Is supply management an outdated concept?
A good example is the dairy and egg marketing boards. Canadians — through forced, government-mandated, retail-based subsidies — pay more for these products than those in the U.S.
A dozen eggs in the U.S. can cost you $1.50; compare this to Canada at $2.50; U.S. cheese around $6-7 for two pounds. Compare this to $10 in Canada. Milk, another Canadian staple, costs you around $4.50 compared to $3 in the U.S. Butter, $4.50 in Canada, is also $3 in the U.S.
Government supply and management policies protect the dairy industry, guaranteeing stable prices for farm incomes year after year.
So why are dairy products much cheaper in the U.S.? The U.S. subsidizes farmers up to $22-billion annually through general revenue.
Subsidies from general revenue tax all citizens at ‘incremental-to-income’ general taxation rates. Because Canada chooses to protect dairy farmers at the consumer level through supply and management controls the yearly monetary benefit received from the taxpayer through marketing boards is concealed.
This misleading user pay philosophy is detrimental to the poor.
Those on welfare or low-paying jobs, when using these products, subsidize the dairy industry at a high rate of taxation when compared to the salary of an average or high-income earner. Efficient user-pay systems operate best under free market conditions. Supply meeting demand determines price.
Canadians are increasingly looking at food sustainability issues, growing and supplying more food locally. To be successful local food systems need to supply a variety of products. In most cases, a smaller distribution area would allow consumers to purchase eggs, milk and cheese locally instead of from the other side of the country.
U.S. President Donald Trump is banging the wrong drum: NAFTA creates a cross-border flow of $1-million a minute or $2-billion a day. The annual $640-million dairy industry is an inconsequential factor.
That said Canada needs to get rid of supply management. Quality sells. Canadian cheese is far superior to the rubber that passes for American cheese and the watery butter Americans serve their consumers.