Hey there, time traveller!
This article was published 8/8/2016 (1877 days ago), so information in it may no longer be current.
Critics of Canada’s system of supply management covering dairy, eggs and poultry — matching domestic demand with domestic supply in a way that works eminently well for both consumers and producers — continue to haul out old canards about its effectiveness that data demolishes.
It is true the Canadian Dairy Commission has determined dairy prices will increase, very slightly, in order to address declining dairy-farmer incomes from its past decisions. That is reasonable, I think. Consumers are getting a good deal, at least when compared with those in countries raised in a recent Free Press editorial (Dairy commission leaves sour taste, July 21).
Australia, New Zealand and the U.S. are most often used as Canadian comparators, designed to flagellate supply management. Surely these open and "free" systems must produce cheaper product than that found in Canada.
Expatistan, an index comparing costs in various cities around the world, disagrees. Free Press readers might be surprised to know a litre of milk bought in Wellington, New Zealand’s capital, costs NZ$2.03, while a litre bought in Winnipeg is the equivalent of a mere NZ$1.55. Eggs cost a staggering NZ$7, compared with just NZ$3.37 in Manitoba’s capital.
Overall, food in Winnipeg is 20 per cent cheaper than in Wellington.
What about, say, Brisbane, Australia? A litre of milk in that city is cheaper than in Winnipeg, but only by three cents. And that has come at the cost of driving Australian dairy farmers into utter penury. The Australian federal government recently had to pledge a multimillion-dollar support package to the sector to prevent its collapse. Eggs more than make up the difference — they cost A$5.81 in Brisbane, 45 per cent more than Winnipeg’s cost of A$3.18.
The story is the same the world over — milk and eggs in those countries that "liberated" the industries often cost more than in Canada. In the U.S., eggs are generally more costly, while milk is cheaper. But that dairy cheapness comes with a cost — it is based on very inexpensive labour and subsidies. For example, with respect to the former claim, a recent study from Texas A&M University calculated that should immigration reform as proposed by U.S. President Barack Obama carry the day, the price of a gallon of U.S. milk would have to increase by 91 per cent given the dependence of U.S. dairy on cheap, largely Hispanic labour. There is no equality or equity in American milk production.
There is no country today that can claim dairy as a robust sector of the economy — except Canada. European dairy farmers are rioting in the streets, Australians are taking legal action against a big co-operative and New Zealanders are wondering what happened to their world as many dairy farms have become money-losing propositions.
And what of the much talked-about global dairy boom Canadian farmers are missing? In short, this is a fiction. Only seven per cent of total world dairy production is traded internationally. New Zealand controls 32 per cent of that seven per cent, while the U.S. and the EU combined have approximately 51 per cent of it. What is left is a pittance. It works out to less than one per cent of total global production, which is filled by small, pasture-based players such as Argentina and Uruguay. That is not even taking into account the stated American aim of increasing dairy exports to push out competition.
Might Canada take market share from some of the big players? I doubt it. The EU and the U.S. subsidize their dairy farmers, while temperate New Zealand is a very low-cost producer, with its cows eating grass and never facing cold weather. Moreover, the U.S. has stated its objective is to increase its Asian dairy exports and to drive out competition through whatever method. I have no doubt it will do so.
The U.S. National Milk Producers Federation has also targeted Canada and is insistent we should give up our Canadian system of supply management. They want to flood us with fluid milk, which they could do with a very small increase in production. With eggs, a big U.S. egg producer recently told a conference it was a benefit for Canadians to the system we do. Without it, he suggested, Canadian egg producers would get "clobbered" by imports from south of the border, with attendant effects on food security and sovereignty, and those eggs would not be cheaper than they are now.
This, then, raises the issue of food security and sovereignty. Supply management responds to Canadian concerns. The covered commodities are priced in Canadian dollars and produced according to Canadian standards by Canadian farmers. Remember that C$8 cauliflower from last year?
Supply management takes into account both consumer and producer interests; I find it difficult to believe it remains under attack. It is postmodern, not neo-Soviet, providing a reasonable income to farmers and a good price for consumers. Other systems can learn from ours. I anticipate a return to regulation in Australia and the EU, and a fundamental rethink in New Zealand.
It feels good to be a trendsetter.
Bruce Muirhead is the associate vice-president, external research, and a professor of history at the University of Waterloo. He is also holds the Egg Farmers of Canada Chair in Public Policy.