In the last week, discussions surrounding supply management in the Canadian dairy sector have lit up again, thanks largely to the Conference Board of Canada’s recent report entitled “Reforming Dairy Supply Management: The Case for Growth.” In it, the Conference Board, a not-for-profit research organization, argues for a three-point reform and, ultimately, the demise of supply managed dairy in Canada.
This change could gain up to $2.5 billion for farmers from the export of high-quality dairy products, the report argues, while consumers could eventually save $2.4 billion annually. It would also increase innovation, the writers say, since it would no longer protect “unsuccessful farmers” whose only hope is to ride their quota through retirement.
The transition to a new system would have to focus on funding, efficiency, equity and duration, according to the Conference Board, and would happen through policies that liberalize prices, unwind milk production quota and tackle trade barriers. Quota would be bought out through a book-value buyout, which could be funded through a consumer levy, as was done in Australia. This reform would cost up to $4.7 billion dollars, but, as the report estimates, it could see retail price change in as little as five years.
The Organisation for Economic Co-operation and Development (OECD) estimates that this market price support cost Canadian dairy consumers an average of $2.6 billion per year in the decade to 2011: roughly $200 thousand per dairy farm per annum and around $276 per family every year.
– Reforming Dairy Supply Management: The Case for Growth
Possibly the greatest argument the Conference Board gave for reform, however, was that the change would improve equity amongst all Canadian citizens.
Dairy Farmers of Canada’s Response
While I was researching and tweeting about this report, I had the opportunity to have some very interesting discussions with people of all viewpoints. Then the Dairy Farmers of Canada (DFC) contacted me looking for the opportunity to respond to the report…
“First – we reject any call for dismantling supply management. Farmers and processors have continuously worked on updating, improving and adapting the system since its beginning to take advantage of opportunities and develop new markets. We continue to do so”
“The [Conference Board] recommendation amounts to bad business advice for dairy farmers,” wrote a spokesperson for the Dairy Farmers of Canada, criticizing the study for suggesting dairy farmers double their herd size only to receive half the income, and, without any suggestion for how to subsidize the changes on farm.
On the argument that the average Canadian family spending an extra $276/year on dairy products, the DFC says it’s misleading and is based on an assumption that the removal of supply management would reduce farm gate price, a savings that would ultimately be passed on to the consumer. Farm and retail prices are not so directly linked, DFC argues.
World Food Summit in 1996:
“When all people at all times
have access to sufficient, safe,
nutritious food to maintain a
healthy and active life.”
Includes three pillars:
food access, food availability, food use.
I realize the benefits of supply management, don’t get me wrong. I know milk prices won’t fluctuate, and that dairy farmers are well-protected. But I also have to wonder how supply management doesn’t stifle innovation. Why can’t we brainstorm some kind of compromise? Is it not possible for us to keep our high-quality production through some means other than supply management? Are subsidies really that bad of an idea? I’m paying the dairy industry anyway. What difference does it make if it’s through a subsidy instead? At least then I can rest assured we’re sharing our production capabilities with the global market, no?
Does the demise of supply management really mean animal welfare issues, loss of family farms and lower quality dairy production? I didn’t know food safety was regulated by supply management and I thought limiting supplies often led to illegal behaviour? But you’re probably right; that under-the-table milk is only bought for “non-human” consumption. So, in an effort to eat only “safe” food, maybe we should just cut everything from our diets save milk, eggs, turkey and chicken.
Are we so pro-status-quo, we can’t even begin to offer solutions that consider all challenges and opportunities? Can’t we try to move forward without constantly citing best and worst case scenarios? Is change always futile?
Oh, right and I should clarify there’s a bit of a bias here. I grew up on a mixed farm where we dealt with market challenges on our own, and often milked our own cows, goats and — once — a horse. What can I say? My brothers are innovative. Though I typically resist change, I always seek it.
Really, is there not some kind of happy medium?
I’m off to buy a holstein. Let me know what you think.