“Despite a professed commitment to free trade, Canada has retained a staunchly protectionist supply management regime in several agricultural sectors, notably the dairy industry. It harms our trade options. Domestically, it also costs consumers far too much.
Dairy farms are governed by a byzantine system that prices milk based on intended usage, locks out most foreign products with exorbitantly high tariffs and even determines how much farmers can produce. Everyone suffers. First in the line of people harmed by supply management are consumers – Canadians are forced to pay two to three times as much for whole milk as Americans.
It is simply untenable that Canadian families pay upwards of $300 more a year than they need to, for milk alone, let alone higher prices for other products like cheese, yogourt and ice cream, to subsidize a tiny number of relatively well-off farmers. Worse, it’s regressive, which means that the ones who suffer most are the low-income families – the very ones who most need affordable access to nutrition. Many others, including processors and restaurants, have been calling to an end to supply management for years.
Canada’s insistence on this protection also makes it difficult for Canada to open up access to international markets. This means that all other Canadian enterprises that rely on trade, all those who would benefit from Canadian participation in trade arrangements such as the Trans-Pacific Partnership, are too often denied lucrative access to some of the world’s largest and rapidly growing markets. This includes, ironically, most of the farmers in the non–supply –managed sectors, such as beef, pork, grains and oil-seeds who make up by far the majority of Canadian farmers.
In contrast to the fewer than 15,000 supply-managed farmers, there more than ten times that many – over 210,000 farmers (92 per cent of the total number of Canadian farmers) – that are directly dependent on export markets; they either export their products or sell them domestically at prices set by international marketplaces. These farmers would benefit from increased access to the world’s rapidly growing emerging economies, particularly those in Asia. Even the dairy farmers themselves are prevented from taking advantage of the opportunities and efficiencies a truly free market affords.
The system needs to go.
This is not new. Most economists, think tanks, commentators, consumer advocates (and trade negotiators) have, for quite some time, recommended the dismantling of Canada’s supply management regime – for both domestic economic reasons and for reasons of international trade. Politicians, however, seem stuck. Frustratingly, many of them agree in private that it no longer makes sense, that it should be dismantled – but they say that “politically, it’s not possible” and “there are too many votes at stake.” But this is, quite simply, no longer true….”
“Kiss Goodbye to Supply Management
As Martha Hall Findlay reeled off the reasons why Canada’s supply management system should be dismantled, you could almost hear time’s winged chariot changing gears in the background. The former Liberal MP’s research paper, which landed in the week the Harper government joined the Trans-Pacific Partnership talks, has the potential to change everything.
Written for Jack Mintz’s School of Public Policy at the University of Calgary, it is the latest to lay out the irrefutable case for consigning the supply management of dairy, poultry and eggs to history.
Crucially though, it is the first to address the question of political will — or more accurately, political won’t. Her analysis suggests that there are only 13 ridings in Canada with more than 300 dairy farms — eight in Quebec and five in Ontario.
Eight of them are Conservative, most with 10,000 vote pluralities. Her conclusion is that even if Conservatives had made clear their intent to end supply management, and all those seats had been lost in 2011, the Tories would still have won a majority government.
She suggested even that scenario was unlikely, since it discounts the prospect of people actually voting in support of dismantling supply management.
Her analysis of Statistics Canada’s agricultural census division suggests that in every single riding in question, there are far more non-dairy farmers, who would benefit from ending supply management through gains in exports.
There are a mere 12,746 dairy farms in Canada (down from 145,000 in 1970 and 30,000 in 1996). This compares to 210,000 beef, pork and grain farms dependent on international trade.
The reason so many MPs are of the opinion that nothing can be done is that they are constantly bombarded with messages from the vocal dairy lobby, richly funded by the proceeds of the higher milk prices all Canadian consumers pay. No-one wants to be accused of killing the family farm, even though the numbers suggest there has already been a winnowing of small farmers.
Ms. Hall Findlay urged export-oriented farmers to mobilize themselves in support of reform. But the real silent majority is the millions of consumers who pay more than they should for dairy and poultry.
The study suggested a family that buys an average of three bags of milk a week (four litres) is paying up to $300 more than in the United States — and that doesn’t include higher prices for cheese, butter and eggs.
“The worst part is that it’s not just taxpayers, it’s regressive. Lower income families are paying a higher percentage of their income for basic nutrition.
“From a political perspective, that alone should be worth far more than the whole variety of family tax credits that have been offered in recent years to encourage voters,” she said.
The paper did not delve into the ticklish issue of how to compensate dairy farmers for their the loss of value of their production quota — currently, each cow is valued at $28,000. But Ms. Hall Findlay did point to the experience of Australia, which funded transition payments by putting a levy on retail milk sales for eight years. She noted that, while the levy kept dairy prices higher than international free market prices, they were lower than they had been under supply management….”