The George Morris Centre has outlined a package of reforms
that would improve Canada’s dairy industry.
The reforms begin with emphasis on market growth and
improved efficiencies, such as eliminating provincial trade barriers and
improving the plant supply quota system.
That sets the stage for liberalizing milk pricing without
devastating dairy farmers’ profits, say the three authors, and that then
positions Canada to strike international trade deals.
As things stand now, dairy farmers resist any trade deals
that would increase competition or lower prices in the Canadian market, and
that makes it more difficult for Canadian negotiators to win concessions from
trading partners on other issues of benefit to Canadians.
There is “no need to redesign the system from scratch,” say
authors Al Mussell, Bob Seguin and Janalee Sweetland.
And the recommendations they make could be implemented
swiftly without requiring politicians to pass any new laws, they say.
They also recommend improvements to the governance of
marketing boards.
They say this is a package deal and that implementing only
some, but not all, of the recommendations would yield only minor benefits.
They begin the report by acknowledging that supply management
has achieved its stated objectives of eliminating surpluses, improving
farm-gate milk prices and addressing market power concerns.
But they say the price has been high.
Canada’s dairy market has hardly budged while there has been
substantial growth in other countries, imports have nibbled into market share
and dairy substitutes have been developed and taken market share.
Supply management has “fragmented” the domestic market,
sharply limited access to quota and curtailed exports.
In another paper, Mussell argued earlier that the Ontario
milk marketing board made a mistake to cap the price of quota.
Achieving that goal has stymied quota transfers and so the
most efficient producers who can afford to, and want to, expand can’t and the
least efficient producers who might retire if they could sell their quota at
higher prices are holding on.
Mussell argued this is reducing the overall efficiency and
profitability of dairy farming.
But this paper also notes that higher and steady milk prices
for farmers has led them to invest more in quota and that reduces what they
could be pocketing as profits.
This is the fourth in a series of George Morris Centre
reports on the day industry. Two were prepared for the Conference Board of
Canada, outlining how and why supply management evolved as Canadian dairy
policy and comparing Canada’s dairy industry with other nations.
The third paper was an outline of the challenges the
Canadian dairy industry is facing.
I hope the federal government will use this report to threaten to drastically cut tariffs unless the marketing boards act swiftly to implement the recommendations.
