator companies, the millers, as to exactly what kind of rules are going to be put in place come next July and August.   Brady: All right. One of the terms that's often used this Single Desk Selling Authority. My understanding is that that ensures that the Canadian Wheat Board can basically purchase all of the wheat and barley for export or human consumption. Is that for all of Canada or just particular provinces.   Murray: The Wheat board only applies to the Western wheat growing area. This includes the grain growing areas in [inaudible 00:03:40] Saskatchewan, and Alberta and up into the Peace River area as well. Wheat growing in Ontario does not for instance, does not come under the auspices of the Canadian Wheat Board. You're right the term that is used is the Single Desk Selling. This is actually key to that central role that the Canadian Wheat Board has been playing. Just very quickly what this Single Desk means is that all farmers in the [inaudible 00:04:14] Wheat Board area are required by legislation to deliver their wheat or durum or barley for human consumption to the Canadian Wheat Board. The Canadian Wheat Board then on behalf of the farmers then markets that grain, both domestically and internationally. What the board then .... This is an additional element in its, it's not strictly connected with the Single Desk though it's grown up with it. What the Wheat Board has done for the most part then is take that grain, all the receipts from that grain that it sells and offers back to farmers a single pool price. All farmers, basis the export position get the same price. Regardless of whether the grain that the farmer delivered to the Canadian Wheat Board was sold in November at a particular price or in May at a different price or even sometime in the middle of July at perhaps at a third price, all farmers would get exactly the same price. Now, what I need to say is that, that's adjusted, the price that an individual farmer will get will be adjusted for where that farmer is located in the grain growing region. The reason is that, off of that price that the Wheat Board provides, has to come the cost of grain transportation and grain handling. Depending upon where you are and the kinds of distance you are to port, or the degree of competition that there might be between grain elevators, farmers will end up having a different deduction, one from another.   Brady: Okay, I want to work through, maybe a simple example of that, but I also want to then talk a little bit about the change that's coming because as I understand the change actually hasn't happened yet. I think there's some interesting nuances there. First let me just make sure I've got it straight. If I'm a wheat farmer right now, under the Single Desk Selling Authority. Say, I've harvested my wheat crop, walk me through really quick, how I'll work with the elevator and the price that I'll receive. Again building off of what you said abstractly but say, I'm done with harvest, what happens to me now.   Murray: What farmers will have done and I won't give you all the gory details, but what they would have done in spring is signed a contract with the Canadian Wheat Board indicating roughly what their planting intentions were going to be so that they said, "Well, I'm going to be roughly seeding this much wheat, this much durum, for instance and malt and barley if that's what they were doing. The Wheat Board has an indication of the amounts of grain roughly that are going to be out there. They adjust these planting intentions of course for yields that are occurring. The Wheat Board, if you like, has a basic idea of how much grain it has. It keep pretty good track of the quality that's coming in, if there is an early frost in a particular area, they know that that grains maybe marked down to a Number 2 or something like that. As the Wheat Board, as their customers come forward and say, "We need grain of a particular type." They will go out to farmers and ask the farmers to deliver on those contracts that they had signed back in the spring. They may come and say, "In November, we want you to deliver 25% of that contract that you had signed." Farmers then would deliver that grain. Here's where it's interesting. The farmers now have complete choice as to which elevator company they would like to deal with. What's happening at the same time is as the board puts out these calls to the farmers for grain, they, at the same time approach the elevator companies and have the elevator companies bid on the right to fulfill those contracts. For instance, Viterra, the largest grain handler may decide to bid on a particular amount and it is then up to Viterra to make arrangements with the railway to have sufficient cars in place. Now, the railway also has to coordinate with the Canadian Wheat Board and I'll come back to that in just a second. At the same time the elevator company has to go out and make sure it's offering the right kinds of incentives to farms to get that grain delivered, in this case to the Viterra elevators rather than to a competitor elevator. You have, what I'm calling a mixture of an administrative system with the Wheat Board providing the broad demands that the system needs to meet and then having bidding going on or ordinary market competition to actually get the operational components to fit to those macro demands. Let me just continue on that. A farmer will then say, "okay, I'm going to deliver to Viterra." They may for instance have a trucking subsidy in place that has encouraged them to go to Viterra, rather than to say one of the competitors. The farmer would deliver that. They would get, what's called and Advance Payment that pays them some proportion of what the wheat board anticipates will be the final payment due. The reason the board doesn't pay out the entire amount is that the board has to keep that contingency in place, in case the market should tank sometime in the future, the board would not be able to meet its obligations without incurring a deficit. This procedure occurs over the year, with farmers getting their Advance Payment. At the end of the crop year, at the end of, sometime in July, the board totals up all the revenue that it had obtained, divides that through roughly by the amount of grain. This is done by various classes. You'll look at a top grade versus dropping down to a second grade and so forth and each of those will be done separately. They will take that total revenue, divide by the total number of bushels or tons that were sold and come up with that average price. The farmer then will get the difference between that final price and the initial price that they had been paid. Now, often the board knows or has a pretty good sense part way through the year that they are going to be able to pay out a final price. They'll have some interim payments to farmers that get a little bit closer to that final price. Now, meanwhile, the farmer also then has to pay the elevator company and the railway for the grain that they are hauling. They will have a bill that they will pay at the elevator that will break out the amount that the elevator company is collecting for storage and handling as well as the amount that the railway has charged the elevator company to haul that grain to port. At the end of the day, the farmer gets t

    50 min

  5. 2025-03-14

    The Origins, Nature, and Content of the Right to Property: Five Economic Solitudes - February 15th, 2012

    Dr. Glenn Fox and Dr. Brady Deaton discuss Glenn's longstanding interest in property rights and his recent publication in the Canadian Journal of Agricultural Economics. Transcript Dr. Brady Deaton: Welcome to FARE Talk, where we set out to provide enduring discussions on contemporary topics relevant to our economy with particular emphasis on food, agriculture, and the environment. My name is Brady Deaton, Jr., of the Department of Food, Agriculture, and Resource Economics at The University of Guelph. I'll be your host. Today, Dr. Glen Fox and I will be discussing his long-standing interest and research on property rights. Glen is an agricultural economist at the University of Guelph. He was recently honored as a fellow of the Canadian Agriculture Economic Society and his fellow address, recently published in the Canadian Journal of Agriculture Economics. This address will be linked to this podcast. Glen, welcome to FARE Talk.   Dr. Glenn Fox: Thanks Brady.   Brady: In your paper, you point out the many long-standing controversies in agriculture and natural resource policies are really debates about the nature of property rights. That's the issue that I want to tackle in today's podcast, but before I do, I wonder if there's some kind of story or anecdote that you can give that kind of sets the stage for our listeners.   Glenn: I started working on this topic about 20 years ago, actually, Brady, with one of my master's students named Mike Ivy. And Mike and I were interested in a topic which had become sort of visible or had emerged in importance in the late 1980s, in the early 1990s on the question of when or under what circumstances does a regulation become so costly or so burdensome to a landowner to become the equivalent of a taking, to become tantamount to expropriation. And so we started to read legal literature, economic literature, read some case law, and we very quickly were confronted with a paradox. And the paradox was that most of the literature, whether or it was being written by economists or by lawyers or by political scientists or ethicists, dealt with a small number of cases typically that had gone to the U.S. Supreme Court. They used apparently the same words and concepts, but when they got to the punchline, this critical question, does regulation constitute a taking, the answers were all over the map. And we had a great deal of difficulty figuring out why when there's only so many cases and they appear to all be using the same words, that the interpretations or the conclusions could be so divergent. And after staring at this for a while, we realized that there was something else behind the scenes. And the something else behind the scenes was that each of the authors was invoking a different theory of property rights. And initially we identified three different theories of property rights. Subsequently, we've refined that and now have a list of five theories of property rights that I think exist in work that economists do, but also that legal theorists do. And the five are: classical liberalism, pragmatism, utilitarianism, legal positivism, and then modern libertarianism.   Brady: Now in the regulatory [inaudible 00:03:10] situations in the United States there's this reference to the Constitution. So, the Fifth Amendment of the Constitution. In the Canadian context, is there something like the Fifth Amendment there?   Glenn: That's a good point. The reason that this word "takings" came up, the reason it's in this literature is because of the one clause referred to as the "takings" clause in the Fifth Amendment to the U.S. Constitution. There is no equivalent to a "takings" clause in Canadian constitutional law. There is another paradox and this is still something that puzzles me today and I don't have a good answer to this is that while there is a "takings" clause in the U.S., there is not a "takings" clause in Canadian constitutional law. The practice has generally been in Canada, when regulations have been found to be excessively burdensome that property owners were compensated whereas the practice in the United States under "takings" clause has been generally that property owners have not been compensated when they've subject to certain types of regulations. So that's a bit of a mystery to me, but -   Brady: I mean I think one of the [00:04:18] in our area, one of the things you hear referenced a lot is this Crow rate subsidy. And that's an example of where farmers or landowners were ultimately compensated for the fact that their guarantee of basically lower shipping rates was taken away by an act. Is that something that comes up in your understanding of this topic and kind of contrasting the U.S. situation with Canada?   Glenn: I think that's a related development, but it's really somewhat different from the regulatory takings. In the case of the Crow rate, which were these grain transportation subsidies off the prairies, those subsidies meant that the price of grain at the farm gate in the prairie provinces was higher than it otherwise would be because essentially those farmers were price takers so whatever price they got was the world market less the transportation cost. If the transportation was subsidized then their price went up. So grain farmers had a higher price. Livestock producers in the prairies were at a disadvantage because their feed costs were higher. So when the decision was made to phase out these Crow rate subsidies, there was compensation ultimately that was paid to farmers because of this sort of entitlement that had emerged, particularly to grain farmers. They had that built into their cost structure and really, I think for sort of reasons of political expediency, the government said, "We need to get away from this policy and we recognize that there are people whose livelihood has been helped by this policy and who will be hurt when we take it away. But we're going to take it away so we'll compensate them for that. The regulatory takings issue is really something quite different and maybe an example of wetland policy, might be an example. So you think of a farmer who's got a wetland or a marsh on his or her property. Then there's some policy measure that designates that as some sort of protected area under a wetlands protection policy. Once that designation is imposed, then that restricts what the farmer could do. Up until that point, maybe the farmer could drain the wetland and turn it into a mock gardening agricultural operation. Well, now that option's off the table and the farm is arguably worth less than it would have been, because the option to do that has been removed. And so the farmer might say, "My farm was worth a million dollars before and now it's worth half a million dollars. I need to be compensated for the imposition of that regulation to protect the wetland on my farm.   Brady: So just to make sure I've got it straight. In Canada, if the government compulsory takes the land, actually takes it, then there's the tradition of compensation. But if the question or the line that you've been kind of working on is when you change the economic value or the market value of something through regulation, then at what point does that constitute something that should be compensated for? And of course that's the big debate in the U.S. literature examining Supreme Court decisions. And it's still [inaudible 00:07:35] your observation of things that are going on in Canada. Let's take a couple of cases that you think - That you cover a number of actually applied situation in the Canadian context to examine the origin of property rights and how that helps illuminate the controversy around different natural resource issues. Let's take a couple of those and maybe just illuminate this idea of the origins of property rights being very helpful in illuminating aspects of that controversy.   Glenn: Well, one of the examples that I understand you've done a previous podcast on this subject already, but- One of the long-standing controversies in Canadian agricultural policy has to do with the Wheat Board. And under the framework developed by federal legislation for the prairie provinces, producers of certain types of grain had to sell that grain to the Wheat Board. It was called a [inaudible 00:08:30] selling agency. It was the monopoly buyer that was then tasked with the job of marketing that grain, particularly to export markets. There are numerous sides to that debate, but I think two of the sides that I think illustrate these different property rights are on the one hand, some farmers and some agricultural economists and some people at the Wheat Board argue essentially a utilitarian theory of property rights. And the utilitarian theory of property rights says that an arrangement, a policy, an institution is a good policy or a good institution if it maximizes the sum of utilities in some net sense, it maximizes the net benefits for everybody that's affected by the action. So the utilitarian pro-Wheat Board argument would be that farmers on net gain, even though they've had this restriction on their ability to sell grain to any customer that they choose because of the operations of the Wheat Board. Because of counter[inaudible 00:09:41] market powers or economies of size or scale or whatever. And so there's a net gain even though some individual farmers might be disadvantaged. And so that would be the utilitarian perspective.   Brady: You know, in the previous podcasts we discussed this a bit and we look at our own profession, agriculture economics and its debate about whether or not the Wheat Board was able to increase net returns to farmers. And so that would be an example of our literature, would you characterize as being kind of utilitarian in origin?   Glenn: Yes, and when I'm saying that there are these different theories of property rights, it's not to say that there aren't what I'll call "intermural contests" wi

    25 min

  6. 2025-03-14

    Farm Succession Planning: Reflections and Suggestions - May 11th, 2012

    Jennifer Stevenson and Dr. Brady Deaton discuss farm succession planning. Jennifer is the Business Finance Program Lead with the Ontario Ministry of Agriculture Food and Rural Affairs (OMAFRA). Transcript Brady Deaton Jr.: Welcome to FARE Talk, where we set out to provide enduring discussions on contemporary topics relevant to our economy with particular emphasis on food, agriculture, and the environment. My name is Brady Deaton, Jr. of The Department of Food, Agriculture, and Resource Economics at The University of Guelph. I'll be your host. My guest today is Jennifer Stevenson, she works for The Ontario Ministry of Agriculture, Food, and Rural Affairs as The Business Finance Program Lead. She is very involved in supporting farm tax and business seminars, as well as ongoing efforts to enhance the capacity of farmers to develop succession plans. Jennifer, welcome to FARE Talk.   Jennifer S.: Thank you.   Brady: I recently heard you speak in Fergus about succession planning, particularly as it relates to the agriculture sector, and it was really interesting to me. I hadn't read that much research on it, but I was aware of the issue, and I was hoping that we could explore that in today's conversation. So, just to kind of get the ball rolling, talk to me a little bit about your role with the ministry in looking at succession planning?   Jennifer: Actually it's a recent role that I've taken on, as one of my colleagues went to a different role. But what I'm seeing in talking with producers and producer groups, is that succession planning is definitely top of mind. There's a lot of concerns, and there's concerns most on the technical side, because there's obviously some tax implications, but also on the human dynamics side. A lot of people have, shall we say, a reluctance to talk about the human dynamics problem. So what I try to do is demystify that, bring it right out on the table, let's talk about it, and having them recognize that they all really share the same kind of problems, and also to find some solutions, maybe sometimes some out of the box solutions, to those problems.   Brady: Breaking down this whole idea of succession planning, when I hear it talked about and when you talked about it, there always seems to be two kind of components to it. The succession planning, which is about the business of farming, and passing that to the next generation, and the estate planning. Are those important or what do I need to understand about those two?   Jennifer: Yeah. I don't know if you remember when I actually gave that seminar, but one of the things I said right off the top is you've got to separate wealth from income, because the thing about farming is that most farmers actually live where they work. So, their wealth is actually tied up into their business, as well as their home, and a lot of that wealth has been accumulated on what I call an emotional basis. Meaning, that's where you've raised your kids, that's home, that's comfort. So, what you have to do is be able to separate the business assets from those emotional or home type assets. Look at what's really generating income, as opposed to what's accumulating wealth over the course of the business? If you take a look at farm wealth in particular, I mean let's be honest here, we'll talk about land assets. They have tended to appreciate to a higher degree than has the S&P 500. So, there's been a fair accumulation of assets within the agricultural community. So, you're talking about a substantial amount of wealth that's been accumulated, so when you're looking at the next generation coming in, you have to ask the question, "Are they ready to take over the wealth? Are they capable? Are they able to get financial backing?" Let's say from a traditional source, let's say from a financial institution like a bank or whatever. If they're not, what do you do? Are you able just to gift it? Or, do you have to look at some other scenarios? I think that's the big problem out there.   Brady: Right. So, I mean, and then that probably gets into the emotional sensitivity. If you think about a farmer thinking about a succession plan, but also thinking about how they're going to deal with their estate, or bequest their estate, and they're looking at land as you mentioned, as one of the big, if not the biggest item, they're often dealing with children that are both active potentially on the farm operation, but then often times a lot of children that aren't on the farm.   Jennifer: Well also, what you're talking about is protecting assets, because we take a look at the divorce rate of being 50%, they're also looking at protecting assets from divorce. I mean, let's be honest. If you've built up this emotional capital that you've put a lot of blood, sweat, and tears in over the years, it's really hard to envision that this is going to come apart. So, you're absolutely right. There's a lot of investment, a lot of thinking, and some people just don't even want to deal with it. They just want to avoid thinking about it. But understanding that avoiding doesn't make the problem go away, so we have to try and think of a way to get people at the table talking about these issues honestly and openly. And also bringing their stakeholders within their family, and the potential stakeholders, so that they can put these issues or ideas in a gentle sort of way, but one that will get everybody not at a perfect result, because I understand that succession planning is not a perfect process, but at least something that a compromise that everyone can live with.   Brady: One of the issues that was brought up there was a great site and I'll provide a link to it. I'll provide a link to your sites on OMAFRA as well, as links to the site I'm about to mention, which is the [Burmont 00:05:43] Extension Program, but they talk about one important aspect of farm succession planning, is these farm business agreements which in one way or another have to account for the five Ds. Death, disaster, disability, divorce, and disagreement.   Jennifer: Absolutely. Farmers have a tradition of, "My handshake is my word" so a lot of it is changing the culture to recognize that, hey, this is a business. You are the CEO of your business, so we have to make things formalized. The nice thing about formalizing an agreement is it takes the emotion out of it. So, putting things on paper, having people sign agreements is a way to be able to secure your assets, in terms of you know exactly what your rights and responsibilities are, as well as the other person's rights and responsibilities. Again, it comes down to getting that culture shift in people's minds.   Brady: Well, let's take a scenario that I imagine is out there where a farmer is in a sole proprietor situation, but they have several children. One of them who may have a handshake or an informal agreement, that they'll get the farm. If that isn't written down, and the person were to die without say a will that guaranteed the land to the individual, then I imagine that person is no longer, despite the fact that there was an informal agreement, that that informal agreement is not the formal agreement that actually occurs, and that person's in a whole heap of trouble.   Jennifer: Oh, yes, yes, yes. When I give any kind of workshop on succession planning, I say, "Hear this. If hear nothing else, hear this, that if you die without a will, what you're doing is handing over control to a person you've never met to make financial decisions on your behalf." So, it's extremely important to have a will. Also, if you're planning on bringing kids into the business, why wait? Bring them in as soon as you possibly can, and bring them into financial discussions. Bring them into the bank, bring them in when you have a discussion with your accountant. It's incredibly important to have that level of commitment and allow them to establish a level of commitment in the business.   Brady: I know land is interesting to us both, and land is so expensive, and in a lot of places in Southern Ontario, its value is not only reflective of its farm productivity, but also of its potential future non-farm activity, which makes it hard for the next generation to actually maybe afford the land at its market price. How do people account for that in their succession planning?   Jennifer: Yeah, I mean you're talking about extrinsic versus intrinsic value, and again, it comes back to wealth versus income. You've got to make sure that you can provide yourself with an income before even looking at your business plan. Make sure that the idea at the end is that there's going to be enough income to be able to provide for your wants and needs. The other thing to remember, too, is that we've been I think lulled into a certain level of complacency that the level of interest rates right now are so low that looking at the future, are they going to be this low in the future? Might not be, right? Just looking at the past, and in fact, I was talking ... Sorry, I was listening to Dr. David Kohl who had a presentation yesterday about this issue. Said that what he called normal interest rates were only about 6 or 7%. So, if you had for instance, a mortgage at 2%, and it went to 4%, you're actually doubling your interest expense. So, I think a lot of kids coming in, or young adults coming into farming right now have to recognize that these interest rates that we're seeing right now are not "normal" interest rates, and that if they go to refinance in 5-10 years, they have to consider what that interest rate will likely be.   Brady: So, in terms of succession planning, I guess there's two ends to this. The first end is if you're the current owner looking into the future, trying to either asking yourself what you're going to do with your land, whether you're going to give it to your children or whether you're going to sell it, one of the challenging is how are you going

    26 min

  7. 2025-03-14

    Does Dutch Disease Explain Canada's Manufacturing Woes? - June 14th, 2012

    In this podcast Jeremy Leonard and I discuss a paper that he and his colleagues - Mohammad Shakeri and Richard S. Gray - recently published through the Institute for Research on Public Policy. The paper is titled, "Dutch Disease or Failure to Compete? A Diagnosis of Canada's Manufacturing Woes," and is available for download. Transcript Brady Deaton Jr.: Welcome to FARE Talk where we set out to provide enduring discussions on contemporary topics relevant to our economy with particular emphasis on food, agriculture, and the environment. My name is Brady Deaton, Jr. of the Department of Food, Agriculture, and Resource Economics at the University of Guelph. I'll be your host. Today my guest is Jeremy Leonard. Jeremy is a research director at the Institute for Research on Public Policy. He and his co-authors, Mohammad Shakeri and Richard Gray, have just recently released a study titled, Dutch Disease or Failure to Compete, A Diagnosis of Canada's Manufacturing Woes. Jeremy, welcome to FARE Talk.   Jeremy Leonard: Good to be here, Brady.   Brady Deaton Jr: Jeremy, before we start, talk to me a little bit about the Institute that has published this study.   Jeremy Leonard: Sure, I'd be pleased to. The Institute for Research on Public Policy is a national think tank based in Montreal, Quebec. We're just celebrating our 40th anniversary this year. We were created in 1972 as an independent think tank. We don't have members and we do not have supporters. We're supported by an endowment fund, which basically allows us to produce studies that are evidence based, and try not to take ideological or political sides in debates. Our role is really to inform and spark debate; pose the questions before we come up with the answers. We study a diverse array of issues including economic issues like the one we're going to talk about today, as well as more social issues like immigration, aging, and a whole host of other issues.   Brady Deaton Jr: All right, and I should say that we will link the listeners up to your site so that they can download this study if they want to read it more fully. Let's start off just by impacting your question. The paper's question, Dutch Disease, or Failure to Compete. What generally is prompting this question?   Jeremy Leonard: What's prompted the question is two facts over the past several years that are undeniable. One is the fact that the Canadian dollar has strengthened considerably over the last five to six years, going from about 60 to 65 cents to parity today. That's a fact. Another fact is that the manufacturing sector has been shrinking in Canada over the past five, six, seven years. That shrinkage started happening well before the recession, and it happened at the same time as this appreciation of the currency. There's a natural question because the issue of the Dutch disease is really just that. The one, appreciation of the currency, causes the other, problems in manufacturing. We're clearly seeing these two things happening at the same time. We thought it was important to sort of dig a little bit deeper on the question, is one really causing the other or are they both happening at the same time for some other reason that we haven't taken account of.   Brady Deaton Jr: One of the things that I was trying to work through in kind of preparing for this podcast, was a better understanding of exactly this term, the Dutch disease. When you first hear it, it sounds like it's something that's damaging to the economy overall or having some kind of miserating effect on the economy. But, in wading through it, and I'd like to get your thoughts on this, it seems more like an effect than a disease. What are your thoughts about that?   Jeremy Leonard: The term Dutch disease comes from Holland as the name suggests. There were discoveries of natural gas off the North Sea off the coast of Holland, and that created tremendous demand for those energy resources. That energy demand can be a good thing for an economy because it brings in dollars; it increases exports; and a whole host of other things. One of the things it also does it that the people who are interested in buying these resources are using Dutch currency to do it and it causes an appreciation in the Dutch currency which did raise the cost of exports to Dutch manufacturing exporters. And, in fact, the Dutch manufacturing sector did decline considerably. You could argue that the term Dutch disease is really an effect of something which can at the base have some positive effects. Since then, the Dutch disease has come to be a convenient shorthand to say, it's the exchange rate that's causing problems in the manufacturing sector. In some sense, in Canada, you can say the same thing about the developments of the oil sands. People can have different opinions about these aspects of it, but one thing that's absolutely clear is that it has brought very large amounts of money and economic resources into the country from the many other countries who are demanding these energy resources. That still leaves us with the question that we try to address in this study, which is, to what extent does that boom and those economic good times for the energy sector by force mean economic bad times for the manufacturing sector. That was really the goal of the study.   Brady Deaton Jr: Right. So, it's not, isn't bad for the economy. The whole idea of your paper as I read is really focused on this effect on the particular sector, in this case manufacturing. So, is there a negative relationship between a resource boom and manufacturing output. That's really what's going to drive the research that we're going to talk about. Talk to me a little bit about the theory, the abstraction, that drives the argument for there being a negative effect between a resource boom and manufacturing output.   Jeremy Leonard: Yeah, sure, and I touched on it a little bit, but we can go into it in a little bit more detail. The issue really boils down to the effect that there are some goods in the economy that are tradable and some that are not tradable. What happens when you have a boom of any sort, whether it's a natural resource boom or any other kind of boom, is you have a sector where there's very rapidly growing demand for services and production. That tends to bid up wages because the higher your demand is, you need to hire more workers, and anyone who has studied Economics 101 knows that in those conditions wages are going to rise and they can rise rapidly. So you'll have upward wage pressure in the booming sector, which is then going to trickle over into other sectors. People will be drawn into the energy sector, that will mean fewer people wanting to work in the non-energy sectors. The main result is you have this upward pressure on wages. This upward pressure on wages causes problems in industries that are exporting goods. Their costs are going to go up and they will not be able to raise their prices. Essentially what it causes is an increase in the terms of trade, which causes problems for exporters. We see this has manifested itself in a rising currency. That's sort of a very complicated way of explaining it, but it really has to do ... It's much more than just about dollars floating around the economy and whether the Central Bank is creating too much money or not creating enough or issues like that. It really has to do with some pretty fundamental economic effects that come about from this resource boom. We know the economic forces at play and the question then becomes, what's driving those economic forces, and then there are a number of things that can effect that. That's sort of the theory behind it. It's very well developed and you can look at it in terms of how flexible sectors are. In other words, how much labor mobility there is in sectors and things like that. Invariably what you find is that there's a possibility that the manufacturing and trade intensive sectors will be adversely effected, but it's not a necessity. In other words, you can certainly envision scenarios where you can actually see a resource boom and you wouldn't necessarily see an adverse effect. Given that the theory doesn't give you a definite answer on whether a resource boom is going to cause problems in manufacturing, we decided we needed to look at the actual numbers in Canada to try to answer that question.   Brady Deaton Jr: All right, so let's get into this. As you pointed out earlier, Canada's energy sector has experienced a boom; oil production has increased; gas has increased; Canadian exports have increased. We've got the first part. Talk to me about how you examine then how this effects manufacturing.   Jeremy Leonard: What we did was we basically did a two stage process. The first thing we wanted to get a handle on was to what extent is the strong Canadian dollar being driven by energy prices. There are many, many things that can affect the exchange rate besides energy prices. It can be prices of other commodities. It can be the stance of monetary policy. For instance, if interest rates are higher in Canada than they are in the United States as they have been for quite a few years, that's going to encourage investors to invest in Canada, which will also put upward pressure on the exchange rate. So the first stage was to examine the extent to which energy prices are associated with high exchange rates. The answer is that there is a linkage there, but the interesting finding there was that it's not just energy prices that are driving this exchange rate. It's also prices of other commodities like wheat; other commodities that Canada produces like industrial metals. So there is a partial effect. Stage one was simply to establish what piece of the strengthening of the Canadian dollar could be attributed to rising energy prices.   Brady Deaton Jr.: Before you get to the second stage, first stage you're basically just saying what is

    29 min

  8. 2025-03-14

    First Nations Lands and Economies - September 13th, 2012

    In this podcast Chief Robert Louie and I discuss the management and control of First Nations Land. Chief Louie is the Chief of the Westbank First Nation. He is the chairman of the First Nations Lands Advisory Board since 1989 and a member of the Order of Canada. Transcript Brady Deaton Jr.: Welcome to FARE-Talk where we set out to provide enduring discussions on contemporary topics relevant to our economy with particular emphasis on food, agriculture, and the environment. My name is Brady Deaton, Jr. of the Department of Food, Agriculture, and Resource Economics at the University of Guelph. I'll be your host. Today Chief Robert Louie and I will be discussing the management and control of First Nation's land with particular focus on the Framework Agreement on First Nations Land Management. Chief Louis is the Chief of the Westbank First Nation. He is the Chairman of First Nations Land Advisory Board since 1989 and a member of the Order of Canada. Welcome to FARE-Talk, Chief Louie.   Chief Louie: Thank you very much Brady. It's a pleasure to be here.   Brady Deaton Jr: I want to begin by mentioning something that's on the Land Advisory's Board website and have you kind of discuss it; and there's a statement there that's very powerful. It says, "For the first time in history of First Nations, we'll gain a window of opportunity to have the power as a Nation to manage its reserves, lands, and resources, and eliminate the bureaucracy of Justice and Indian Affairs." Talk to me a little bit about that.   Chief Louie: Well, it's extremely important for First Nations across this country that First Nations be recognized with inherited right to manage their own lands and resources; and for us this land management process and the implementation of land codes does exactly that. It recognizes the jurisdiction. It recognizes that First Nations are the lawmakers on their own lands, that they have the power to make laws over their lands and their resources; and that's fundamentally important. And it is the first time in the history of Canada, that such an accomplishment has occurred. First Nations were historically self-governing before the Europeans came to Canada, and now with Land Codes and with the Frame Agreement initiative, it recognizes that First Nations again have the jurisdiction to look after their lands and their resources.   Brady Deaton Jr: I think there's two big terms that will probably be used a little bit interchangeably, but I wouldn't mind if you could just unpack them a little bit. There's the Framework Agreement, and there's the First Nation Land Management Act. The Framework Agreement, of course, come into being in 1996. And the Land Management Act is in 1999, I believe. Talk to me a little bit about the difference between those, and how they came into being.   Chief Louie: The Frame Agreement is a government to government agreement that was negotiated by the First Nations and with Canada. And that Frame Agreement, back in the 1996 timeframe, at the time of signing, sets for principles that recognizes First Nations to have the inherited right to do such things, as manage their lands and resources. It talks about principles to protect lands, so reserve lands cannot be sold. It recognizes that third party interests are going to be protected. Principles of that nature. It's a fundamental document that set for strategy and set for the process, so that government could eventually pass its legislation, and that legislation was passed in 1999, the First Nation Management Act. By Canada passing that legislation, it ratify the Frame Agreement. What's unique about the Frame Agreement and the First Nation Management Act is very simple. It says and it recognizes that unilateral changes cannot be made without the consent of the other party. That's fundamentally important from the First Nation perspective, specially when we're looking at how laws are developed and the negotiations that took place to put forces [inaudible 00:03:54]. That's very, very important and it's very unique in Canada.   Brady Deaton Jr: The process leading up to the Framework Agreement it's quite interesting. It's something that emphasized discussions of the First Nations Land Management Act. The Westbank First Nation was one of the original signatories, what was that process?   Chief Louie: In the early 1990's, and even going back to the late 1980's, there was a movement by First Nations at ... We had to see the recognition of the inherited right of First Nations recognized. We had the constitution that was passed prior to that. It's spoke of, in section 25 and section 35 in that constitution, spoke of the inherited right of First Nations, but it wasn't implemented. This was a very serious contention by First Nations. When government look at, and it was about time of the changing government, it was the election process in the early 1990's that led to the liberal government, who wanted to come into power. They said to First Nations in their background, in the election process, saying that we would want to have First Nations recognized with certain inherited rights. We capitalized on that. Our process was "Let's do that", to do that we needed to get ourselves out of the Indian Act. We worked with the government when it became government and we negotiated the Frame Agreement. That really was the starting point to say, "Yes, there is a process, and if the government says they would support it, then, let's see the reality of it." The reality of it was the Frame Agreement and the eventual passage of the First Nations Land Management Act legislation. Of course, since then we have been [inaudible 00:06:09] First Nations who have passed land codes, who were now self-governing to the extent that they can now manage their lands and their resources.   Brady Deaton Jr: How many First Nations have opted in to the Framework?   Chief Louie: Right now we have 37 First Nations to actually become operational, that have passed land codes and are fully operational. We have 25 that are in the developmental phase today. We have a total of about 83 First Nations on the waiting list to become involved. When we add up all those figures, it boils down to about one in six First Nations in Canada are either involved or want to be involved in the Land Management.   Brady Deaton Jr: What are the steps if a First Nation wants to basically enter into the Framework Agreement? What are the steps by which that would be done? I wanna talk in a minute about the Indian Act, because I think that's important. If you wanna to move out of the Indian Act into the Framework Agreement what generally are the steps that First Nations would undertake?   Chief Louie: The First Nation that is interested in this process first of it has to have the genuine interest. And that interest would normally, and usually comes from the council of the First Nation. It has interest, it's heard of the Land Management initiative through one process, step, or another. It says and it feels, "Yes, this is something that could work for our community", that First Nation would then look at passing a bank council resolution to set the process, to say, "We have interest, we'd like to become involved, we have interest here, accept our resolution saying that we have that interest, it's signed that we wish to proceed." Now, in the recent years, last couple of years, government of Canada has said, "well, that's fine, but now we have to go through a process, you're going to have to fill out some application forms and let's take a look at all of the varies things that have to now be considered. Are you in third part management for example, do you have economic development needs, do you have any environmental issues or matters of serious concern, are you [inaudible 00:08:30] Canada?" Questions of that nature. Then Canada, once it has that application, will make a decision. It has the control, if you to will, to accept or reject the First Nation now coming into the process. If it accepts that First Nation, then that First Nation is recognized "Yes, you will now have an opportunity to participate when the funds and when time permits." Recently, in the Spring of 2000, the minister of Indian Affairs accepted to have that [inaudible 00:09:07] of First nations, another group, 18 new First Nations, from coast to coast, were then agreed upon to enter into the land measurement process. That opened the doors for those 18 First Nations. They're now in the developmental phase of their land code development. We still have many other First Nations for waiting. You can appreciate that cost money to have First Nations in developmental process. Canada has to set aside those [inaudible 00:09:38] and has to budget it. Right now, we're under certain budget constraints. Even though that we have KPMG studies, and studies of that nature, that suggest and support the fact that if a First Nation becomes operational, we can show and demonstrate through past history and review of the economical findings that that First Nation is going to bring a return to the investment into that First Nation going into developmental phase. It's been estimated that at least 10 times the return on that investment. By Canada investing into the First Nations to support them to become operational. Once it becomes operational, 10 times the return of the investment. And those investment returns grow every year.   Brady Deaton Jr.: Do the First Nations vote on whether they want to accept the new developed land codes? How is the community participation in this process?   Chief Louie: The community is very, directly involved. To [inaudible 00:10:40] the process is one thing. Then the First Nation, once it's gained entry into the developmental phase, it has to go through an internal process of ratification by its members of their land codes. Land Code is the laws that the community sets that follows the principle

    34 min
See All (58)

Trailer

5
out of 5
19 Ratings

About

Brady Deaton, Jr., the McCain Family Chair in Food Security in the Department of Food, Agricultural and Resource Economics at the University of Guelph, hosts the FARETalk podcast. The podcast provides engaging and enduring conversations about contemporary topics relevant to food, agricultural, and resource economics. The podcast has been running since 2011. OAC's The Why and How Podcast looks to answer big questions in agriculture, food, and the environment through casual conversations that are rooted in research. Host Josh Moran chats with graduate students, researchers and professors to learn more about the science behind today's hot topics and trends.

Information