Potential regulatory changes could limit corn and soybean output and cost Ontario’s economy
Ottawa, July 10, 2014—Restricting the use of neonicotinoids—an insecticide commonly used by crop farmers—could reduce revenues from corn and soybean production by more than $630 million per year in Ontario. The province’s gross domestic product would be cut by nearly $440 million if neonicotinoids were not available for use, according to a Conference Board of Canada report issued today.
The report, Seeds for Success: The Value of Seed Treatments for Ontario Growers, provides an important new perspective on the costs of a hypothetical regulatory restriction on existing businesses and operators.
“For any significant change in regulations, it's important for governments to consider the effects on individual farming businesses, as well as the broader costs and benefits,” said Vijay Gill, Director, Policy Research. “Publicly released cost-benefit analyses rarely accompany new regulatory interventions, and this would be helpful within Canadian regulatory policy and practice.”
- Corn and soybean farms collectively accounted for more than 85 per cent of the value of Ontario grains and oilseeds harvested in 2012.
- Restricting the use of neonicotinoids could reduce revenues from corn and soybean production by more than $630 million per year in Ontario.
- Restricting the use of neonicotinoids also would be likely to lead some operators to exit the industry or scale back production.
This report examines the potential consequences for Ontario farmers if a hypothetical restriction were placed on the use of neonicotinoid insecticides on Ontario corn and soybeans. The evidence demonstrates that neonicotinoids can effectively treat a variety of pests while adding little to the cost of corn and soybean seeds. Concerns have been raised that such insecticides could be related to a reduction in bee numbers.
This report is designed to help policy-makers at the federal and provincial levels conduct a thorough cost-benefit analysis of a potential restriction on neonicotinoid seed treatments. It is not in itself a complete cost-benefit analysis, since it focuses only on the potential commercial impacts on Ontario’s grain farms. It does not consider the potential benefits or environmental impacts of such a restriction.
Thousands of Ontario grain farms already operate on slim margins. Restricting the use of neonicotinoids could result in some combination of lower yields and/or higher costs. This would reduce profits (or increase losses) in the soybean and corn sectors. Regardless of current profitability, Ontario corn and soybean farms would, on average, experience higher per tonne production costs from such a policy.
The analysis assumes that a hypothetical restriction would be enacted only in Ontario. As a result, competitors in the United States in particular would gain an operating advantage over Ontario grain farmers. Consequently, some farms would likely exit the market or scale back production on marginally profitable land, reducing profits across the industry.
Corn and soybean farms collectively accounted for more than 85 per cent of the value of Ontario grains and oilseeds harvested in 2012.
The report was prepared with financial support from the Grain Farmers of Ontario and CropLife Canada.