More Criticism About Supply Management

By | June 18, 2015

There is no end to the thoughtful critics of Canada’s Soviet style supply management system for the dairy, poultry and eggs producing sectors.

Not only have leading Canadian think-tanks like the C.D. Howe Institute, the Conference Board and the School of Public Policy at U. Calgary produced reports highly critical of this antiquated system, here is what the WTO has to say, in a nutshell, about the serious defects of the system in its most recent Trade Policy Review – Canada (April 2015):

One of the weaknesses described regarding the supply managed system is the priority it gives to farmers over consumers. Supply management results in limited competition, both domestic and international. The target price to producers is largely based on average production costs and the system has not created incentives for producers to lower their production costs over the years. It therefore guarantees stable revenue for producers while transferring the cost onto consumers. In a context of growing global demand for dairy products, the system also hinders the competitiveness of the industry and may be preventing it from taking advantage of international markets. Finally, the system is maintained at the cost of trade barriers (quotas, and very high out of quota tariff rates).

It couldn’t have been better stated in such a succinct way – not only do Canadian consumers suffer from the system, Canada is losing out on major opportunities in global dairy markets. The question is this – why doesn’t the dairy industry wake up?