OTTAWA, September 30, 2015 – Canadian farmers have endured a long-running and concerted attack on the system that brings Canadians the dairy, poultry and egg products they trust.
As the pressure mounts to conclude the TPP negotiations in Atlanta this week, Canada’s dairy, poultry and egg farmers are hearing an increasing amount of rhetoric and misinformation regarding supply management in the media.
As a result, farmers would like an opportunity to address these myths.
Supply management does not raise prices for consumers
Farmers do not set retail prices–retailers and restaurants have always charged what they feel the market will bear. The price paid by the consumer is related to many factors, which can include: retailer competition, brand positioning, cost of competing items and specials to get consumers in the store. None of these factors is related in any way to the share the farmer receives–which typically only represents a tiny fraction of the final price.
- Chicken is currently the least expensive meat protein. Over the last two years, the price of chicken has risen by only 3%, compared to over 20% for other meats that are freely traded.
- A Nielsen study showed that in 2014, consumers paid an average of $1.30/L for fresh milk in Canada, as compared with $1.83 in New Zealand, $1.81 in France, $1.15 in the U.S, $1.19 in Germany, and $2.35 in China.
- The average annual retail price for whole frozen turkeys in Canada over the last 15 years was $2.92 per kg, vs. $3.34 per kg in the United States; sometimes a little higher – more often lower, but never wildly out of range with the U.S.
- You can buy a dozen eggs, the most complete protein source available, for less than the price of a latte.
The biggest determinant of how much we pay for dairy, poultry and egg products isn’t supply management–it’s where and when we shop.
Supply management is not blocking the TPP
The Government of Canada has successfully negotiated twelve trade agreements with 43 countries since 1994; all of these have opened up new markets, improved trade rules, and preserved supply management.
This is a successful negotiating formula, and we are confident that the government will be able to do it again at the TPP. Canada is already the 6th largest importer of agri-food products – and 1st on a per capita basis; we don’t need to take any lessons on market access from other countries.
Every single country involved in the TPP has something that they want to keep. The United States, for example, has a long history of restrictive import protections in the sugar and dairy industries; Japan has a long history of protecting its rice sector; and New Zealand has always vigorously defended its pharmaceutical program.
Supply management is not subsidized
Unlike other agricultural sectors, Canada’s dairy, poultry and egg industries receive no government subsidies.
In countries without supply management (and even here in Canada), other sectors are heavily subsidized.
Consumers pay twice for most food, once through their taxes (whether they buy it or not), and again at the grocery counter. With dairy, poultry and egg products, you only pay for it if you buy it.
Canada isn’t a closed market
Canada is an important market for countries the world over – even for supply managed products. Canada imports more chicken, for example, than six of the TPP countries (including the U.S.) combined. What’s ironic is that New Zealand and Australia, the media darlings of international trade, whom we are encouraged to emulate, import no chicken.
Supply management makes a difference to Canada’s economy
- 16,667 farmers
- 332,006 total jobs
- $11.3 billion in farm cash receipts
- $27.5 billion to Canada’s GDP
- $6.4 billion in taxes
Dismantling supply management will not lower consumer prices
In countries where supply management has been dismantled, such as Australia and New Zealand, prices have actually gone up for consumers, while revenues for farmers have gone down or stayed the same.
The average domestic price for two litres of milk in New Zealand jumped 11.3% from May 2013 to May 2015, despite being a major milk exporter, and having one of the lowest costs of production in the world.
Nielsen’s global price comparison (52 weeks ending December 2014) shows the average consumer price for milk is about $1.30/L for Canadian fresh milk, which compares well with the $1.83/L consumers pay in New Zealand, $1.81/L in France, $1.15/L in the United States, and $1.19/L in Germany; while China’s prices are more expensive, at $2.35 /L.
Even in Canberra, Australia’s capital, 30 eggs cost $6.69 CAD, while, at the same time, they cost $5.99 in Ottawa. Promising lower prices prematurely assumes that retailers will pass on lower prices to consumers–when was the last time this happened?
Supply management helps food safety systems work
Canadian farmers are known worldwide for their stringent food safety systems. Not all farmers outside of Canada adhere to the same standards.
Dairy, poultry and egg farmers are obligated to follow strict on-farm programs that ensure that the highest on-farm standards are followed, from food safety to biosecurity—and supply management allows these to be enforced.
Supply management is risk management
Supply managed farmers are able to avoid bust periods that can happen for reasons like animal disease (both domestic and international), which often force other farm sectors to use government support programs and subsidies in order to ride out the storm.
In a recent interview, Ontario Agriculture Minister, Jeff Leal, credited supply management for saving rural Ontario from “total collapse” during an outbreak of BSE – because stable revenues from one sector allowed all the other businesses that serve farmers to ride out the downturn.
There are more than 1,000 egg farms in Canada in all parts of the country, with an average flock size of about 23,000; compared to about 200 farms in the U.S., concentrated mainly in a few states, with an average flock size of 1.5 million. Thanks to supply management, which has assured the stability of the family farm, when a crisis like high path Avian Influenza hits in Canada, farmers can contain, mitigate and buffer Canadian consumers and protect our animals, without the uncertainty of relying on imports.
Get the facts
Farmers are growing increasingly concerned about having their industries misrepresented in certain media. It’s time that people had the facts–or at the very least, the other side of the story.
For more information on how supply management works for Canada and Canadians, please refer to the following sites: