The Trans Pacific Partnership and the end of dairy supply management

From Martha Hall Findlay, in the Globe and Mail:

“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 nonsupply 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….”

Read more in the Globe and Mail.

Commentary from John Iveson in the National Post: 

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….”

Read more in the National Post.

19 Comments

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19 responses to “The Trans Pacific Partnership and the end of dairy supply management

  1. Now we can look forward to dairy products contaminated with rBGH and an industry which will increasingly fall into the hands of the multinationals. Those who excell at the ‘game’ will prosper while the rest fall by the wayside. Say goodbye to mom & pop.

  2. Royce Hamer

    Nice on sided article here. Someone forgot about the higher quality and stringent controls placed on these farmers. Someone forgot about the welfare of the animals that have an average productive life of a captive cow of about 7-8 years v/s 18-20 years for a free range dairy cow. The milk from the factory farm is putrid, toxic and must be pasteurized to even come close to being safe and then all it is is white sludge. My USA friends in Buffalo come to Fort Erie to buy milk, eggs and meat, they tell me they have done the research and can tell the difference when consumed. He was at one time a large dairy farmer and operated a dairy. Some form of stable pricing must be provided for the smaller farmer otherwise they will all disappear and if you think prices are high now just wait until the conglomerates tell you what you will be paying. Remember Monsanto stating that they wanted to control the world’s food supply, The family farm is the safest source of food supply we will ever have. Price be damned.

    • You comment is pretty one sided Royce in that you did not mention millions can not afford to purchase this non-free market milk. BTW in the free market I get my “free ranged” milk for $2,50 a gallon here in Missouri.

      I could buy state watched milk that would entail spending a minimum of $10 in gas to go get it,(because it is a crime to sell in local stores) and paying $8 a gallon when I got there. $18 a gallon is not something that I can afford.

  3. “Canadians are forced to pay two to three times as much for whole milk as Americans” — That is mind blowing…. and yes the poor (like myself) are the most effected. Thank God I have an inexpensive source of milk.

    You have interested me in running the numbers so to speak:

    A city person that uses 2 gallons a week (I do it’s my major protein source). would pay $8 a gallon in Springfield MO (not including time and gas because it is a crime to sell in stores) ends up spending $768 a year plus lots of gas. I end up spending about $240 and not so much for gas. And according to your article a Canadian spends $1536 to $2304. That is per person if they drink milk like I do. Yes things need to change.

    What a spread from $240 to $2304 a years to drink 2 gallons a week. I hate to think what a large family could spend.

  4. Richard Barrett

    At this time I do not want the United States milk that comes from some cows that are fed chicken manure, etc.. Source provided upon request.
    I follow the Supply Management System and support it, but am working hard to bring in a better milk (RAW) with Safety. It should be at 3 levels of
    production: 1. Farm to Consumer direct. 2. Cow Share Canada or Farm
    Share self regulated. 3. Provincial Dairy regulated. Grass fed and
    no Homogenization.
    Let the Consumer have the choice!
    fuwmilkalberta@gmail.com

    • Peter

      I would suggest all three “levels” you indicated already exist. I would suggest your #1 and #2 fall in the same category, and are really one. IMO, it is all about understanding who (which party) carries the responsibility/liability.
      As for your comment about “Grass fed and no Homogenization”, could you clarify if you feel that is to be applied to all 3 “levels”, or just #3?

  5. Raoul

    Funny how in negotiating these big cross-border and international agreements and treaties they forget to consult with the Human beings/Farmers/Consumers that will be most effected by it ? Did I miss something ? I guess Big Daddy knows best for us right ?

  6. Bill Anderson

    This is just typical neo-liberalism — the faulty belief that the free market can magically take care of all of our problems.

    Speaking from the perspective here in America, it would be really helpful for our small dairy farmers if we had a supply management system. Under the current system, more and more small farms are being driven out by the big farms, because we have no such supply management system.

    Of course, the concerns about higher prices adversely affecting low-income families are legitimate, but the way to solve this is NOT to depress the price paid to the farmer. Whoever wrote this article probably will do nothing to help the low-income families, except to feed them rBGH CAFO crap milk that only harms their health in the long-term. A real solution would be to address the root causes of economic inequality, but of course, doing that would mean questioning capitalism, which seems to be a taboo subject.

    • I don’t question capital-ism… I practice it, so I know how well it works. With our own $$, we underwrote a little dairy which now supplies about 450 families in the lower Mainland of BC with REAL MILK. Not a dime of govt. subsidy, enables us to get right at it, serving the joint-owners directly, without direction from apparatchiks sitting at a desk, 3000 miles away. Compare that with the the net result of all your high-falutin’ socialist notions ; how many gallons got delivered to real people, today, in your model??

    • Peter

      I don’t know that questioning capitalism is taboo… That would be unfortunate. I tend to think that contrast brings clarity. Contemplating capitalism and socialism brings about a deeper understanding, and ability to articulate what is wanted.
      I believe that, if we, in reality, hold to the idea of equal rights, then inherently we are free to contract. If we, as a society, marginalize the application of freedom to contract (capitalism), then let us not continue with the mantra that we are a society founded on the principle that we are equal in dignity and in rights. Capitalism and equal rights go hand in hand. Try as you might, there is no separating the two.
      Another way to contemplate it, free market capitalism is the space where NATURAL market forces brings things into equilibrium. I doubt there are few who would claim that man has a better ability to regulate than does nature… We may not always like what nature gives us… But nature is ALWAYS fair. And so if our aspiration is to have what is fair (just), we need only surrender to nature (or what is…).
      IMO, socialism and regulations create the exact opposite of equal rights and that which is fair. Under socialist environment, there is no end to “specialism”, which inherently creates unfairness.
      If questioning capitalism is in deed taboo, then surely such would itself be evidence of a non-free society – and inherently the product of socialism.

  7. Bill – small farmers are being driven out of the business precisely because we do not have a free market. Why do you not have a voluntary “supply management system” if you think that is the solution? Could it be because we do not have a free market, and farmers are not free to do this?
    Anyhow if the free market does not support someones activities then it is best that they find something else to do for a living.

    You state: “… the faulty belief that the free market can magically take care of all of our problems….”

    So you think that economic slavery is preferable to people being free to make economic choices for themselves and their families? Look how well that worked in the old soviet Union and everywhere else it has been tried. And the heck with the economics of it. Do you own your property or do you not? Without economic freedom you don’t even own your own property. This is just as much a moral issue as it is economic one.

    Bill – freedom is ALWAYS the answer. What was the question again?

  8. frustrated farmer

    Should supply management be banished, what are the chances that the sale of raw milk or cow share programs will become legal in Canada?

  9. frustrated farmer

    The best way to protect and encourage small diversified farms is to encourage direct sales from said farms to their clients. Diary, poultry, beef, vegetables, pork, eggs. Not only do farmers and clients win, but abattoirs and other ag.-related businesses thrive. Rural revitalization.
    Wendell Berry does know best. Who thinks Gerry Ritz has ever read Berry?

  10. cowshare programs already are legal in Canada, for those who have the audacity to assert their right to use and enjoy their private property, as enshrined in law in An act respecting human rights, RSC also known as the Canadian Bill of Rights 1960.
    In the local propaganda outfall, last Saturday, we saw 2 pages back to back, promoting the inevitability of Canada joining = it’s a done deal, you just haven’t been told yet
    I predict we will have the New Zealand model … REAL MILK sold at teh farm gate and delivered to town in old fashioined milk trucks, owned by the farm

  11. Gordon cow shares are not freedom. Cow shares are merely the slaves being told that their rights come from Caesar, and that Caesar says he is going to strictly limit your right to contract. Cow shares are slavery.

    • Gordon S Watson

      when we started our cowshare I did not go to the Registrar of Companies because we didn’t – and don’t = need permission to do something that is already perfectly lawful – ie. use and enjoy our private property. If you want a shorthand explanation of what we’re doing ; it’s an ad hoc limited Partnership. But it is NOT a creature of the govt. Despite the depradations of the state, the REAL MILK is flowing here today. You cannot argue with success

      • I wish you success Gordon, but you are still have a long way to be free. You are jumping through hoops because your right to contract has been criminalized. You only are using your property in a strictly controlled manner rather than as you wish or as your customers wish.

        Your whole game depends not on your rights but the current permissions your owners grant you. If they make cow shares illegal tomorrow you are shut down with no where to go because you are not operating under the argument of inalienable rights.

        Investigate the difference between legal and lawful. They are almost polar opposites.

  12. Gordon S Watson

    members of our cowshare are not “customers”. They are individuals who associate with me, in the use and enjoyment of our jointly-held property.

    for the last 40 years, through involvement in several political movements, I’ve been studying the distinction between ‘legal’ and ‘lawful’, contrasting the Law of God, spelled-out in the Bible, versus man-made made perversions, set out in statute / regulation

    Everything belongs to God Almighty ; He gives it to us only as His stewards. You’ll notice that Fraser Health Authority has been put to open shame because I most certainly do exercise that in-alien-able right and duty in practical terms, as well as proclaim it in Her Majesty’s Courts in British Columbia.

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