We've had a bit of a melt here in southwestern Ontario which is very common for this time year. However, this year it came after more snow than usual in the neighborhood. In fact, we had so much snow that I had one particular farm lot blocked off simply because of plowed snow off the road. With the melt I was able to scurry across a bit of snow that was left and check out things in my drive shed.

I don't have room for everything in the drive shed, so invariably machinery is prioritized with some little-used items sitting in the yard. When you have farmed as long as I have, sometimes it's hard to remember how different things got on the farm. It was an agricultural economic equation determined by revenues versus costs etc. Reading about the U.S. Farmer Bridge Assistance Program (FBA) payments coming out on Feb. 23 made me wonder how much of some of that machinery I have was paid for by subsidy. In agricultural economic terms, it's all part of revenue.

Subsidies certainly been part of my story. Going back more than 40 years, there's been government subsidisation of some things within the grain business whether it's older stabilization programs or interest rebates or even crop insurance. Portions of these were funded by farmers, but they were also funded by government, and it continues to this day. However, when I look at the FBA payments in the United States, it reminds me of the subsidy theme park our U.S. friends have always had. U.S. farmers who apply will receive $11 billion in assistance. Corn farmers will be getting $44.36 an acre, soybean farmers will be getting $30.88 an acre and wheat farmers will be getting $39.35 an acre based on 2025 acreage. That's one heck of a subsidy.

In Ontario and Quebec, of course, we don't dream of getting anything like that. What makes it worse is the U.S. administration was the one that pushed Humpty Dumpty off the wall and in this disjointed way is trying to put him back together like it never did it in the first place. The water was further muddied by the U.S. Supreme Court striking down the right of the U.S. president to enact certain tariffs. (https://www.dtnpf.com/…) Simply put, here we are. American governments always take care of their farmers, and it continues.

I did a quick calculation of how much those FBA rates would garner me if my farm was in the United States, and it added up to $30,443 US or $41,664 CDN. It's a nice chunk of change and something I'm sure our U.S. friends appreciate. The question is, what does it really mean and where does it go?

You would have to ask each individual farmer where the money goes, and I've had some experience with that through the years. I also had major arguments with some of my professors in Graduate School because when I was younger, I looked at agricultural subsidies as more of a social good versus what they really were. My agricultural economics professors told me the subsidy money is recapitalized back into the farm often into fixed assets like land and equipment. I would argue the fact, but a world of experiences told me that it is a fair comment. The money that our U.S. farmer friends receive will be distributed differently, but largely put back into land and equipment.

With that, it will have a stimulus effect which I'm not totally against. In fact, subsidies come in many different forms within our agricultural portfolio. There are some that argue that free enterprise should rule everything within agriculture economics. I am not one of those. I believe that government plays a role in our agricultural economics to make things fairer. Where once I was a big critic of Canadian supply management, now I'm its most ardent supporter. I am that way simply because if we sold milk like I sold corn, large regions of eastern Canada would be so much poorer. In my mind, that doesn't make any sense. If supply management is subsidized in Canada, that's fine with me.

Now, would I like that $41,664 put into my cash flow this spring? I sure would, but as we all know that is not going to happen. Previous governments back to Jean Chretien have dismantled our Canadian agricultural safety net. It's all in the rear-view mirror now. Keep in mind that U.S. FBA money is right in front of our U.S. farmer friends now. They will use it at their discretion, but surely it will be recapitalized back into their farms.

It is what it is. It will surely be good for John Deere and Case International in the U.S. and to some extent there will be a shifting of directions for our two agricultural economies. We don't get that money here, so that means we have to focus even harder on our fixed costs, buying that used machine versus the new one, and making choices without emotion to keep ourselves in a profitable position.

All of this probably means in 2026 our American friends will be even better poised to produce record crops again. Good for them. We will need to keep up with them. The challenge for Canadian farmers will be to do what we have always done, compete without a gold-plated safety net. We can run the ship tighter, question every capital purchase, temper the fixed costs, and look for opportunity in basis, logistics and marketing discipline. We won't have $41,000 cheques arriving in the mailbox, so our edge will have to come from discipline, efficiency, and the risk management decisions we make every day.

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Philip Shaw can be reached at philip@philipshaw.ca

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