As regular readers of this blog are aware, one of my pet peeves is the supply management regime imposed on Canadian consumers of dairy and poultry products. As if the cost of food were not already too burdensome on average low-income families in Canada, September 1 will see the price of industrial milk increasing for the second time this year.
The objective of supply management is to balance the supply of milk, cheese, butter, poultry and eggs with demand. To do so, production quotas, which farmers must purchase, are set to restrict production, while Canadians are discouraged from importing cheaper products from abroad by the imposition of crippling import duties.
Time and again, however, we read studies showing that supply management causes higher consumer prices than would be the case with open markets. Furthermore, these higher prices place more of a burden on poorer households than on richer ones.
The most recent study—Supply Management Makes the Poor Even Poorer—by Vincent Geloso and Alexandre Moreau of the Montreal Economic Institute concludes, in part, that:
… A reform plan that would phase out production quotas and import duties would benefit all Canadian consumers, … especially … poorer individuals, raising their living standards and effectively lifting many of them out of poverty”
It is indeed sad to think that this study, as with so many before it, will fall on the willfully deaf ears of our elected officials. Of course, those who govern us are well paid with handsome benefit packages so a few hundred dollars added on to their food bills each year will have little impact on them. Moreover, the poorer among us are hardly an influential voting block, so let them like it or lump it.
According to the MEI study, “the poorest 20% of Canadian households paid $339 more per year than they would have in the absence of supply management.” This pushes between 148,396 and 189,278 Canadians into poverty, using the Basic Necessities poverty line. Using Statistics Canada’s measure of relative poverty, the Low Income Cut-Off, between 133,032 and 161,435 Canadians are pushed into poverty.
All this to protect fewer than 15,000 farmers—some say only 12,000—who operate under supply management, which seems to this onlooker as a relic of the now thoroughly discredited Soviet-type economic planning.
The majority of Canadian farmers (over 90 per cent) operate under open-market rules. That is to say, they either sell their products in Canada at world prices or they export them to other countries. This is much the way virtually every other industrial segment of our economy operates.
What’s so special about dairy and poultry farmers?
As former Liberal MP for Willowdale, Ont. Martha Hall Findlay pointed out as far back as the summer of 2012, numerous economists, think tanks and consumer advocates have repeatedly recommended that Canada phase out its supply management system. And, although many elected officials apparently agree in private that it should be dismantled, they steadfastly refuse to speak out publicly against the system. According to Ms. Hall Findlay, they say that “politically, it’s not possible” and “there are too many votes at stake.”
The dairy lobby repeatedly reminds us that the Canadian government pays no subsidies to dairy farmers. How disingenuous can these people be? Of course there’s no need for a subsidy to be paid out of tax revenue, consumers pay a premium directly out of their weekly food budgets—including those low-income Canadians who don’t even make enough to pay taxes. So how’s that a good thing?
Personally, it wouldn’t matter to me one bit if the milk in my cereal bowl came from cartons reading “Product of the U.S.A.” I buy imported fruits and vegetables all the time and get them at world prices. So why shouldn’t I be able to buy English or French cheese the same way? I buy New Zealand lamb at zero per cent duty, why not eggs, poultry, etc.?
The answer, of course, is simple: the politically powerful vested interests will not let me. Period!
So on it goes. A privileged few millionaire dairy and poultry farmers continue to cry “poor us” while they prosper at the expense of the poorest Canadians. Well-to-do politicians continue serving their crass political purposes, while Canadian consumers pay unnecessarily high prices for their most basic and important nutrition.
Makes me spitting mad.