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Recession Shows Advantage Of Supply Management

While farm incomes have plummeted in many sectors, they have remained stable for dairy farmers without any jump in the cost of milk products to consumers, says Richard Doyle, executive director of Dairy Farmers of Canada.

“Most of the dairy industry around the world is in crisis,” he told the Commons agriculture committee in late May. “It is in Europe, it is in the United States, it is just about everywhere except in Canada.

“Europe has reintroduced export subsidies of $1.5 billion back to the dairy industry in January,” he added. “The U. S. announced the reintroduction of export subsidies and the reactivation of their dairy export program which had been terminated in terms of government intervention.”

Milk export markets are bleak and most countries are only able to export through the use of government subsidies or other kinds of support for farmers, he added. They “are not competitive in the sense of competitiveness from a straight price standpoint, or from my definition they’re exporting but they’re not making profits at it or their income is generated outside of the marketplace.

Thanks to supply management, dairy farmers have actually been able to receive cost-of-production price increases. Meanwhile retail sales of dairy products have risen 1.5 per cent in the last 12 months, “which is difficult in this country with an ageing population. We’ve had a five per cent increase in cream sales and 2.6 per cent increase in cheese sales across the country.”

At the same time, the price of dairy products increased by just over two per cent last year while in the U. S. and Europe, they jumped by more than 10 per cent, Doyle said noting supply management works for consumers as well as farmers.

Mark Davies, chair of Turkey Farmers of Canada had a similar message from the poultry sector. “The value of our domestic market has grown significantly by $126 million in five years for a variety of reasons, such as consumer attitude towards turkey meat. The main challenge faced in the last several months has been managing high input prices and low meat prices in North America, as well as the 57 per cent increase in feed prices in Ontario from 2006 to 2008.”

Meanwhi le the Uni ted States and Brazil, the two main poultry-exporting countries, “have had to buoy up their industries to ensure their survival,” he said. USDA is planning “to purchase up to $60 million worth of turkey breast meat products to help out the turkey industry, which has been suffering significant financial losses.”

Brazil has extended a $1.38 billion line of credit to rescue the country’s struggling poultry industry, he added. “The Canadian government has not had to bridge any financial losses for the Canadian poultry industry. We’ve managed our production quotas to address the market dynamic. We also contend that supply management is the key to keeping our industry sustainable and structurally sound in the long term.”

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