Agriculture

Supply management of farm products: A costly system for consumers

Despite a worldwide trend toward market liberalization and competition, most politicians and people involved in Quebec agriculture maintain a vigorous defence of supply management of certain farm products. Supply management is the mechanism by which milk, poultry and egg producers in Canada (most of them located in Quebec and Ontario) adjust production to protect their incomes. To this end, domestic demand is evaluated arbitrarily, and efforts are made to match this with production of the goods covered by the scheme.

The Stabilization Insurance program and the crisis in the pork industry

In the last few months, serious setbacks afflicting Quebec’s pork industry have been making headlines: the closing of slaughterhouses and processing plants, layoffs, and financial losses. A number of causes have been used to explain this crisis, in particular the rise of the Canadian dollar, industry cycles, high sickness levels, a lack of competitiveness among slaughterhouses, added costs to meet environmental standards, rigidities in collective marketing, and so on. A moratorium decreed by the provincial government on increases in pork production from 2002 to 2005 also stalled the rapid growth that the industry had experienced for more than a decade and stymied numerous investment projects.

Reforming dairy supply management in Canada: the Australian example

Even with a temporary reprieve from the latest WTO talks in Hong Kong in December 2005, the supply management system in Canada’s dairy industry will have to be reformed in the longer term. The system clearly benefits certain milk producers, but on the other hand it holds Canadian consumers hostage and stifles entire industries that have to pay more for their milk. It erects an obstacle to competition throughout the Canadian dairy industry, penalizing the most dynamic producers by means of extravagantly expensive quotas. When it comes to reforming the dairy supply management system in Canada, a number of concerns have been raised to which the Australian experience provides answers.

Back to top