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Supply Management Needs Overhaul

Supply management needs a major shakeup to let farmers pursue alternative markets for new and different products, a recent report recommends.

That would require more flexibility in a marketing system that currently does not accommodate small, independent producers and their specialty products, it says.

The report notably does not advocate abolishing supply management.

But it criticizes the system for stifling new producers who may be interested in alternative production for a growing and eager market.

“(F)arm operations producing alternative products that include supply-managed enterprises face regulated marketing constraints that limit their prospects,” the 66-page report concludes.

“Today, when many commodity products in supply management face stagnant growth but demand for alternative products is growing rapidly, the current system is inflexible and limits consumer choice.”

Titled “New Farmers and Alternative Markets Within the

“The current system is inflexible and limits consumer choice.”

Supply Managed System,” the report is one of five papers on food policy recently released by the Metcalf Foundation, a Toronto-based body which funds research in community and social affairs. The reports can be found at: http://www.metcalffoundation.com/.

The report deals specifically with Ontario but has implications for supply management throughout Canada.

Its main criticism is that the quota system is too rigid for small-scale farmers who want to supply niche markets with alternative products.

For that reason, the system needs to change to accommodate such producers, the report says. It offers several options for accomplishing that:

raising quota exemptions;

decreasing minimum quota requirements;

separate quotas for specialty products;

exemptions for specialty products and direct marketing;

incorporating alternative market development into the existing system;

aligning specialty farmers with specialty processors.

The report recognizes that supply management gives farmers marketing clout and prevents processors and retailers from using their purchasing power to keep prices low at producers’ expense.

At the same time, though, it prevents individual producers from dealing one on one with customers, it adds.

“(A)lternative products differ in ways that make collective marketing largely irrelevant, since direct interaction with purchasers (rather than protection from them) is essential,” the report says.

Because the current system is one-size-fits-all, small, specialty producers do not fit in, the report goes on to say.

“Supply management is oriented to marketing commodities through a single channel to protect farmers from customers and targets relatively homogeneous farms supplying homogeneous commodities.”

This raises the need for quota exemptions to allow alternative producers into the system, the report says.

In most provinces, poultry producers may operate without quota if they remain under certain limits.

The maximum number of quota-exempt broiler chickens ranges from 99 birds in Newfoundland to 2,000 a year in Alberta. For layers, the numbers range from 99 hens in British Columbia, Manitoba, Nova Scotia and Newfoundland to 300 in Alberta. The only exemption for dairy is in Alberta, where farmers may produce and process up to 50 litres of milk a day without quota.

At the same time, registered dairy farmers must own minimum daily quota, which ranges from 0.1 kg of butterfat in Price Edward Island to 10 kg in Ontario, Quebec and New Brunswick.

Broiler, layer and turkey producers also have minimum quota-holding requirements.

Most provinces have new entrant programs for supply-managed products. For example, in Manitoba, a new dairy farmer is loaned 15 kg of quota if he or she buys 15 kg through the provincial quota exchange. A new Manitoba egg farmer can apply to receive 6,000 quota units (one unit equals one hen) through a draw.

But those limits are too high and too costly for small, alternative producers to achieve, the report suggests.

A Chicken Farmers of Canada spokesperson last week said the agency had not studied the report and could not respond to it. [email protected]

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