The Conference Board of Canada is taking another run at supply management, particularly for the dairy industry, saying it’s costing Canada significant opportunities to expand production for export markets.
“There is a big prize out there for our dairy farmers to go after,” Michael Bloom, the Conference Board’s vice-president of industry and business strategy, said Wednesday in Ottawa at a panel discussion organized by the Ottawa Economics Association.
High tariffs to protect supply management also mean that those who are able to sell into the Canadian market make huge profits, economist Bruno Larue of Université Laval said at the same meeting.
Those imports could be significantly reduced if Canadians were able to increase milk production and lower prices.
Foreign suppliers are eager to grab even a small slice of the Canadian market, which boasts some of the highest prices and margins in the world, Larue said, pointing to the concessions the European Union sought in a recently-negotiated trade agreement.
The Conference Board of Canada is taking another run at supply management, particularly for the dairy industry, saying it’s costing Canada significant opportunities to expand production for export markets.
“There is a big prize out there for our dairy farmers to go after,” Michael Bloom, the Conference Board’s vice-president of industry and business strategy, said Wednesday in Ottawa at a panel discussion organized by the Ottawa Economics Association.
High tariffs to protect supply management also mean that those who are able to sell into the Canadian market make huge profits, economist Bruno Larue of Université Laval said at the same meeting.
Foreign suppliers are eager to grab even a small slice of the Canadian market, which boasts some of the highest prices and margins in the world, Larue said, pointing to the concessions the European Union sought in a recently-negotiated trade agreement.
It will gain access to the Canadian market for an additional 18,500 tonnes of cheese per year. The high tariffs will not apply to this cheese, but those who hold import permits will be able to charge the going Canadian price which will be about 2.5 to three times higher than the world price for the cheese.
“Foreigners like our market because the prices are high,” Prof. Larue said. “They don’t have to export a lot to make a lot of money in Canada.”
He suggested that producers in Europe, the United States, Australia and New Zealand are actually better off with supply management because they make so much money selling small quantities here. “They just want a bigger piece of the action,” he said.
Canada’s high prices are the result of “successive monopolies” and “cascading high margins” throughout the supply chain, from farmers to processors and grocery chains, he said.
The industry will lose in the long run unless it reforms now because more and more foreign product will come over the tariff wall, Prof. Larue added.
Among his suggested solutions: significantly boost production quota, break down provincial barriers and make it easier to buy and sell quota. The longer farmers and governments wait, the more costly it will be to phase out supply management, he said.
Bloom said that buying out Canada’s dairy quotas need not cost about $23 billion, which is the market price, because the government could pay farmers their book value for quota, which would be$3.6 to $4.7 billion.
Many farmers didn’t pay anything for their quota because they were in the business when supply management was launched; others have written off much of the cost of the quota they have purchased.
But I can anticipate howls of protest, insisting that they get full market price for quota. And I can see some justification because Canadian governments have consistently and loudly proclaimed full support for supply management, and no farmer can get into the business without buying quota.
Bloom said the market price for poultry quotas is about $7 billion.
There has been less international pressure to lower or scrap poultry tariffs, perhaps because Canada is not seen as a significant market for chicken, eggs and turkey.
The Conference Board argument that Canada could benefit from export earnings from poultry does, however, apply.
Canada’s poultry and dairy farming is concentrated in Ontario, Quebec and British Columbia, all locations with ready access to major urban markets in the United State and all with roughly the same natural resources and infrastructure as competitors in the U.S.i
The Conference
Board of Canada is taking another run at supply management, particularly for
the dairy industry, saying it’s costing Canada significant opportunities to expand
production for export markets.
“There is a big
prize out there for our dairy farmers to go after,” Michael Bloom, the
Conference Board’s vice-president of industry and business strategy, said
Wednesday in Ottawa at a panel discussion organized by the Ottawa Economics
Association.
High tariffs to
protect supply management also mean that those who are able to sell into the
Canadian market make huge profits, economist Bruno Larue of Université Laval
said at the same meeting.
Those imports
could be significantly reduced if Canadians were able to increase milk
production and lower prices.
Foreign
suppliers are eager to grab even a small slice of the Canadian market, which
boasts some of the highest prices and margins in the world, Larue said,
pointing to the concessions the European Union sought in a recently-negotiated
trade agreement.
The Conference
Board of Canada is taking another run at supply management, particularly for
the dairy industry, saying it’s costing Canada significant opportunities to expand
production for export markets.
“There is a big
prize out there for our dairy farmers to go after,” Michael Bloom, the
Conference Board’s vice-president of industry and business strategy, said
Wednesday in Ottawa at a panel discussion organized by the Ottawa Economics
Association.
High tariffs to
protect supply management also mean that those who are able to sell into the
Canadian market make huge profits, economist Bruno Larue of Université Laval
said at the same meeting.
Foreign
suppliers are eager to grab even a small slice of the Canadian market, which
boasts some of the highest prices and margins in the world, Larue said,
pointing to the concessions the European Union sought in a recently-negotiated
trade agreement.
It will
gain access to the Canadian market for an additional 18,500 tonnes of cheese
per year. The high tariffs will not apply to this cheese, but those who hold
import permits will be able to charge the going Canadian price which will be
about 2.5 to three times higher than the world price for the cheese.
“Foreigners
like our market because the prices are high,” Prof. Larue said. “They don’t
have to export a lot to make a lot of money in Canada.”
He
suggested that producers in Europe, the United States, Australia and New
Zealand are actually better off with supply management because they make so
much money selling small quantities here. “They just want a bigger piece of the
action,” he said.
Canada’s
high prices are the result of “successive monopolies” and “cascading high
margins” throughout the supply chain, from farmers to processors and grocery
chains, he said.
The
industry will lose in the long run unless it reforms now because more and more
foreign product will come over the tariff wall, Prof. Larue added.
Among his
suggested solutions: significantly boost production quota, break down
provincial barriers and make it easier to buy and sell quota. The longer
farmers and governments wait, the more costly it will be to phase out supply
management, he said.
Bloom said that
buying out Canada’s dairy quotas need not cost about $23 billion, which is the
market price, because the government could pay farmers their book value for quota,
which would be$3.6 to $4.7 billion.
Many farmers didn’t pay anything
for their quota because they were in the business when supply management was
launched; others have written off much of the cost of the quota they have
purchased.
But I can anticipate howls of protest, insisting that they get full market price for quota. And I can see some justification because Canadian governments have consistently and loudly proclaimed full support for supply management, and no farmer can get into the business without buying quota.
Bloom said the
market price for poultry quotas is about $7 billion.
There has been
less international pressure to lower or scrap poultry tariffs, perhaps because
Canada is not seen as a significant market for chicken, eggs and turkey.
The Conference
Board argument that Canada could benefit from export earnings from poultry
does, however, apply.
Canada’s poultry
and dairy farming is concentrated in Ontario, Quebec and British Columbia, all
locations with ready access to major urban markets in the United State and all
with roughly the same natural resources and infrastructure as competitors in the
U.S.
