The end of supply management?

[gregpet]

[theplowboy]

We have been hearing about the end of supply
management for thirty years. I doubt the Bloc will
be interested in supporting any changes.

[hobbyfrmr]

I dont know enough about the politics of western canadian ag, very few things seem to ever work as expected, I want to use the word futile. Eastern Canda on the other hand, in my view is very effective. Supply management, and the UPA(?), farmers union in Quebec seem to get either a solid revenue or a solid risk management program. Somewhere along the way, they have learned how to effectively get their message across to their politicians. Once again, I am insanely jealous and have no good ideas how to improve ag in Sask.

[Happytrails]

Hobbyfarmer maybe you should concentrate on supplying a good product with a fair portion of the COP being your efforts. I wouldn't waste any time being envious of the supply managed industries. Sooner or later our urban masters will stop protecting them by force of arms and open the shop. Then they will be like the south after the civil war...HT

[DogPatch]

Dairy farmers have thousands of dollars of quotas that have loans against, and been used for collateral for other loans. If "The Powers to Be" suddenly deal away the Supply Managed producers as the sacrificial lamb, how will they be compensated? Are the benefiting sectors going to be willing to cough up their support?

On paper, without the value of the quotas that were bought, most dairy farmers will be bankrupt.

[cottonpicken]

Maybe we should supply manage chairs or coats
or dog leashes or tv sets.let the prices triple and
screw over everybody but the people who
produce that stuff. Why not?

[bgmb]

Dog Patch

You certainly wouldn't want to pay out all quota at current values. Many didn't pay anywhere near what it is worth today and the only reason the value is where it is are import restrictive tariffs that hurt the rest of society.

I would suggest a sliding scale to pay out producers who bought quota in the last 7 years. Start at 70% for quota bought within a year and drop 10% each year back to 7 years. Quota bought more than 7 years ago will receive no payout.

The assumption behind the above would be that farmers who bought quota more than 7 years ago have had time to make enough money off the system that they should have no need for a payout.

I am not sure 7 years is the magic number it may have to be shorter or longer.

[burnt]

I am deeply discouraged by the disparity between the spending/buying power of dairy/feather farmers over every other kind of producer.

Having said that, I don't see anything wrong with receiving a fair return on investment, especially having had the props kicked out from under me as a cow/calf op.

I think that there are inevitably two different arguments coming out in this discussion. One point is the value of quota, a point of contention that certainly deserves consideration.

The value is so over-priced that is should be an embarrassment to be in that racket.

Quota should hold NO - ZERO - value and it should be allocated in a fair manner. Putting a dollar value on it makes it a rich man's game. (But then what part of farming or ranching isn't, I guess?)

The second point of dissent is the price of milk.

All I can say to any farmer who complains about the price of a farm commodity is SHAME ON YOU! Bloody hypocrites, you are, to complain about the price of a healthy, readily- available staple of tremendous value.

I relate back to my first point about disparity. And while I said I feel discouragement, I believe that the main driver behind the calls for the end of supply management is jealousy.

Furthermore, can anyone guarantee that the price we pay for milk will go down if supply were to be eliminated?

I would bet the change in price paid by consumers would be minimal. I am basing that on a comparative situation when BSE hit our herd value. Prices to us dropped through the floor, but the price in the store NEVER MOVED!

So how do you free marketers rationalize that, and what does that do to your petulant "i-want-cheaper-milk-so . . ." theory?

[highwayman]

Burnt, any idea what dairy and poultry products sell for south of the 49th where there is no supply management just to compare.

[hedgehog]

just look at the uk, where quotas went about 12 yrs ago.
a third of dairy farmers have quit, and another third would like to. no one wants to milk cows, only immigrants. milk price is below cost.
they cant afford to pay crop farmers for straw, barley etc. a third of our milk comes in from europe now.
keep your quotas if you want an industry to survive.

[burnt]

For reference sake, the price of milk in town ranges from $3.99 to $4.99.

That's funny that hedgehog chimed in right here because I was going to say just about the same as he. But it actually carries quite a bit more weight coming from the voice of experience rather than theory.

From what sources I have heard, they seem to pay around 15% less than we do. It takes a bit of calculation to work the cost back to an exact equivalent, taking into account the volume and exchange. If I am too far wrong one way or the other, I am open to correction.

However, this is the bottom line - the consumer always pays the full cost of production, or more, if the product is government subsidized. So, their real cost is possibly higher than ours.

Because what the American consumers are saving at the checkout, they are paying through their taxes to support the subsidy programs that are a large and significant part of the American dairy program.

And given the cost of government (mis)managing anything, how smart is a system like that?

Additionally, not only do they need recurrent, government-subsidized herd buyouts, besides whatever else the dairy farmers get, the buyouts are something to be dreaded by the beef sector because of all the meat they "dump" onto the market.

Yup. That works well!

There is a lot wrong with the way supply management is run in Canada, but the final product cost is not one of them.

[Ruken]

Be careful to throw out supply management in exchange for access to a foreign market. For years I thought the abolishment of supply management might be a worthwhile trade off so we could access more foreign markets. However...after BSE and seeing how much politics exists....I don't put much security on the international market place. They take care (or shall I say, their opposition parties) take care of themselves first. That leaves us high and dry regardless of whether we have supply managed industries. Leave well enough alone. They're not hurting us that badly, east or west!

[Ruken]

Oh, and excellent comments, Burnt!