Canada’s supply management system has been a feature in the news in recent months, mostly in relation to a trade spat with the United States. Unfortunately, there are many misconceptions regarding the system and how it operates, and this has muddied the waters in terms of its worth to our country. As the federal Agriculture and Agri-food Critic for the NDP and as a strong supporter of supply management, I want to take this opportunity to explain its importance to Canadian agriculture.
To function properly, the system depends on three pillars: production control, pricing mechanism, and import control. Supply-managed farmers are guaranteed a minimum price for their products, which they collectively negotiate through their provincial marketing boards. Prices are based on production costs and market conditions, ensuring farmers have a guaranteed income based on the quota they hold. Canada restricts imports by setting tariff-rate quotas to maintain the third important pillar: import control.
Critics of supply management contend that the three pillars of control lead to artificially high prices that hurt consumers. What they fail to realize is that our products are often on par or very close in price with those in other countries.
In fact, recent reports have found that some products, such as milk, have been cheaper in Canada than in Australia, New Zealand, and the U.S.
The domestic focus of our supply-managed sectors has created stability and predictability for farmers and consumers alike that is lacking in export-focused systems. In fact, other countries have often had to intervene with government subsidies to farmers to help mitigate the effects of price fluctuations; in other words, consumers in those countries have been forced to pay for their products twice — once at the retail level, and again through their taxes.
The United States does not have a supply management system, and their dairy industry is highly subsidized. American milk products enter Canada at a trade deficit rate of 5:1. U.S. milk consumption has been on a steady decline in recent years, while production there has risen. This has lead to some U.S. dairy farmers pouring excess milk into holes used for livestock manure. In 2016, Americans produced over a billion pounds of excess cheese, with no market to offload their products. The U.S. Department of Agriculture then purchased up to $20 million of its country’s cheese glut, for distribution to food banks. Production control failure couldn’t be more starkly illustrated than with these U.S. examples.
Canadians across the country are now familiar with the recent bully tactics by the U.S. president in relation to NAFTA re-negotiations, and he has identified our supply-managed sectors as a prime target. Last week, I was incredibly proud to stand with my colleague, the NDP’s International Trade Critic Tracey Ramsey, who proposed a motion unanimously adopted by all parties in the House of Commons, which called for us to stand united against these unfair trade tactics.
Parliamentarians are united in defence of Canadians who depend directly and indirectly on our trade relationship with the U.S., and we support of the Government of Canada’s commitment to impose retaliatory tariffs in response to unfair U.S. trade actions. We are also committed to the defence of our supply management system.
Supply management has allowed a diversity of small family dairy, chicken, turkey, and egg farms to survive, thrive, and produce high-quality Canadian products — something we should all celebrate and defend.