Dis­sent­ing voices

The Glengarry News - - The Classifieds -

“With Cana­dian milk in NAFTA crosshairs, Australia is proof con­sumers and farm­ers can ben­e­fit from phas­ing out sup­ply man­age­ment.”

So says the Fraser In­sti­tute Cana­dian con­sumers and the dairy in­dus­try could both ben­e­fit by phas­ing out sup­ply man­age­ment, says the Fraser In­sti­tute, point­ing to a study on Australia’s dairy poli­cies.

“With sup­ply man­age­ment tak­ing cen­tre stage in the NAFTA talks, Australia of­fers an im­por­tant les­son for Canada -end­ing pro­tec­tion­ist trade poli­cies can have pos­i­tive ben­e­fits for both con­sumers and pro­duc­ers,” said Dan LeRoy, Fraser In­sti­tute se­nior fel­low and as­so­ciate pro­fes­sor of agri­cul­tural eco­nom­ics at the Univer­sity of Leth­bridge.

The study, “Phas­ing Out Sup­ply Man­age­ment: Lessons from Australia’s Dairy In­dus­try,” finds that im­me­di­ately fol­low­ing dereg­u­la­tion of Australia’s dairy in­dus­try in 2000, the price of milk dropped 12 cents per litre.

And since dereg­u­la­tion, dairy farm­ers in Australia have seen farm gate prices rise 56 per cent.

“With a more open, com­pet­i­tive sys­tem, con­sumers can ben­e­fit from lower prices while farm­ers also ben­e­fit from higher rev­enues. The key is achiev­ing more pro­duc­tive farms,” Mr. LeRoy said.

Aus­tralian milk farm­ers now ex­port about half their prod­uct, mak­ing dairy the coun­try’s third most im­por­tant agri­cul­tural ex­port after beef and wheat. An­nu­ally, Aus­tralian milk ex­ports to­tal about AUD$3 bil­lion.

From 2000 to 2008, Australia charged an 11 cent per litre levy on milk to fund pro­grams that helped dairy farm­ers ad­just to dereg­u­la­tion or tran­si­tion out of dairy farm­ing.

“Australia is proof that, if done cor­rectly, end­ing sup­ply man­age­ment can ben­e­fit con­sumers, farm­ers and the in­dus­try as a whole,” said Mr. LeRoy. “Canada’s high milk prices -- the re­sult of sup­ply man­age­ment -hurt low-in­come fam­i­lies the most, so even though the NAFTA talks may serve as a cat­a­lyst, pol­i­cy­mak­ers should have con­sid­ered phas­ing-out this pol­icy a long time ago.”

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