Back in March, John Ibbitson wrote an interesting analysis piece predicting Canada’s ruling Conservative government was preparing to take a new look at the dairy industry in Canada – specifically the governing supply mangement system. For dairy this is also sometimes called “milk quota“.
To generalize, Canada’s federal government utilizes tariffs and provincially-administered price supports – with limits on production – to smooth market fluctuations in specific farm sectors. Canadian consumers pay more – considerably more – for dairy products. By some estimates the system adds $2.4 billion to the consumer side of the ledger each year.
Dairy farmers in Canada enjoy relative stability, compared to many other countries. But that safety net does not exist across all sectors of agriculture – a sore point for the vast majority of Canadian farmers who lack that greater guarantee of security.
The article postulated that conservatives with a free-trade preference are willing (eager?) to consider changes because there wouldn’t be any over-riding political cost.
Oh, there would most certainly be a furor! But the once-strong Liberal Party is in serious (some say fatal) disarray and the NDP is (by and large) devoted to serving urban and unionized voters. Consumers would most likely welcome lower prices. It seems “do-able”.
Here’s Ibbitson’s calculus:
If it comes down to joining what could be the world’s most important new trade bloc, or protecting butter and eggs, don’t bet on Mr. Harper to side with butter and eggs.
After all, although the dairy lobby is among the most powerful in the country, its members are largely centred in Quebec ridings where the Conservatives have been shut out and in Eastern Ontario, where support for the Tories is so deep that the party might even hold some of the ridings in the next election despite the outrage of farmers.
The political costs, in short, are containable, while the economic benefits of opening Canada to trade in the Pacific are potentially enormous.
The United States, Australia and New Zealand are demanding unfettered access to Canada’s highly protected dairy and poultry markets a day after inviting Ottawa to join them in the Trans-Pacific Partnership free trade talks.
Their demands to tear down agricultural trade barriers mean Canada’s supply management system will be in the cross hairs in the TPP talks
The article goes on to discuss the nuances of trying to negotiate change without seeming to give way too much, too soon, or make too many enemies. Read the tea leaves as you will, but something could be brewing in those back rooms.
It’s a balancing act. Speaking personally, I live in rural Ottawa surrounded by numerous family dairy farms that seem pretty stable and happy with the quota system. (Making my pretty slice of bucolic bliss a government subsidy?)
I also buy groceries. No doubt about it, cheese, butter and milk cost much more here than 30 minutes south, in neighboring Ogdensburg, NY. Anything over $20 of dairy products bought there is subject to a 200% tariff at the Canadian border.
As this editorial in the Montréal Gazzette suggests, and the aforementioned June 20 Globe and Mail article illustrates, there is support to reduce trade barriers:
“It’s time to be a little braver,” said Mr. Hart, a professor at Carleton University’s Norman Patterson School of International Affairs. “Mr. Harper wants Canada to be a trading nation. Okay, Mr. Harper: just do it.”
Re-vamping Canada’s decades-old use of supply management quotas would be a huge shift that bears watching.
This is not an area where I can feign any expertise, but I know many In Box readers understand dairy issues inside and out.
What’s your take on the status quo, on possible changes and the best way(s) to proceed?