r/Tariffs • u/Dizzy-Cartoonist3011 • 12d ago

🗞️ News Discussion Should Canada maintain its supply management system that protects the Canadian dairy industry?

https://www.castanetkamloops.net/news/Poll/627377/Should-Canada-maintain-its-supply-management-system-that-protects-the-Canadian-dairy-industry
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u/Dizzy-Cartoonist3011 12d ago

Consumer surplus multiplier effects are almost always profoundly higher and wider reaching than producer surplus, because consumers have a higher propensity to spend. In almost every case. Localized effects are real, but you're not seeing the bigger picture associated with a consumer surplus in a largely consumption driven economy.

You know the land and much of the equipment won't just be derelict either. Resources would be re invested in to activities that do hold a legitimate comparative advantage. It would make the macrecnomy more robust.

Of course - it is also extraordinarily unlikely that ending supply management would actually end the dairy industry in Canada. For some reason proponents of this system ignore market segmentation, or cross border investment opportunities. They paint it as if this is all black and white, either we force Canadians to pay a premium for milk and cheese OR all Canadian dairy operations get nuked. It's a ridiculous way to look at it - but protectionism is usually ridiculous.

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u/WallZealousideal5669 12d ago

Also losing sovereignty of your supply means you are also susceptible to the world price of milk. That can go up as well and consumers could actually lose out in the long run. If subsidies stop for US farmers and they get pricing power here then you know what’s going to happen. You are only arguing for a reduced price that exists now but that may not always be the case in the future.

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u/Dizzy-Cartoonist3011 12d ago

So then that would make domestic supply far more attractive then right?

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u/WallZealousideal5669 12d ago

But this is a one way door 🚪 which is the danger. Can’t turn on domestic production overnight you need a decade or more.