Ottawa’s ‘sacred cow’ still supply management

Broad support despite charge it keeps prices high

• There aren’t many issues that garner support across party lines in Ottawa these days.

But when it comes to the supply management system for egg, poultry and dairy products — the mechanism that sets prices for producers — all of Canada’s federal parties seem to see eye-to-eye.

Political support for the controversial agricultural framework has endured, despite the country’s ongoing affordability crisis and critics who persistently warn that it’s Canadian consumers who pay the price.

As a result, Ryan Cardwell, an agricultural economics professor at the University of Manitoba, doesn’t put much stock in what elected officials have to say on the subject.

“On one hand, they talk about food affordability, and (on) the other hand, they have a government-sanctioned cartel in staple foods,” Cardwell said.

“So, it’s talk. I don’t give it much credence.”

Canada’s supply management system sets prices for products and puts controls on production and imports to protect domestic farmers from foreign competition, guard against price volatility for their products and stabilize production levels.

First introduced in the dairy industry in the 1960s before expanding into eggs and poultry, the system exists in lieu of subsidies, which are common in the agricultural sector around the world.

Proponents of supply management argue the system is a win-win for producers and consumers: it offers both stability and predictability in prices and production.

But economists are often critical of the system because they say it stifles competition. Economic theory suggests more competition generally leads to lower prices.

The sharp rise in food prices post-pandemic has led to more scrutiny of grocery giants and raised concerns about a lack of competition in the industry. The Liberal government recently introduced amendments to the country’s competition law, in part to address these concerns.

More broadly, all parties have had more to say on competition since inflation took off in 2022. But when it comes to sectors covered by supply management, concerns about weak competition in the Canadian economy don’t seem to exist.

Last month, Industry Minister Francois-philippe Champagne doubled down on the government’s support for the system.

“I’ll be very clear to folks who are watching, supply chain management is not on the table. This has provided stability and predictability to our farmers. This has been key to the fabric of our country,” Champagne said.

Last June, the House of Commons passed legislation that would limit the ability of trade negotiators to make concessions on supply management.

The Bloc Québécois bill passed with 262 votes in favour, while 49 Conservative MPS and two Liberal MPS voted against it.

Former competition commissioner Melanie Aitken is a forceful critic of supply management, which she described as a “sacred cow.”

“If you want to take advantage of the opportunities of trading with your global partners ... you need to recognize that you can’t have these incredibly stultifying protectionist policies denying access to our markets,” she said.

Bruce Muirhead, a history professor at the University of Waterloo, is a strong advocate for supply management who holds a research position funded by a lobby group for egg farmers.

He said he was a fan of the system before he took on his role as Egg Farmers of Canada chair in public policy.

“I think that economists, for the most part, they base their findings on ideology,” said Muirhead.

“There’s just this sort of implicit assumption, if it’s regulated ... then it just can’t be competitive. But that is absolutely not the case.”