Life without supply management: We will all pay
Life without quotas will not only be difficult for farmers. Taxpayers will be expected to cushion the blow that Canadian agriculture will ultimatley suffer when the supply management system is eventually dismantled.
“The Canadian government concessions equate to death by a thousand cuts” has been the refrain from the dairy industry after the Americans gained a larger slice of the market under the new Canada-US-Mexico trade deal.
We will also be subjected to more American wheat, poultry and eggs. More competition ought to be good news for consumers, yet, there is no guarantee that our grocery bills will drop simply because there are more American flags on the shelves.
In fact, Canadian taxpayers will be footing the bill for the new trade agreement.
The federal government has already pledged that it will provide “fair compensation” for dairy producers by the pact takes effect.
The Ontario Premier has vowed, “We're going to hold the federal government accountable to ensure our dairy farmers are fairly compensated.”
So, regardless of the immediate effects of the new tripartite deal, we will certainly be expected to fork out lots of money to support our milk producers.
However, this compensation will be a pittance considering the huge sums governments will be forced to dole out as the supply management system is slowly but surely eliminated.
“This deal not only gives more access to the Canadian dairy market, while limiting our ability to produce and export home-grown dairy products; this deal lets the Americans dictate our dairy policies,” Dairy Farmers of Canada has complained. “Fairer trade is about win-win results. If our government fought for a good deal for Canadian industry, it wasn’t dairy.”
The national organization warns: “This is a bad outcome for dairy farmers and the whole dairy sector. The government has conceded access to our domestic market to the US, affecting our ability to produce Canadian milk. By doing so, it is slowly bleeding Canada’s dairy sector.”
And, “The 220,000 Canadian families who depend on dairy for their livelihood (on farms, in processing plants and related jobs) feel they were used as a bargaining chip to conclude this agreement.” Farming and milk production are still big in these parts. As we recently reported, latest figures show that in Stormont-DundasGlengarry, the agriculture industry employs about 2,610 people. In North Glengarry, farming accounts for ten per cent of the work force.
One in ten jobs here is directly linked to milk production, a business that generates about $260 million in revenues every year in StormontDundas-Glengarry and Prescott-Russell. Financially, milk producers have been doing all right. A sampling of 70 dairy farms from across the province found that the average net income was $128,230 in 2017, up from the average of $90,114 in 2016. Since 2012, the average profit had been dropping. While the av- erage net income in 2008 was $117,860, it rose to $178,601 in 2012 before decreasing to $154,894 in 2013, $146,907 in 2014 and to $132,879 in 2015.
The successful business model has been propped up by consumers for too long, critics of quotas have contended.
While supply management has been a sacred cow in farming country, the “milk cartel” has come under increasing fire on several fronts in recent years.
The votes are in the cities, where many people are convinced that they are being gouged. Farmers have little say in determining the price of milk. Dairy Farmers of Ontario regulates prices paid to dairy farmers but the marketing board has no control over pricing at the retail or restaurant level. The farmer’s slice of a pizza is about four per cent and the producer’s share of a glass of milk in a restaurant is about ten per cent, less than the standard tip for servers. “Canadian dairy farmers and Canada’s economy thrive because of supply management. The system generates economic activity across Canada. It also doesn’t cost the government or the taxpayer a penny to operate,” reads the pro-quota proaganda.
On the other hand, the U.S. dairy industry heavily relies on export markets, and is dependent on massive government subsidies at federal, state and local levels.
Canada’s farm sizes are also smaller than typical U.S. dairy farms. The average farm size in Canada is 75 cows and in the U.S., it is 234 cows. Canada has about 11,000 dairy farms while the U.S. has about 40,219.
Another factor: American dairy farmers are legally allowed to use recombinant bovine somatotropin, or rBST, a synthetic version of a naturally occurring growth hormone. They use it to increase their herd’s milk production. rBST is illegal in Canada, and although Health Canada has determined it does not pose a health risk to humans, it has stated it negatively affects cow health.
Yet such facts are obscured when high-stake international trade talks occur with a country that is ruled by an unpredictable yet “stable genius.”
The latest round of negotiations, which resulted in further erosion of supply management pillars, hammered home such how small Canada is when compared with the United States.
While President Donald Trump seems to be obsessed with dairy duties, Canada’s milk output, which represents a drop in the North American bucket, was in hindsight a minor consideration when crushing auto tariffs hung over the heads of Canadian negotiators.
The Americans have always been able to push us around and we have always been forced to grin and bear it.
After all, they may be big bullies, but they do buy 75 per cent of our exports. So, we must take some consolation in knowing that our representatives at the bargaining table may have bent but did not break.
The latest trade deal bought Canadian farmers some time, time to prepare for the inevitable -- life without quotas.
Americans are big bullies but they still buy 75 per cent of our exports.