Supply management best for producers, citizens
Unthinking and ideological criticism of Canada’s system of supply management — covering regulated marketing in dairy, eggs and poultry and which matches domestic consumption with domestic supply — continues.
The latest is from Finance Minister Bill Morneau’s advisory panel, whose criticism of supply management is not accurate. Generally, the critic’s line links the ability to participate in the global market with being “free” to make one’s own choices. Over the medium term, that is always disastrous in agriculture.
I was recently in the Australian states of Queensland and Victoria interviewing dairy farmers following dairy deregulation in 2001. Their numbers have plummeted to 6,000 from about 13,000, and the volume of milk they produce is down to nine billion litres from about 12 billion. Dairy exports have similarly declined.
The situation in Australia has deteriorated to the point where the federal government has been forced to pony up A$555 million as a subsidy, as much-heralded export markets failed to materialize. Hundreds of farmers are leaving the sector and prospects continue to look bleak.
Many Australian farmers I spoke to lamented the power the new regulators — the supermarkets — had over them and pricing, and the fact their children will not be taking over the family farm.
Many told me dairy farming without any protection or support is not sustainable.
A similar situation exists in freemarket New Zealand, where I interviewed dairy farmers in January 2016. They control about 32 per cent of cross-border trade in milk products, making them almost entirely dependent on the export market. Many of them wonder how they will make ends meet, as global dairy prices on which they are dependent for their livelihood, are expected to remain depressed.
Prices dropped in 2016 to US$3.90 per kilogram of milk solids. The break-even point for the average New Zealand dairy farmer is US$5.65 per kg of milk solids. Though some rebound is forecast for 2017, many will not make the break-even point.
Debt per average farm has hit NZ$7 million, which has helped drive many to the wall. The big farmerowned co-operative Fonterra is providing no-interest loans based on volume of milk production, but it is a finger in the dike. To top it off, dairy prices for consumers in New Zealand are more expensive than in Canada.
Is that the future we want for Canadian dairy? Exports, much touted by critics, don’t amount to much. Only between seven and nine per cent of total global production is traded internationally, a relatively small amount. The European Union, New Zealand and the U.S. control about 80 per cent of that seven to nine per cent, so where would we fit in? Whose market share would Canadians take?
In a non-supply-managed environment, government would be forced to subsidize dairy farmers to the tune of billions of dollars annually, as Washington does.
Getting rid of supply management would destroy the family farm, encourage rural depopulation and depress rural wealth as many farmers would be forced out of business, as has happened in Australia, New Zealand and the U.S. Remaining farmers would be worse off, with negative implications for Canadian milk.
We should celebrate our supplymanaged farmers, and the food sovereignty, security and stability they represent. Our farmers are custodians of the countryside where they live and provide Canadians with well-priced, high-value, safe and nutritious food.