Guaranteed agricultural prices: how does it work in the United States and Canada?
The idea formulated by Emmanuel Macron of floor prices to guarantee farmers’ income was met with skepticism or doubts from many players in the agri-food system. However, several countries including the United States and Canada have used similar mechanisms for decades.
In Canadathe prices of milk, eggs and poultry are regulated by means of “of a well-defined formula”explained to Agence France-Presse (AFP) Sylvain Charlebois, professor specializing in agri-food at Dalhousie University in Halifax, Canada.
For example, the price that dairy farm operators receive for the milk they produce is established by the Canadian Dairy Commission (CCL) and adjusted in the ten Canadian provinces. This price – generally updated once a year – varies and depends on how the milk is used.
“It is a very rigid and highly regulated system which is more than fifty years old and which is strongly defended by producers”continues Mr. Charlebois.
In the USAit is Congress which sets in law, for five years, the prices of twenty-three agricultural products, including wheat, corn and soybeans (but not meat). “We are talking about reference pricesexplains Thierry Pouch, chief economist at the French Chambers of Agriculture, to AFP. The American government pays the farmer the difference between this reference price and his sales. »
Milk benefits from a different system and a real minimum price, without compensation from the government but below which sales are not possible. It is the only agricultural product in this case, to the knowledge of Jonathan Coppess, professor at the University of Illinois. This price is set independently in eleven major regions in the United States and is based on a complex calculation method, which varies depending on the final use of the milk (drinking, cheese, butter, etc.).
According to Mr. Coppess, this program is not “really effective”partly because the prices are established in a tortuous way, at the national level therefore without taking into account regional specificities, and because they are there for five years.