Supply management. An economic anvil on the necks of Canadians.

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Supply management in agriculture is a policy in Canada that is harming consumers and producers from coast to coast. It is hard to believe that we maintain an economic policy that is so detrimental to Canadians as a whole. Part of the issue is that most Canadians don’t even know that such a policy even exists and I suspect if most people realized that they are paying hundreds of dollars a year due to this market control system that they would happily support dumping this primitive policy.

There are nothing but benefits to be seen for Canadians if we get rid of our supply management policies. People will spend less on food essentials and have more opportunity to eat healthier while Canadian producers will be able to expand our export markets and diversify our economy.

Supply management is a socialist market control policy that allows government to micromanage supplies of dairy, eggs and poultry products through a system of quotas and tariffs. This protects a small number of producers who have production quotas thus forcing higher prices on consumers. A dairy producer pays roughly $28,000 for the right to keep one dairy cow. That means a herd of 70 (not terribly large) has a quota value of $2 million. That price is of course forwarded to consumers. Quotas are restricted and it literally is illegal to produce milk, eggs or chickens over a certain number without a quota.

The waste from this system is brutal too. My wife grew up on a small dairy farm for example. Her father had a quota to sell a certain amount of cream but was not allowed to sell milk. The cows were milked and the cream separated and sold. The remaining milk that was not consumed by the household was literally dumped. It would have been illegal to sell it. Sounds rather Soviet doesn’t it? These sorts of examples abound in all supply managed industries and we are all paying dearly for it.

In dairy alone families pay an extra $276 per year due to supply management. When chicken and eggs are taken into account, families are spending nearly $500 per year for these policies. These are premiums paid on staple food items. If families paid regular (much lower) market cost for these items, they would be more encouraged to purchase them of course meaning a likelihood of less processed and unhealthy foods being in the cupboards.

In Canada we actually had organized crime participating in cheese smuggling because our cheese costs so much more in Canada than right across the border in the United States. This sounds like a comedy but it really is happening. When supply of an item in demand is restricted by government, smuggling is always soon to follow.

Some people lamely try to claim that these market controls protect the family farm which is utterly untrue. Supply management has actually wiped out small farms and led to larger factory style production as only large companies can afford to operate under our quota system. From 1971 to 2011 the number of dairy farms in Canada dropped by 91%! This trend has happened in poultry and egg industries too. So much for the family farm.

Market diversification and creative production is stifled by these horrible policies. Free range chickens are much in demand by consumers. Nobody is allowed to produce more than 300 chickens without a quota however which is not enough to live on while a quota application could take years and may never be granted. Quotas are usually in the range of 70,000 or more birds too which hardly helps a small producer. How does one get started in this foolish system? The same applies to eggs.

Small farms making specialty cheeses or types of milk are nearly impossible. I remember a story of a small ice cream producer in Ontario being shut down because the cream costs were simply too damn high. How many other small to medium sized enterprises are we missing out on because of supply management?

Our policies are costing us billions in lost exports as well according to one report. Tariffs and quotas get our producers barred from foreign markets thus costing us countless jobs and tax revenue. Our outdated policies have been a sticking point in many trade negotiations with other nations too so we are losing on import and export opportunities that range outside of supply managed products due to these disputes.

Supply management is a losing policy that costs us all and only benefits a tiny number of people who hold those precious quotas. Most nations on Earth have moved away from supply management policies and have seen nothing but benefits in doing so. New Zealand is now known as “the Saudi Arabia of milk” now that they rid themselves of their supply management and let their economy develop and expand. With the size of our nation with so much viable farmland, we really are missing out on huge opportunities here.

Rarely is a single policy ever doing so much damage. People fight back and forth about the merit of cutting taxes to put more money back in the pockets of consumers. Well, if we got rid of supply management we would put billions of dollars back in the pockets of consumers and it would not cost the government a cent.

The protected dairy, egg and cheese producers are price fixing in a way that would be illegal if any other industry tried it. They are a strong lobby and are essentially racketeers sliding under the radar of public perception. Government hides from the issue for fear of angering the producers with quotas while all consumers and most producers pay the price.

We need to inform the public of the price they are paying for these idiotic policies and then have government repeal them. There is nothing but benefit to us all in doing so. As far as I can tell only the Libertarian Party of Canada is promoting such a repeal.  We need common sense and open markets and neither Harper nor Trudeau appear prepared to give them to us.

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2 thoughts on “Supply management. An economic anvil on the necks of Canadians.

    • This country’s political parties agendas are ran by special interest groups constantly lobbying our sheeping politicians. However, civil servants are the ones actually running the show! To quote several with whom I met during my career when I was alluding to go to the Minister on a matter at hand: ” Remember sir…( pause)… Politicians come and go … WE stay…
      Status quo is the best alternative for any bureaucracy!

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