Bill C-202 will protect supply management from upcoming trade negotiations with the U.S.Christinne Muschi/The Canadian Press
Supply management presents a mystery in multiple dimensions. How is it possible, on the one hand, that every political party could be so fanatically devoted to this policy, for the benefit of such a narrow slice of the economy – roughly 9,000 dairy farms, plus a couple of thousand chicken and egg producers – and at such exorbitant cost to the rest, even going so far as to pass legislation forbidding Canadian trade negotiators to make any concessions on it, no matter what they get in return?
How, likewise, could consumers be so blasé about a policy that costs them so much at the checkout counter, forcing them to pay as much as three times the market price for such basic food staples as milk, butter and eggs? How could progressives, who would mount the barricades against any proposal to tax groceries, for the general welfare, be so quiescent about a tax collected for the benefit of a single industry?
The dairy industry’s outsized political influence, explained in charts
On the other hand, why has supply management taken such central place in the conversation? Why do we spend so much time talking about supply management, and so little talking about similar or worse assaults on the consumer interest, from domestic air travel to wireless telecoms to financial services, all of them organized, like the supply-managed sectors in agriculture, as government-approved oligopolies?
On the latter question, at least, I have a few thoughts:
Because of who pays for it. The costs of supply management aren’t just borne by consumers generally, but fall most heavily on the poorest – since groceries absorb a much larger share of their budget than those of the better off. Other anti-consumer policies are regressive, but none are quite so regressive as a policy whose whole purpose is to inflate the price of one of the fundamental necessities of life.
This is what makes supply management unique. Other farm groups get government support, and other countries support theirs, but by means of explicit subsidy, paid for by taxpayers, and particularly (under a progressive income tax system) by upper income taxpayers.
Opinion: We must protect supply management from the trade war
Because of who benefits from it. Perhaps it is imagined that supply management is aimed at preserving that singular object of sentimental attachment, the family farm. Perhaps that was true, once. When supply management was first brought in, more than 50 years ago, there were about 120,000 dairy farms in Canada. Today there are fewer than 10,000.
As their numbers have dwindled, their size has increased: they are now large-scale agri-businesses, mostly. Their owners have both higher incomes than the average Canadian, and more security.
Far from stemming the loss of family farms, supply management has accentuated it. The premium on prices arising from the program’s complex system of internal production quotas and external tariffs gets capitalized into the value of the quota. Originally quota was just handed out; now you have to buy it, at a price equivalent to about $24,000 a cow, in Ontario and Quebec (twice that amount in the Western provinces). That’s a significant barrier to farmers getting into the business.
Because of who else it hurts. Supply management doesn’t just hurt its primary consumers. The costs are passed through to the manufacturers of foods made with supply-managed products, who are put at a disadvantage versus foreign competitors. And it hurts exporters in other sectors, including other farmers, so far as Canada’s refusal to compromise on supply management leads other countries to retain their own trade barriers – or, as Donald Trump now threatens, to put up new ones.
Arguably, it hurts dairy farmers themselves: instead of expanding into world markets, they are encouraged to remain cocooned within their protective barriers. How are we supposed to compete with those hyper-efficient New Zealand farmers, supply management’s advocates complain? It never occurs to them to ask how New Zealand’s farmers got so efficient. Answer: New Zealand abolished most of its farm protections in the 1980s. It is now the world’s leading dairy exporter.
Because it corrupts our politics. Many of the politicians most publicly enthusiastic in their support for the supply management regime will admit privately to its perversity. But they dare not get offside with the dairy lobby, for fear of losing critical seats in Quebec. Supply management has become, for Canadian politics, like the “stolen” 2020 election in the United States: a test of a politician’s loyalty, his willingness to say, over and over, what everybody knows is untrue, if the party demands it.
So it lumbers on, unchallenged, at increasing cost not only to consumers, or to our credibility as a trading nation, but to the sanity of our political discourse. There is a strong moral case for redistributing income from rich to poor. There is none whatever for redistributing from city to country – still less from farmer to farmer!