Quota allocation formula proposed
Two University of Guelph researchers have developed a
formula to allocate quota to provinces which have a competitive advantage.
That’s supposed to be the criteria for allocating additional
quota as Canadian demand increases, but it has never been implemented by any of
the dairy or poultry agencies.
It makes one wonder what teeth the Farm Products Council of Canada actually holds, or why it has refused to act. We, the Canadian public, can continue to pay inflated prices for dairy and poultry products because the council refuses to have increases in market demand produced in provinces which can do it at the lowest cost.
The farmers who run the national agencies have allocated increases on the same percentage basis
as existing quota and have ignored what the legislation says about comparative
advantage.
Saskatchewan challenged an egg agency allocation once and
won an increase in its share of the over-base allocation, but there was no
formula used to measure competitive advantage, only raw political clout.
Rajsic and Fox say the National Farm Products Council
anticipates there will be more challenges coming.
In fact, after they wrote their paper, Alberta’s chicken farmers served notice that will lead to their withdrawal from national supply
management at the end of this year because they want more quota.
If they pull out, they could produce as much chicken as they
want and presumably that could become competition for producers in other provinces.
Negotiations are ongoing to keep Alberta in the national system.
Ontario, which has also argued for years that it has been short of quota, is too timid to threaten to do the same at Saskatchewan and Alberta, so the nation's largest population continues to pay prices that are hard to justify.
There have been several proposals put forward by economists
in the last eight years to deal with over-base quota allocations, but Predrag Rojsic and Glenn Fox of the Department of
Food and Agricultural Resource Economics at the University of Guelph find fault
with all but one of them.
Karl Meilke, a colleague at Guelph, advanced a formula in
2009 that would allocate over-base quota according to provincial quota prices.
He argued that quota prices reflect the profitability of
production in various provinces, and the most profitable would be the most
competitive.
Rojsic and Fox agree with that basic approach, but add a few
wrinkles.
Their detailed research paper has been published in the journal
of the Canadian Agri-Food Trade Research Network and is posted online at http://www.uoguelph.ca/catprn/PDF-TPB/TPB-2012-04-Rajsic.pdf
.
I hope the political appointees at the Farm Products Council of Canada read it and gird up their loins to finally implement the legislation on over-base allocations.
And the same goes for the political appointees to the Ontario Farm Products Marketing Commission who seem to think they can totally ignore the public and news media inquiries.
