Supply management views aired

It wasn’t quite a debate, but attendees at the Alberta Beef Industry conference in Banff last month got two different views on supply management.

On one side was New Zealand’s special agricultural trade envoy Alistair Polson, who said Canada’s protected marketing system for dairy and poultry is a deal breaker for entry into the Trans-Pacific Partnership trade agreement.

On the other side was Al Mussel, senior research associate with the George Morris Centre in Guelph, Ont., who said the issue was tariffs, not the system itself.

Polson took the audience through the history of agricultural controls and subsidies in New Zealand, noting that New Zealand lost its preferential Commonwealth access into the U.K. when it joined the European Union. This and other factors resulted in subsidies and supports for the country’s farmers.

“It was a disaster,” Polson said. The sheep meat industry overproduced and prices dropped. He said there was misallocation of subsidies. Sheep producers were encouraged to go for bulk rather than quality. “We also created that dependency on government subsidies,” Polson said.

In 1984, a new government almost completely eliminated supports. “Farmers responded to the challenge of farming without assistance,” he said, telling the audience the dairy export business is profitable for New Zealand producers.

Countries at the negotiating table aside from New Zealand and Canada currently include the U.S., Mexico, Australia, Brunei Darussalam, Chile, Malaysia, Mexico, Peru, Singapore and Vietnam, with Japan looking to join in. Canada was admitted to the talks in October 2012.

Polson said part of the talks are focused on eliminating tariffs, which he said would give more opportunities for Canada’s ranchers and grain farmers. But he said there can be no exceptions when it comes to eliminating tariffs if any agreement is to be high quality.

“We can’t have a caveat for dairy,” he said. If Canada is allowed to keep tariffs for its supply management industries, other countries will want protections as well. “We’ll have a race to the bottom. We’ll have an agreement that’s valueless,” he said.

A Canadian perspective

Mussel countered that potential trading partners don’t care about the supply management system — it’s tariffs and import controls that bother them.

Other countries don’t get to decide Canada’s policies in this field. “Supply management is domestic policy,” he said, adding that the system hasn’t yet derailed any trade agreements. Canada’s supply management system was developed in a time of adversity for farmers, he said, and was designed to mitigate surpluses. It helps keep relatively high and stable prices for producers in the Canadian market versus the lower, volatile prices in the United States.

Like New Zealand, Canada lost its special Commonwealth access to the British market, causing a thriving dairy export industry to decline. After the access was lost, there was a time when the government was buying up surpluses. The system that has been developed since is less expensive than pursuing that, he said.

Mussel said when it comes to opinion in Canada about the system, beliefs are often divided between two extremes.

“It’s either ‘inefficient system, get rid of it right away,’ or ‘protect it at all costs, it’s perfect,’” he said. The resolution is somewhere in between, Mussel said.

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