National Post (National Edition)
Liberals have the power to end supply management, but will they?
HOW LIBERALS CAN END SUPPLY MANAGEMENT — IF THEY HAVE THE GUTS
Maybe you’ve seen the billboards in your town, too. The ones with two cute kids, distraught because they don’t have glasses of Canadian milk in front of them. The tagline reads: “If it’s made with Canadian milk, it’s worth crying over.” Brought to you courtesy of the Dairy Farmers of Canada, can it be a coincidence that the ads are popping up just as Canada heads into trade talks with the U.S.? President Trump has harshly criticized Canada’s web of agricultural industry protections and has threatened to renegotiate them. Undoubtedly, this has farmers worried.
Presumably that’s why we’re getting this latest PR campaign, which appears to work on some. According to a recent Angus Reid survey, supply management is supported by nearly a third of Canadians. Meanwhile, full majorities in every province say they know “nothing about it at all.” The slightly more positive news is that a majority of Canadians say they would, nevertheless, be comfortable with “at least talking about scrapping (supply management)” in the NAFTA negotiations.
Reading these findings, you have to wonder what it would take for Canadian households to resolutely abandon support for a system that forces them to spend hundreds of extra dollars each year on milk, chicken and eggs. Thousand-per-cent tariffs perhaps? Having to shell out the price of a new refrigerator just on milk and cheese? Perhaps that’s even being too optimistic.
Such is the perverse power of special interest groups in this country that a system that’s bad for consumers and taxpayers is firmly entrenched, and even supported by them. But does this mean there’s no hope of ever defeating it? Not necessarily. Trade talks — such as the ones Trump’s forced upon us — would provide a pathway to reform. It would simply require our politicians to take the improbable step of promoting the best interests of Canadians.
Supply management is the system of quotas, tariffs and guaranteed prices that distort the production of poultry, eggs and dairy in Canada. Instead of production being determined by the “laws” of supply and demand, it’s set by government diktat. Since quotas secure a farmer’s right to produce goods for which prices are guaranteed and supply limited, quotas are very valuable.
So long as the system remains in place, that is. Thus, farmers have an enormous incentive to maintain the status quo (in 2008, the total value of all dairy quotas was estimated at $28 billion). In this, they’re aided by a public that’s both widely ignorant about supply management, and supportive of romantic notions about family farms and food security.
As former Conservative leadership contender Maxime Bernier learned the hard way, any politician keen to abolish this system thus faces two huge challenges: convincing voters of the need for change, and besting those who oppose it. Bernier’s record on the first was unexpectedly positive. In 2016, at the outset of the Conservative party leadership race, Bernier staked out his opposition to agricultural protections, rightly calling the party out for its hypocritical commitment to free markets, yet official support for supply management. Initially, pundits mocked him for his supposedly unwinnable platform. By the end of the campaign, they were all projecting his ascendance to the party throne.
They turned out to be wrong, of course. Bernier lost to Andrew Scheer by a hair. As Terence Corcoran compellingly argued in the Financial Post, the benefactors of supply management may have tipped the scales in Scheer’s favour. Like “drive-in driveout party crashers,” he notes, farmers and agricultural union members joined the Conservative party in several key Quebec ridings, casting enough votes for Scheer to beat Bernier, even in constituencies where Bernier was a local hero.
If Bernier (or like-minded candidates) were to run on a similar platform again (as he’s intimated he might do), he’d need to focus on overcoming these opponents by getting stakeholders on side that could wage PR campaigns that counter the farmers’ message. Given how many groups would benefit from cheaper food — including restaurants, grocers, food manufacturers, and exportoriented producers — this shouldn’t be impossible.
But making it into power isn’t the sole hurdle. The more difficult — if not impossible — task for a politician like Bernier is implementing lasting reform. Most experts agree supply management would need to be phased out over many years, and by extension, over more than one electoral cycle. This would make reforms vulnerable to reversal after each election, as farmers courted the political parties willing to reinstate government protections in exchange for their support.
The only way to avoid this outcome, argues Michael Trebilcock, a supply management and trade law expert, is to prevent supply management from being rehashed every time there’s an election. To do this, Canada must lock itself into long-term, international trade commitments to gradually eliminate our tariffs and industry supports, and couple this with principled compensation for farmers who purchased quotas in reliance on the existing system.
The opportunity to do that is now, with NAFTA open on the surgical table, and the U.S. pushing us to jettison our agricultural protections. As strange as it sounds, Canada could seize this rare moment to bind its own hands by committing to dismantle our supply management over a long period, in exchange for favourable trade concessions.
Unfortunately, though, if the Trans Pacific Partnership (now effectively defunct) and the Canadian-Europe Comprehensive Economic and Trade Agreement are any guide, Canada is not about to forfeit the support of farmers for the good of all Canadians. Under the TPP, for instance, the most the Harper government would concede was an increase in annual imports of dairy products to a paltry 3.25 per cent of Canadian production. Oh, and it still compensated farmers an astonishing $4 billion for this meagre concession.
Up till now, governments have proved too weak to resist rewarding protected farmers with just those kinds of juicy favours, in exchange for their votes, at everyone else’s expense. Now, the Liberals have a unique opportunity to provide the “real change” they claim to be all about, for the benefit of the middle class they claim to be fighting for. If they don’t deliver, it should be clear what Canadians have actual cause to cry over.
SUCH IS THE PERVERSE POWER OF SPECIAL INTEREST GROUPS IN THIS COUNTRY.