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The buttermilk of the issue

There are few things more refreshing on a hot summer’s day than a tall glass of cold buttermilk.

It has a bracing sourness that challenges the senses, but with none of the bitter aftertaste of milk that has gone off before its due date.

It is in this category we place the recent efforts of Al Mussell, from the University of Guelph’s George Morris Centre, to inject a dose of common sense to the questions swirling around Canada’s supply-managed commodities as this country seeks to join the Trans-Pacific Partnership negotiations.

“With so little known about how the TPP negotiations may proceed, it is remarkable how unequivocal some have been in asserting that Canada will simply need to give up supply management. This demonstrates a broad lack of understanding of supply management systems, and the real trade issues surrounding it,” he writes.

We too have observed that the anti-supply management rhetoric kicked into high gear with such swiftness when Canada announced it was formally entering the talks, one might think it was orchestrated.

The old arguments haven’t changed, namely, that supply management farmers are consistently making most of their income from the marketplace. We agree that’s rare in agriculture, but it’s hardly a sin.

Oh, and consumers are paying too much for their milk — according to former MP and Liberal leadership hopeful Martha Hall Findlay, as much as $10 a gallon for milk, or three times as in the U.S.

Laval University Maurice Doyon pointed out that in coming to that conclusion, she made the “rookie” mistake of multiplying the price of one litre of whole milk by four to get her prices. Then, she compared it with a U.S. gallon of milk. “This amounts to taking the price of a beer in a pub, say $5, and multiplying it by 24 to get the price of a case of beer.”

Doyon himself has been critical of supply management in the past, suggesting major changes are needed to how it is structured. But he too questions the practicality and benefits of dismantling it altogether.

The painfully divisive argument against supply management is the notion that somehow these protected sectors of farming are stealing from their export-dependent neighbours by depriving them of improved trade access. Our trade competitors, after all, have made it clear they don’t like it.

But Mussell points out that Canada’s potential partners in the TPP are unlikely to have a problem with the fact that Canada manages domestic supply. “Indeed, much of what supply management agencies do is emulated elsewhere in the very countries that have raised concerns with Canada’s supply management system.”

U.S. dairy policy already supports farm milk prices and it uses milk pricing pools. New Zealand farmers were enticed by their government into joining a co-operative, which effectively has a monopoly on marketing. That’s in addition to hundreds of millions in ad hoc payments the U.S. and EU governments have come up with when their dairy industries succumb to the boom and bust cycles.

Mussell says it comes down to market access, the high tariff rate quotas that make accessing the Canadian market prohibitively expensive for foreign competitors.

On butter, for example, the TRQ is 299 per cent, for cheese 246 per cent, chicken, 238 to 246 per cent and on eggs, 164 per cent.

Canada does allow limited access — single-digit percentages of national consumption — to import competition at no or low tariffs.

This is where Canada may have to give if it is to get some of the benefits it is hoping to achieve under a TPP agreement. This is not without consequences and many will argue reducing TRQs is the same thing as dismantling the system — similar to removing the single-desk monopoly for the Canadian Wheat Board.

“It would be naive to suppose that reducing trade barriers might not create painful adjustments in the system and in supply-managed industries, especially if the negotiated changes in access were very large or implemented very suddenly,” Mussell agreed.

Import competition would probably force a drop in domestic prices, which in turn would affect quota values. That would likely create pressure from farmers who want to increase their production.

“But it would also be naive to suppose that supply management systems are static and unchanging,” he said. And it would give Canada the ability to negotiate improved export opportunities on all fronts.

We don’t know whether the supply-managed sectors, which are already prone to regional bickering, could survive this process. But rather than falling into the toxic trap of the either-or debate, Mussell has at least honed in on the central question. Now that’s refreshing.

About the author

Vice-President of Content

Laura Rance

Laura Rance is vice-president of content for Glacier FarmMedia. She can be reached at [email protected]

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