Need to dismantle supply management disputed

Thursday, June 28, 2012

by SUSAN MANN

Spokespeople for Canadian dairy, egg and poultry farmer organizations have fanned out across Canada to counter the latest avalanche of articles and segments in major Canadian media outlets calling for supply management to be dismantled.

But one observer, Al Mussell, senior research associate with the George Morris Centre, says the assertion that Canada must or should discontinue the system as part of Canada’s entry into the Trans-Pacific Partnership (TPP) trade talks is misplaced. Other members of the Trans-Pacific Partnership - United States, New Zealand, Australia, Brunei Darussalam, Chile, Malaysia, Peru, Singapore and Vietnam - “have little incentive to care whether we do or don’t market dairy, eggs, and poultry using a supply management system; they care about the barriers to trade they face in supply managed products with Canada,” he says in his recently released special report – Does Canada Need to Dismantle Supply Management in the Trans-Pacific Partnership?

Canada and Mexico have both been invited to join the talks and the next round of negotiations is set for next month in San Diego, California.

Mussell says two of the pillars of supply management are price setting for the farmers’ price and supply control and “I can’t begin to imagine why other countries would really care about what we do domestically with regard to price setting and supply control.” What they do care about is the third element – import controls. But formally supply management agencies don’t have anything to do with them. “They’re federal government rules having to do with tariff rate quotas and the level of tariffs.”

Canada will face pressure on its import protection of supply-managed commodities at the trade talks “and given the levels that they’re at how can we not,” he explains.

Mussell says Canada needs import controls to make supply management work. But “this is a matter of degree” and Canada could negotiate some more access for supply-managed commodities in exchange for other considerations. “The point everybody’s missing here is it’s a negotiation.”

Canada has the second largest economy among the TPP countries so the other countries couldn’t force Canada to unilaterally drop its tariffs on supply managed commodities to zero, he says. “We’re the second largest dog in the fight.”

The long-time Canadian critics of supply management see the TPP talks as an opportunity to get rid of the system. But insisting that supply management be dismantled opens up unnecessary conflict among regions, governments, supply management agencies and it creates a distraction from the real issue of how to best negotiate the levels of trade barriers with TPP, he says.

Here is some of the most recent commentary about dismantling supply management.

In a report released June 21 called Supply Management: Problems, Politics and Possibilities, former Liberal MP Martha Hall Findlay says Canada’s system for dairy products over charges consumers and interferes with international trade negotiations.

The same day, National Post writer John Ivison wrote it is has long been known supply management is a “racket – an indefensible, anti-competitive cartel.”

National Post writer Andrew Coyne wrote June 22 that every economist or policy analyst of note agrees that supply management is a disgrace.

The same day, Globe and Mail columnist Jeffrey Simpson called supply management a “protectionist racket.”

Mike Dungate, executive director of Chicken Farmers of Canada, says these comments around supply management are unsubstantiated. “It’s almost like bullying. They’re just piling on and piling on.”

Nobody is providing evidence, he says. Dungate, Therese Beaulieu, spokesperson for Dairy Farmers of Canada, and Peter Clarke, chair of Egg Farmers of Canada, all dispute Hall Findlay’s assertion in her report that Canadians pay an average of $9.60 for four litres of milk.

In DFC’s press release, they say data collected by the Nielsen firm indicates the weighted average retail price of milk in Canada is $1.45 a litre, which is 20 cents cheaper than the $1.65 a litre they pay in New Zealand and 10 cents cheaper than the Australian price of $1.55 a litre.

Clarke asks if the $9.60 figure is incorrect, how much more of “what they reported on is incorrect as well?”

Beaulieu says Dairy Farmers of Canada was expecting the negative commentary when it heard there was to be an announcement on the TPP negotiations.

Dairy Farmers had done “a lot” of interviews during the past week and has been quoted in several articles. In addition its spokespeople have participated in television and radio shows, Beaulieu says. They have written letters in response to critical editorials and opinion pieces.

She says farmers should seek support from their local communities and local businesses. “The rural communities are very supportive of the businesses within their communities.”

Dungate says in the 16 years he has been at Chicken Farmers, no one who has written studies and commentaries slamming the system have ever contacted them about how the national chicken system works. The board meetings where directors set allocations are all open to the public and reporters but none of them have ever attended.

He says the notion that farmers are trying to curtail chicken supply to drive up prices is false. Farmers get paid their cost of production on a per unit basis. “The more that we produce the more the farmers will earn,” he says, noting if they constrain supply farmers still get their cost of production but it’s on a lower number of units so farmers make less.

 “Our argument overall is Canadians get great value from all farming in this country and from the agri-food industry and they only spend on average about 10 per cent of their disposal income” annually, he says.

Ted van den Hurk, an Ontario chicken farmer from near Stayner, says consumers have never approached him to say they don’t buy chicken because the price is too high.

“The Canadian on the street doesn’t feel they’re being gouged because they realize they’re getting a good, safe, healthy product at a reasonable price compared to their income,” he notes, explaining our price for dairy and poultry can’t be compared to the American price because the average family income in the United States is much lower than Canada’s.

Peter Clarke, Nova Scotia, chair of Egg Farmers of Canada, says many Canadians are keen to purchase as much of their food as they can locally. Egg farmers make that possible because there’s production in all 10 provinces plus the Northwest Territories.

Supply management ensures farmers a fair return on their labour and investment and enables them to invest wherever they are in Canada. “It allows our families to really plan for the future,” he explains.

As for what effect the dismantle supply management commentary is having on the federal government, Agriculture Minister Gerry Ritz says by email that the system provides farmers with a fair return on their investment and labour while supplying consumers with high quality dairy products at fair prices with no government support. “Our government and our farmers know Canada’s balanced trade position is working well.”

He also points out that supply management hasn’t prevented Canada from signing any free trade agreement with any country. BF