Supply management is “Canadian genius”By Peter Clarke
“Canadian genius” is what Professor Bruce Muirhead calls supply management.1 “Canadian” because it’s a truly made-in-Canada system. “Genius” because supply management is a shining star when compared to non-Canadian alternatives.
Supply management is founded on a simple premise: stability in the market for consumers and for farmers. Every year, a production quota is set so that supply mirrors demand. Canadians are guaranteed access to a supply of fresh, local, and high-quality food, and farmers receive a fair return. Beyond egg farming, the system of supply management is used in dairy and poultry farming.
To understand supply management, you need to go back to the 1960’s. Back then, egg farming was an economic roller coaster. It was impossible to tell how much a farmer could sell their eggs for… and if they could even cover their costs. Family farms were bankrupted. Rural communities were swept up in the hurricane of price swings.2
Supply management was created to address this chaos—and it has. Today a farming family can plan long-term knowing what their annual income will look like. This couldn’t be more important in a business where costs can rocket into the millions of dollars.
So what would Canada without supply management look like?
For one thing, taxes would be higher. Before supply management, taxpayers were on the hook for millions in subsidies and bailouts for farmers.3 Now, because of supply management, farmers receive a fair, stable income without costing taxpayers a penny.
Some critics argue that consumers pay more in the grocery store for supply managed products. The evidence from outside Canada shows that is false. In Australia’s deregulated market, a dozen eggs cost about $5 Canadian—more than here in Canada.
Milk in deregulated New Zealand is 35% higher than in supply-managed Canada—so high, in fact, that New Zealanders call it “white gold”.4
As for the U.S., a 2009 study found that retail prices there would increase 61% if dairies lost their work force of underpaid, undocumented immigrants—a practice rightfully banned by law in Canada.5
Deregulation in Australia and New Zealand meant more than higher prices. It meant the destruction of family farms and entire rural communities. In Australia alone, thousands fled the dairy industry as financial losses mounted. As one Australian senator put it, “the industry needs government intervention to some degree or we’ll end up losing the dairy industry in this country.”6
Meanwhile in Canada, supply-managed agricultural sectors are among the country’s strongest. Collectively, our farms are responsible for 332,000 jobs, $6.4 billion dollars in tax revenues and $27.5 billion to Canada’s GDP.7
There is an old truism: if it ain’t broke, don’t fix it. It’s a truism the critics of supply management too often ignore. There is nothing but hurt down the memory lane of a pre-supply management, pre-1960’s world.
Supply management is truly a model of Canadian genius. Let’s keep it that way.
To learn more about supply management, check out this video:
2 Canadian Parliamentary Review
3 Canadian Parliamentary Review
4 Centre for International Governance Innovation
5 Huffington Post
6 Huffington Post
7 Kevin Grier, Market Analysis and Consulting Inc.