Are we being milked by agriculture’s supply management monopoly?

Posted July 9, 2012

In a recent letter to the editor in the local daily, Bill Hulet spoke in defence of Canada’s agriculture supply management systems.

He opined that the only successful farmers he knew operated under the Canadian made agrimonopoly, known as supply management.

He dumped on the free market system in the U.S stating it is the least efficient farming system in the world.

I guess it is a natural reaction to the first major threat to ending the various food production monopolies enjoyed by an estimated 14,000 Canadian well-off farmers. In reality, the system is an indirect tax on low-income Canadians.

Why should 34 million Canadians be subjected to overpriced dairy products, eggs and poultry, to name a few basic price controlled foods?

Are our farmers less productive than those, say, in New Zealand or Australia? With relatively small populations those two countries cancelled supply management of agriculture products years ago.

And, as we have witnessed, they export some products to North America. Their farmers are not daunted by competition.

Canadians don’t realize that paying $5.65 for a pound of butter is more than $2.00 that U.S. consumers pay in most jurisdictions. Milk and cheeses in the U.S. are also considerably cheaper.

course, some of this is a result of market size and economies of scale.

But Canadian consumers don’t see U.S. produced dairy, milk products and poultry in their supermarkets. It is because; the tariffs on these imports are astronomically high, as much as 300 per cent.

Starting to see the picture?

This protected 14,000-member member group of supply management producers is free to jack up the retail prices while at the same time lock out any foreign competition.

To think that Canada is free trading country.  Think of it as inelegant protectionism.

This issue arose when Canada was invited to be a trading partner with the Trans-Pacific Partnership (TPP). It is apparent that the members want Canada to dump agriculture supply management.

Assuming Canada is a trading nation, how can supply management of food be part of our efforts to create global trading opportunities?Now with the advent of joining the TPP, Canada is faced with a problem: To end supply management protectionism to meet the entrance requirements for joining the TPP trade bloc.  Countries in the TPP include: The U.S., Mexico, New Zealand, Australia, Singapore, Malaysia, Brunei, Peru, Chile, Japan, Viet Nam.

These countries provide a huge opportunity to expand Canada’s export trade including dairy, poultry, eggs and milk-based products. It is an opportunity to join a trading bloc of 2.7 billion people with a combined gross national product of $35.2 trillion.

But first, supply management must cease in order for Canada to be admitted into the TPP.

It’s not something that can occur overnight. The Federal government should introduce a detailed program to allow the 14,000 producers to switch from the present system and become aggressive free traders. To accomplish this, the government should provide marketing support, plus phased in free marketing for the products enjoying closed market protectionism.

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