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The cost of Dairy... Do CDN's pay more?

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    The cost of Dairy... Do CDN's pay more?

    Why we need supply-management for a healthy dairy
    industry

    Supply-management has once again found its way to
    the headlines in national newspapers all across
    Canada.

    Supply-management is being criticized as a result of
    an imminent signing of a free trade agreement
    between Canada and the European Union where they
    have asked for additional access to Canadian markets.
    A change in the current system could have dire effects
    for Canadian dairy farms, including the 193 currently
    situated in Prince Edward Island.

    Supply-management was introduced by the federal
    government in the 1970s as a way to ensure local
    farmers could meet domestic demand. The
    introduction of quota levels helped to control supply
    while creating stable prices for Canadian consumers.
    Prices for milk worldwide had led to fluctuating prices
    and instability in Canadian markets. The government
    sought to fix this by implementing a system to provide
    milk and poultry for the Canadian market by Canadian
    producers.

    The shift to a neo-liberal mindset during the 1980s
    has led to the mindset that supply-management
    hinders trade initiatives from moving forward, and is
    costing consumers dearly. However, is this belief valid?

    Kelly McParland, a columnist for the National Post,
    acknowledges Canadians are being overpriced at retail
    stores for the price of milk, yogurt and cheese in
    comparison to other world markets. While Kelly is
    certainly right - Canadians do pay more at the cash
    register - he has failed to articulate why prices are
    lower in other markets. Simply put, other markets are
    heavily subsidized. Markets such as the United States
    and the European Union gloat about free trade and the
    positive impact of open markets on industry. What is
    overlooked is the crutch the government must provide.
    In fact, as reported by the Toronto Sun in 2012, the
    European Union spends 40 per cent of its budget
    subsidizing its dairy industry, the equivalent of $52
    billion spent annually. In comparison Canadian
    taxpayers do not subsidize the industry.

    Some Canadians also point to the large discrepancy
    between the cost of American and Canadian milk as a
    flaw in supply-management. This discrepancy is also a
    result of subsidies. The fiscal cliff issue in the United
    States highlighted the importance of subsidies for the
    dairy industry; without subsidies, the predicted price
    of milk was expected to double to between $6 to 8 per
    gallon. Those subsidies are provided via the American
    Farm Bill, which was in danger of losing assistance
    from Washington.

    It's not clear whether or not a free-market system will
    bring lower prices to Canadian consumers. New
    Zealand once had

    supply-management, then switched to a free-market
    orientation. Prices increased for consumers, and a
    monopoly was established where one dairy owns 90
    per cent of milk farms. The result caused the New
    Zealand government to have a parliamentary
    investigation as to why prices increased.

    A common misconception is how the price of milk is
    determined. Prices are set based on actual input costs
    directly associated with producing milk. Usually this
    formula allows 50 per cent of producers to break even
    after labour costs. The farmers, who break even, spend
    the majority of their profit on paying off existing
    loans, or investing in capital upgrades. Farmers who
    do not break even are forced to manage costs more
    efficiently to reach the 50th percentile or leave the
    market. This creates a competitive environment where
    not all farmers are guaranteed to succeed.

    The number of dairy farms in Canada has decreased
    since the 1960s from around 135,000 to roughly
    14,000 today. Barrie McKenna, columnist with the
    Globe and Mail, suggests decline in farms is directly
    related to barrier of entrance in the industry. McKenna
    mentions the cost of buying quota, which is the
    equivalent of $25,000 per cow. Supporters of supply-
    management argue the high quota shows that the
    industry is healthy, and that other profitable
    businesses require high start-up costs, including
    purchasing franchise fees to begin operations. Neo-
    liberalization has also pushed many "mom and pop"
    shops out of business, as increasing economies of
    scale make it difficult for small businesses to compete;
    this decline in numbers extends beyond the dairy
    industry.

    In conclusion, economics and policies aside, the issue
    comes down to values. What do Canadians value? If the
    elimination of the supply-management reduced actual
    costs to consumers (which there is substantial
    evidence it wouldn't) it would put our dairy industry in
    a precarious position. Given that the average
    percentage of the Canadian grocery bill spent on dairy
    is two per cent or less it represents a small portion of
    the cost of living. The choice then comes down to a
    potential small increase in consumer savings, or
    maintaining the livelihood of roughly 14,000 Canadian
    dairy producers including other dairy-related jobs that
    would be affected. I, for one, am in support of the
    latter.

    Kody Blois is a Nova Scotia resident pursuing a
    commerce degree with a minor in political science at
    Brock University. You can follow him on twitter
    @kodyblois or his blog kodyblois@blogspot.ca

    #2
    What's the point of putting this piece of blatant propaganda on this website? Do you think that rational individuals are gonna buy into the author's nonsense in any way?

    Comment


      #3
      As I have explained in other posts, the Canadian dairy industry is heavily subsidized... the author's statement that it is not subsidized is an outright lie.

      Comment


        #4
        Even a liberal like Martha Hall Finlay is questioning the logic of supply management.

        Comment


          #5
          Liberty,

          I think it does have some valid points... SOME.

          I think the subsidy racket in the US and EU is valid...
          and taxpayers in Canada do not have to pay... which is
          GOOD. I don't think we pay enough more for our dairy
          foods... to justify buying out the quotas.

          And if then we must have taxpayers subsidize dairy
          production... then it really is a step backwards.

          Real is real... the system is the way it is. I think there
          will be some revision upward in the total imports
          allowed... from 3-5 percent perhaps to double this
          (6-10) without tariffs. Then a slow transition could
          occur over time that would be fairer to all.

          Cheers

          Comment


            #6
            Believe the author, Kody Blois, would be the
            nephew of Barron Blois, former president of Dairy
            Farmers of Canada. Just for interests sake

            Comment


              #7
              I was small dairy farmer in the 70s 25 cows on line quota was free cows were $1000/1200 then the push to get bigger well then the quota prices started to skyrocket and were built into the cost of production so the big got bigger because they had free quota to aid them in buying more quota.
              SAme thing is going on in other sectors of agri today .
              Same shit different pile.

              Comment


                #8
                Darn rights we pay more for our dairy products in Canada than in the USA. HOWEVER, I don't blame if on supply management, but rather the retailers and manufactures gouging us because they are able to blame the difference on Supply Management. In the USA, dairy farmers are having an extremely rough go financially.

                Comment

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