Canada’s supply management system for the dairy and poultry industries has been very much in the business news in 2011. Canada’s future economic success is largely being tied to the Pacific Rim and the European Union. But Canada’s attempts to gain access to the emerging Trans Pacific Partnership trade group are being resisted because Canada refuses to budge on its supply management system.
Canada and the European Union have been negotiating a comprehensive economic and trade agreement with the aim of concluding in 2012. Not surprisingly, Canada’s supply management system is a point of contention. Critics of supply management are quick to point out that Canadians pay too much for dairy, poultry and egg products. The system shelters a small group of farmers behind tariffs that restrict imports, manages supply and demand with production quotas and sets minimum prices.
What the critics do not talk about is how the rest of the Canadian agriculture sector is supported by the Canadian consumer. Over the past ten years, Canada’s federal and provincial governments have spent an average of $6.3 billion annually to support agriculture. Of that expenditure, income support to the Canadian farmer, excluding those under supply management, amounts to an average of $3.7 billion. Canadian dairy and poultry farmers receive their income entirely from the marketplace.
Supply management is transparent. The farmer has the chance to earn a fair market return – paid for directly by the consumer.
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