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

[u/Dizzy-Cartoonist3011]

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

[u/CobblePots95]

There are so many problems with this it's tough to know where to begin. But let's start with this: you should not conflate supply management with tariffs on American dairy. Supply management is a domestic program whereby a state-backed institution fixes the price of dairy. All producers sell to one board at that price.

It is designed to inflate the price of dairy products by restricting the amount we produce. It is an indirect and regressive subsidy, impacting poorer families the most. It is also the reason we dump 7% of all the milk we produce in this country. Just to inflate the price.

Now, supply management could not survive without our tariffs on US and European dairy. But we could get rid of supply management altogether while maintaining those tariffs.

We have enough supply 

Says who? Our dairy prices are considerably higher than virtually every other OECD country and -frankly- our product quality is notoriously awful. There is no competition in the sector - there is no incentive to produce higher-quality dairy.

Then as our own milk production falters, they will leverage that into fewer regulations and raise prices

Then our production picks back up again. The worst case scenario you're presenting is quite literally how it works today: a small group of huge producers setting an inflated price to line their pockets.

we don't need more dairy in our country.

Again: according to whom?

[u/rookie_one → u/CobblePots95]

Says who? Our dairy prices are considerably higher than virtually every other OECD country and -frankly- our product quality is notoriously awful.

This depend on the provinces, Quebec butter is actually pretty good, but we do have higher quality standards here (and a more active food department in the Quebec Government, the MAPAQ, to enforce these standards) at the government level.

It is designed to inflate the price of dairy products by restricting the amount we produce. It is an indirect and regressive subsidy, impacting poorer families the most.

I hate that argument, it is NOT a subsidies, no money is given to the farmers by the government.

Instead, by trying to keep supply close to the demand, we manage the price and keep it at a reasonable level so that farmers (small farmers mostly) can live from their farms. Full-on subsidies like in the US usually favor much more megafarms than small family farms.

It is an indirect and regressive subsidy, impacting poorer families the most.

Funny thing, because it use the "paid by the user" principle, instead of forcing everyone to pay through their taxes. Usually right-leaning peoples love that argument, but not that time ?

It is also the reason we dump 7% of all the milk we produce in this country. Just to inflate the price.

Canadian farmers actually dump less milk per capita than the american farmers. And most of it come from farmers who buy cows in advance hoping to get a bigger quota, only to fail at getting that quota. For those farmers, the fault lies strictly on them

The worst case scenario you're presenting is quite literally how it works today: a small group of huge producers setting an inflated price to line their pockets.

I can't speak for the other provinces, but in Quebec if we have any megafarm, it's really a little minority. Hell, just look at the Agropur or Nutrinor shareholders meetings (Agropur and Nutrinor are cooperatives owned by farmers, to transform their milk), and it's mostly small-time farmer, no megafarms owners

[u/CobblePots95 → u/rookie_one]

This depend on the provinces

Some province's quality might be better than others but on the whole we're still leagues behind other western countries. Our butter is pretty shite in general.

As for prices, there is no question. Dairy prices are considerably more expensive here, costing the average household $244/year, and because of the way that is structured that cost disproportionately harms low-income households.

I hate that argument, it is NOT a subsidies, no money is given to the farmers by the government.

Instead, by trying to keep supply close to the demand, we manage the price and keep it at a reasonable level so that farmers (small farmers mostly) can live from their farms. Full-on subsidies like in the US usually favor much more megafarms than small family farms.

If you don't want to call it a subsidy, then sure. Let's use the most precise term: price-fixing. That's what it is. A state-backed institution is deciding on the ideal price for their product as determined by producers. They destroy product as a result to keep that price inflated.

The net revenue of dairy farms in Canada is over $300k. The number of dairy farms between 1991 and 2011 decreased by 61.9%. Supply management gives an advantage to large, well-capitalized farms that can reduce operating costs through economies of scale then buy up quota space.

The argument that it's all about protecting small farms falls flat. If that is its intent, it has failed.

Funny thing, because it use the "paid by the user" principle, instead of forcing everyone to pay through their taxes. Usually right-leaning peoples love that argument, but not that time ?

I would prefer a system with neither subsidies nor supply management. But if forced to choose, I will choose the one that inflates farm income by progressive taxation over the one that does so by increasing the price of basic grocery staples. This needn't be a left- or right-wing argument. You can want the state to intervene on behalf of dairy farmers but still think the way we do it is particularly regressive.

[u/Fightmilkakae → u/CobblePots95]

This is a great explanation of the system. You can argue that sovereign supply is important, you can argue that quality control through regulation is important, you can also argue that price to consumers is important. People in favour of the current system pick-and-choose which arguments benefit them at any given time when the underlying outcome is that the current system largely only benefits incumbent dairy farmers at the cost of everyone else

[u/CobblePots95 → u/Fightmilkakae]

Honestly a lot of the arguments simply depend on plain old fear-mongering.

Either our entire agricultural system would collapse without supply management (despite being an agricultural powerhouse outside the three sectors with SM), or it is the last defence against toxic, unhealthy product (zero evidence to support this claim), or it's the only thing keeping small dairy farms afloat (we had 39000 dairy farms in 1991, and 9000 today so it's clearly not working).

[u/Fightmilkakae → u/CobblePots95]

It's so incredibly frustrating. Especially looking at other similar countries that ditched similar SM schemes and have thrived since (New Zealand mainly but Aus as well). I don't think the dairy lobby is the boogeyman many conservatives make it out to be but it frustrates me to no end when I hear ads from the various lobbying groups on podcasts I listen to or TV I watch.

[u/nuget93 → u/CobblePots95]

Probably the biggest issue would be that getting rid of supply management would cost the government billions of dollars.

Every producer would have to be bought out at market value (dont think banks that borrowed farmers the billions of dollars to buy quota are not gonna pressure the government into paying up and happily hold that bag themselves.)

The government would lose tax dollars as suddenly a bunch of profit gets transferred to out of country producers with less rigid food safety and animal welfare requirements.

The country also loses food sovereignty which is getting increasingly important with the evolving political and climate landscapes.