The Broadbent Blog


Don’t let supply management myths spoil the milk

This article originally appeared in the Globe & Mail.

The way Canadian dairy farmers are portrayed in the NAFTA debate might lead you to believe they drive Porsches to the milking barns. Farmers who own quota in our food system, where dairy along with poultry fall under supply management, are often portrayed as a lobby group rather than people we rely on for food security.

In fact, opposition to supply management in Canada is based on misrepresentation. If we want a food system that is efficient, sustainable and promotes health, then we should protect supply management vehemently and even expand it to other foods. That means confronting the myths about this system that are bandied about like fact.

Supply management works by ensuring farmers don’t produce more milk (or eggs or poultry) than we need. The marketing boards for these foods tell farmers how much they can produce – their quota – and then calculate the sale price by considering the cost of production. This is broadly known as demand-supply co-ordination. Neither the federal nor the provincial governments are directly involved – aside from passing laws and maintaining protective taxes that allow supply management to work. The system isn’t perfect – for one, it doesn’t always consider how to produce the healthiest foods – but it’s not what critics say it is.

Myth 1: Supply management stands in the way of a free market. Compare the way milk is produced in the United States to in Canada. Here, supply management ensures farmers’ costs of production are covered by the price they get for what they produce. This means Canadian taxpayers do not subsidize these farmers. However, in the United States, taxpayer dollars subsidize American dairy for irrigation, nutrition and feed as well as through government loan programs. They need this state support because the market price usually doesn’t cover their costs of production. They also need it because, unlike in Canada where supply is matched to demand, American farmers often produce more milk than they can use. This leads to the destructive boom-and-bust cycles so typical of farming. Now they want to sell us their excess and put an end to Canadian supply management.

Myth 2: Supply management only makes some farmers rich. We have supply management in Canada because farmers and governments recognized that it was hard for farmers to make a living in the marketplace. There’s a paradox that makes food different from other commodities: A really lean season means similarly lean income while a bumper crop floods the market and lowers the price, leading to more lean income. Farmers who own quota in a supply management system typically fare better than farmers who don’t. Also, the price guaranteed by supply management provides Canadians with a price-stable, high-quality source of dairy. Milk prices don’t suddenly spike. Moreover, the system has enabled Canadian farmers to have smaller herds than American farmers where herds are as large as 100,000 cattle. Slowing the growth of big dairy farms has left rural communities with more small farms, which in turn contributes to the richness of rural life that even city people experience when they head to the country.

Myth 3: Canadians will benefit if we scrap supply management. A recent study found that Canadians pay less on average than Americans and Australians for dairy and our prices are less volatile. But price isn’t the only consideration when it comes to food. Food, and the way it is produced, determines how healthy we are. And the way food is produced on the farm and then processed has an impact on the environment. Not to mention that farms are part of the social fabric of this country – when farms go out of business because of boom-and-bust cycles, social and community health is negatively affected.

So rather than back away from supply management, Canada should consider how demand-supply co-ordination can be improved by making sustainability and health explicit goals in this system and in national food policy. Such an approach ensures resources are used efficiently, reduces the distance food travels and lessens food waste. These are all good things.

But demand supply co-ordination isn’t popular in a food system run primarily by private interests. And it’s especially not popular with the Trump administration looking for a market for the excess milk flowing from its skewed dairy supports.

Seeing the benefit in supply management asks us to confront our biases and step away from the drumbeat of globalization that makes it seem like supply management stands in the way of progress. If we want a healthy and sustainable food policy, the government needs to protect it for our sake.

 

Sarah Elton is a doctoral research fellow at the Culinaria Research Centre, University of Toronto Scarborough. Rod MacRae is an associate professor in environmental studies at York University. Both are working with the Broadbent Institute on supply management.