COUNTRY REPORT ▶▶▶
Canada’s supply management system: A hot topic
Canada’s supply management system has been a talking point for as long as it has existed. Understandably, trade partners want it dismantled, but you would be hard-pressed to find a Canadian dairy farmer who will speak against the system. But is the Canadian dairy industry competitive and sustainable? The recent report Supply Management 2.0 suggests it is not and proposes a four-step plan to improve the industry.
BY MELANIE EPP C
o-authored by Sylvain Charlebois and Jean-Luc Le- mieux from the Agri-Food Analytics Lab at Dalhou- sie University and Simon Somogyi at the Arrell Food Institute, both in Canada, the report explores issues
in the supply of dairy products in Canada and opens up dis- cussion around creating a more sustainable system going for- ward. It outlines a 20-year plan for supply management to in- centivise farmers to adapt to a more liberalised market and to become competitive in niche and premium export markets.
Supply Management 2.0: Four-point plan 1. Create a voluntary programme for dairy farmers to exit the industry 2. Make significant changes to the Canadian Dairy Commis- sion (CDC) 3. Remove interprovincial trade barriers on dairy products and create an innovation fund for the sector 4. Initiate a 20-year plan to reduce general tariffs, develop an exporting strategy, create a Canadian brand and provide incentive for innovation.
Recognising that full liberalisation would be too radical a shift, especially now, the authors conceded that dismantling supply management is currently not a viable solution. “The pure free-market economic model tells us that the
16 ▶DAIRY GLOBAL | Volume 7, No. 5, 2020
Canadian dairy industry cannot currently compete with the marginal production costs of dairy producers in other coun- tries,” the report said. “While free-market economics may pro- duce an efficient outcome, it is not the optimal situation when we consider the livelihood of farmers, our rural economy and our values as Canadians.”
1. Exit In the four-step proposal, the authors first suggest the federal government initiate a voluntary quota buyback programme of equal value to the concessions made to foreign competi- tion in recent trade deals. In agreeing to a buyout, farmers would be fully compensated, allowing them to start anew in another industry. The authors’ rationale is that it would be wiser to exit on one’s own terms than to be forced out by for- eign competitors, and doing so would make room for growth for those who wish to stay. Dairy Farmers of Canada (DFC), the advocacy group repre- senting Canada’s dairy farmers, said now is not the time to reduce domestic milk production. “There is an implication in the report to reduce the level of domestic production, with a buyback program, when farmers will be striving to maintain and grow markets at a time when domestic food security is even more relevant,” said Pierre Lampron, president of DFC. “Supply management ensures that Canadian consumers have reliable, year-round access to high-quality milk produced within our own borders according to some of the most strin- gent standards in the world,” he continued. “Now more than ever, Canadians recognise the importance of self-sufficiency in our food production – the pandemic has highlighted the weakness of models that rely disproportionately on foreign production.”
2. Transparency The second proposal suggests making significant changes to the CDC in order to improve transparency, particularly around how price is determined. Co-author, Associate Professor at the University of Guelph
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