Another Report Repeats Attacks On Supply Management

Anew report calls for the abolishment of Canada’s supply management system just as non-supply-managed American dairy farmers are suffering their worst economic crisis in years.

The report by the Fraser Institute labels supply management “a growing financial burden for taxpayers and consumers (which) is unjustified.” It says “the only viable alternative is to remove the supply management regimes in favour of market forces.”

The report issued last month by the right-wing, Vancouver-based think-tank is purportedly about Quebec agriculture, its subsidies and support programs. But it focuses largely on supply management for dairy and poultry, which is also a national system. Over 40 per cent of Quebec’s agriculture is supply managed.

The Fraser Institute has spoken out numerous times before against supply management. This latest report repeats familiar arguments: supply management supports inefficient farmers, inflates consumer prices, disrupts market forces and distorts trade.


In short, supply management is unfair to consumers, food processors, trade-dependent grain and livestock producers and even other dairy and poultry farmers who wish to expand, the report charges.

Dairy farmers respond by saying supply management provides them with a stable income based on production costs, while their counterparts in other countries go through boom-and-bust cycles.

Right now, the economic situation for U. S. milk producers is very much bust, according to the dairy industries on both sides of the border.

U. S. milk prices have fallen 35 per cent in the past three months while feed and other input costs remain high. Some American dairy farmers say they are losing $200 per cow every month.

A major reason is a recent collapse in world milk prices because of overproduction and export subsidies, creating surpluses and lower farm gate prices.


Supply management’s big argument has always been that matching supply with demand shields farmers and consumers from world price fluctuations.

That’s the case now, said Therese Beaulieu, a Dairy Farmers of Canada spokesperson.

Despite the recent steep drop in milk prices following a huge spike during the previous two years, U. S. retail prices have hardly budged while American milk producers are going broke, Beaulieu said.

Here in Canada, dairy farmers can plan ahead and invest in their operations, despite the global economic crisis, because of predictable returns in a regulated system, she said.

Beaulieu disputed the often-heard claim that supply management inflates retail prices. She said Australia and New Zealand saw higher retail prices for dairy foods after deregulation of the industry there.

Bill Mitchell, a Dairy Farmers of Ontario spokesperson, said 93 per cent of global dairy output is consumed in the country where it’s produced. Half of the remaining seven per cent that’s traded consists of low-priced U. S. and European surpluses dumped on the market.


As a result, no milk producer is paid the actual world price and to say Canadian farmers should receive it is unrealistic, Mitchell said.

Mitchell called the Fraser Institute report “an ideologically driven attack” which fails to understand how regulated markets work. The fact that deregulation contributed to the current global economic crisis shows regulated systems have their place, he said. [email protected]

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