Canada’s agriculture marketing boards are showing signs of obsolescence, forcing commodity groups to consider desperate measures.
Certainly, given the economic conditions of the last century, forming marketing boards made perfect sense. Marketing boards and agencies were designed to sell agricultural commodities throughout Canada and to the world. They were also intended to protect farmers from cutthroat purchasers and from market failures.
And they did their job — until recently.
Among Canada’s 120 marketing boards, the signs of strain are showing. Two in particular face catastrophic conditions: maple syrup and dairy.
Let’s start with maple syrup.
Ontario and the United States report a record harvest this year. This “sap tsunami” has meant millions of litres of maple syrup are ready to be sold and producers are enthusiastic.
Quebec, too, has an abundant crop this year — the April weather was ideal. Yet in Quebec, where a marketing board exists, the sentiment is quite different.
This year’s maple syrup harvest is expected to exceed 150 million pounds, which would break the old record by more than 30 per cent. Many are worried that a significant surplus will end up on the black market, and deflate quota-produced syrup prices.
The aim of the maple syrup board is to artificially inflate prices at the farm gate, no matter what happens. In the current quota-based regime, excess inventories end up being sold outside the system. That leaves the Quebec federation scrambling to address the issue.
The situation in the dairy industry is even more critical. Farmers have quotas to produce milk, based on domestic demand. As well, Canada has excessive tariffs on imports.
In recent years, however, the market has changed. Today’s consumers want more products with higher butterfat content, such as butter and yogurt. At the same time they are drinking less milk and that has created a shortage of butterfat in Canada.
So dairy processors have to look outside the system, importing more than $200 million a year in U.S. high-protein milk ingredients.
The rising demand for butterfat has created excessive increases in Canadian farm gate prices, almost three times as high as the world average increase. So dairy processors have little or no chance to compete without imports.
The dairy and maple syrup situations are the result of a very narrow-minded view of world markets. Even though marketing boards try to convince Canadians that they adapt quickly to market swings, they simply do not.
Why? Because marketing boards are simply not hard-wired to deal with massive production and market condition changes.
And many farmers remain set in their ways. Today’s conditions mean farmers must cope with systemic shifts generated by climate change, abrupt macroeconomic shifts and market demand fluctuations.
Marketing boards, faced with these dramatic changes in the world marketplace, are slowly failing farmers and the Canadian public.
Many of the boards that served the Canadian agricultural economy for decades are now passed their due dates.
Each commodity deserves its own strategies and approaches, based on demand.
More broadly, it’s time for a more proactive Canadian plan to develop markets around the world. And in the face of recent international trade deals involving Canada, this needs to happen quickly, before commodity groups take further desperate measures.