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This article was published 29/9/2014 (2572 days ago), so information in it may no longer be current.
Canadians are paying anywhere from 10 per cent to 69 per cent more for certain dairy and poultry products than their U.S. counterparts, according to a new study by three University of Manitoba economists.
In the study, which will be published in an upcoming issue of Canada’s top economic policy journal — Canadian Public Policy — economists Ryan Cardwell, Chad Lawley and Di Xiang compare average prices for 10 different dairy and poultry products in a number of Canadian and U.S. cities within close proximity to the Canada/U.S. border, including Winnipeg.
They found the biggest price discrepancy (69 per cent) was with a fresh whole chicken — $3.11 in the United States versus $5.26 in Canada. And the smallest was with chicken legs — $3.22 per kilogram versus $3.55 in Canada.
They also found a 62 per cent difference in the cost of a dozen large eggs — $2.39 versus $1.48.
The price comparisons were part of a much broader examination of Canada’s supply management system, which regulates how much dairy and poultry products are produced in Canada, as well as the price farmers receive. To protect the domestic industries, it also imposes high taxes on imported poultry and dairy products.
The main question the authors strive to answer is how regressive the system is in terms of its impact on Canadian consumers. And they conclude its "highly regressive" because it imposes a greater financial burden on low-income earners than on high-income earners.
The explain that their research shows that higher prices due to supply management impose additional costs on Canadian households. These additional costs amount to 2.3 per cent of annual income for the poorest households, compared to 0.5 per cent of annual income for the richest households.
And those are conservative estimates, they add.
The authors don’t suggest Canada’s supply management system is the sole reason why dairy and poultry prices are higher here than south of the border.
"But it keeps them much higher than they would be if we didn’t have supply management," Cardwell said in an interview Monday.
They also don’t take a position on what, if any, should be made. Or whether supply management should be eliminated altogether, as the Conference Board of Canada and other supply-management opponents contend. Cardwell said it’s up to policy makers to decide that.
"But there should be recognition that there is a cost of doing this (maintaining a supply management system)," he added, and that it’s poor households that are being impacted the most.
Dairy Farmers Association of Manitoba chairman David Wiens and Manitoba Chicken Producers Association executive director Wayne Hiltz said they haven’t see the U of M study, so it’s difficult to comment on specific findings.
But Wiens questioned why the authors singled out dairy and poultry products, noting it doesn’t matter what they buy, lower income earners will be spending a greater portion of their income on it than a higher income earners will.
He also argued the benefits of a supply management system outweigh the drawbacks because it creates a stable income from Canadian dairy and poultry farmers and more stable prices for consumers. They don’t have to deal with the kinds of wild price fluctuations that consumers in other countries often experience.
"It creates stability right across the board," he added.
He and Hiltz also noted producers have no control over retail prices, which can vary greatly depending on where consumers shop, how much they buy, and the markups imposed by the other players in the supply chain, including processors, distributors, and retailers.