As food prices rise, some experts say supply management isn’t helping – National | 24CA News
Earlier this yr, a since-removed TikTok video of a Canadian farmer dumping milk whereas decrying supply-management guidelines obtained nationwide media consideration. It’s not the primary time the picture a scene, of 1000’s of litres of contemporary milk working down a drain, has come underneath scrutiny.
“Milk … is a very emotional product for us,” mentioned Michael von Massow, a meals financial system professor on the University of Guelph in Ontario. “We feed it to our kids, it’s a staple, one of the biggest sellers in grocery stores.”
In truth, von Massow thinks that’s one of many causes that dairy in Canada is provide managed, alongside eggs and poultry — to guard a Canadian product for Canadian shoppers.
After all, you’ll be able to’t discuss competitors in Canadian industries with out mentioning the sectors the place competitors has been purposefully restrained.
First launched within the dairy business within the Nineteen Sixties earlier than increasing into eggs and poultry, provide administration is a system that regulates the manufacturing ranges, wholesale costs and commerce of dairy, poultry and eggs in Canada.
It’s supposed to handle points corresponding to fluctuating provide and value volatility, but provide administration can be one of many causes that farmers typically dump milk.
The form of milk-dumping within the TikTok video — the place farmers get rid of milk they will’t promote as a result of they produced greater than their quota permits — is uncommon in Canada, von Massow mentioned, noting that milk additionally often will get dumped within the U.S., the place dairy farmers aren’t supply-managed.
“No farmer ever wants to dispose of milk,” mentioned Dairy Farmers of Canada president Pierre Lampron in an announcement. He mentioned provide administration is definitely supposed to forestall overproduction, amongst different issues, and in distinctive circumstances milk disposal occurs because of components past farmers’ management, corresponding to highway closures or processing disruptions.
But the drama of milk being discarded, nonetheless uncommon, brings up questions for buyers who in any other case may not suppose a lot in regards to the system that regulates Canada’s dairy, poultry and eggs sectors. And as meals inflation persists, some have seen a chance to advocate for an finish to provide administration.
Critics say provide administration results in greater costs for Canadians whereas stifling innovation and export alternatives. Meanwhile, business advocates argue that provide administration protects Canadians and farmers from the volatility of inflation and provide chain fluctuations. Recently, the House of Commons agriculture committee prompt that Canada’s provide administration methods might function fashions for growing nations to make use of.
Despite the necessary position provide administration performs within the value of many key grocery objects, “There are strong opinions, but not strong understanding of supply management,” mentioned von Massow.
There are three pillars to the system: farm-level manufacturing controls, or quota; farmgate or wholesale costs set primarily based on quite a lot of enter prices; and import limitations corresponding to tariffs.
The concept is to guard the home market and guarantee Canadians have sufficient to eat by stabilizing costs whereas guaranteeing a good return for farmers, mentioned Lauren Kennedy, a spokesperson for Chicken Farmers of Canada, in an announcement.
“It’s a departure from the typical free market system,” mentioned Simon Somogyi, the Arrell Chair within the Business of Food on the University of Guelph.
“It’s part of our political system to not want competition, and to not allow direct competition,” mentioned Somogyi.
Supply administration seeks to stifle competitors, mentioned Ryan Cardwell, a professor on the University of Manitoba who focuses on meals and agricultural coverage. It’s utilized in industries that largely feed Canadians and the place Canadian producers aren’t or haven’t been aggressive on the world market, he mentioned (although whether or not that’s a product of or an argument for provide administration is a traditional query of the rooster and the egg).
Somogyi, Cardwell and von Massow all say producers have extra to achieve from provide administration than shoppers do. However, whereas farmers profit tremendously from predictable pricing and the diffusion of market energy, additionally they face drawbacks like limits on manufacturing and the issue of stepping into the business, mentioned von Massow.
But the system brings certainty to an unsure business, mentioned Bruce Muirhead, a professor on the University of Waterloo and the Egg Farmers of Canada chair in public coverage.
Proponents like Muirhead say shoppers profit by getting good and constant merchandise at an excellent and constant value.
Roger Pelissero, chair of Egg Farmers of Canada, mentioned in an announcement that the size and distribution of egg farms throughout Canada means the business can keep away from “bust periods” brought on by outbreaks just like the avian flu, or different such disruptions, just like the current spike in egg costs within the U.S. and another nations that was extra restricted in Canada.
But provide administration doesn’t imply that costs can’t see important adjustments. In 2022 the Canadian Dairy Commission raised farmgate milk costs twice as farmers struggled with rising prices, the primary time by 8.4 per cent and the second by 2.5 per cent.
While the variation in value of supply-managed merchandise has traditionally been decrease than different merchandise, von Massow thinks the protection and predictability for shoppers touted by pro-supply administration of us is overstated. But the diploma to which shoppers pay extra for provide managed merchandise can be doubtless overstated by opponents, he mentioned.
“Does supply management cost us a bit more? Probably. Is it as much as the critics say? Definitively not.”
For his half, Somogyi has seen decrease costs on dairy in different nations, corresponding to Australia and New Zealand. Not solely that, however there are extra product choices out there for shoppers, he mentioned. Australia and New Zealand each beforehand had supply-managed dairy sectors.
Not having provide administration would possibly due to this fact be higher for shoppers, however it could be harder on producers with extra stress to maintain prices down, mentioned Somogyi.
The Dairy Farmers’ Lampron argued that if provide administration have been abolished, retail costs could be unlikely to fall, since retail costs are set by retailers. He additionally argued that Canada already advantages from quite a lot of dairy merchandise together with imported cheeses and an “overwhelming” alternative of yogurt.
Muirhead says that with extra competitors for the dairy, egg and poultry sectors, costs would grow to be extra unstable and farmers could be underneath stress to decrease costs and compete with worldwide merchandise.
“I’m not saying that all Canadian farmers would go out of business, but it would fundamentally change the nature of the business that they’re in,” he mentioned.
“If you have competition, it’s a race to the bottom.”
While Cardwell agrees some producers wouldn’t survive if provide administration went away, he mentioned others would grow to be extra environment friendly and productive, and would get extra export alternatives.
Regardless, there’s no robust political transfer to abolish or overhaul provide administration, von Massow mentioned.
“We have these polarized debates without really having a good foundation of research or understanding to say, ‘Should we have it? Should we not have it? Should it stay the same?”’
Supply administration isn’t immune to vary, both. Over the years, tweaks have been made to the system, corresponding to altering how quotas are measured and including packages to assist new entrants, mentioned von Massow.
In a 2020 report, Somogyi and fellow researchers Sylvain Charlebois and Jean-Luc Lemieux argued for a center floor between totally dismantling provide administration and protecting the established order.
Among their essential suggestions: a voluntary quota buyback program that will enable some farmers to exit the market; a change within the CDC’s pricing technique; a elimination of interprovincial commerce limitations; and a sluggish discount in commerce tariffs.
The proposed adjustments would give farmers extra alternatives and adaptability, together with choices for coping with additional milk, mentioned Somogyi, and there could be extra selection in product for shoppers, in addition to decrease costs.
It’s not simple to reply whether or not extra competitors could be good for the dairy, egg and poultry industries in Canada, or for shoppers, mentioned von Massow.
“We need to look at it holistically and dispassionately. And I think that we haven’t done that effectively.”
