TRUAX,
Saskatchewan, Canada, December 8, 2003: I have to
admit that I just do not get those farmers and farm organizations
that are pushing for an end to supply management in Canada.
For those who do not know, supply management involves the
dairy and poultry industries, the latter including chicken,
turkey and egg production. Under the supply management regime,
production is controlled at a national level and matched to
domestic consumption. Prices for these products are linked
to the cost of producing them. In order to produce commercial
quantities of supply managed commodities farmers must quota.
Quota is rationed out among the various provinces.
At various times, supply management has come under fire from
foreign governments and companies that want to break into
the Canadian market for these commodities; from consumers
and consumer groups who think that supply management means
higher prices for consumers; from domestic processors who
would like access to cheaper inputs from foreign countries;
from Canadian farmers who do not want to purchase quota in
order to produce supply managed commodities; from Canadian
farmers who are not necessarily interested in dairy or poultry
production but who think an end to supply management will
assist in getting other countries to reduce ag subsidies;
and from ideologues of all sorts who think any regulation
is bad.
As you can see, the list of those opposing supply management
is lengthy. There are also, however, many benefits that accrue
from supply management. Consumers do not see the volatile
prices that occur in the U.S., and occasionally bring some
major price dips, but neither do they pay prices that are
significantly higher overall than American consumers pay.
When assessing the level of subsidies that governments give
to their farmers, the benefits of supply management are included.
But supply management does not mean the transfer of money
from the Canadian government to farmers. Farmers receive their
income from the end user of their products. This lowers the
need for overall government support to agriculture. By contrast,
the U.S. regularly puts out large sums to purchase surplus
dairy production to prevent price crashes.
By matching production to domestic consumption, supply management
should not add to the glut of certain commodities that depresses
world prices and hurts farmers everywhere. While it is true
that processors and manufacturers might find lower priced
ingredients on world markets, that would simply necessitate
more government support for affected farmers. The cost would
be transferred from consumers to taxpayers as a whole, with
a resulting loss of independence among the farmers involved.
Perhaps the least credible of supply management's detractors
are those farmers who think that hurting one group of farmers
will help us all. There is no proof for this supposition,
which merely smacks of mean spiritedness.
A recent report by Statistics Canada describes the dismal
state of the farm economy. Total net income for Canadian farmers
is at a 30 year low. This situation would be even worse, except
for what one farm reporter described as the "stability
in supply managed sectors".
There are some legitimate criticisms of supply management.
Currently, Canada allows dairy processors to buy milk from
Canadian farmers at a reduced price if the products being
manufactured are for export. Other dairy exporters claim this
allows Canadian companies to export products at an artificially
low price. They say farmers can sell to processors at a lower
price only because the better price they receive for milk
for domestic consumption covers all their fixed costs.
Canada has twice lost this battle at the WTO. If Canada is
to defend the tariffs that protect its system of supply management,
it must clean up its act in this situation. Dairy farmers
cannot expect to have the cake of supply management and also
feast on the cake of exports gained in this manner.
Despite these difficulties, supply management has proven
a major benefit to the farmers that choose that route. A Saskatchewan
politician recently stated that producing a supply managed
commodity was the only type of agriculture he would recommend
a child of his be involved in. It is a sad but true commentary
on the state of farming.
© Paul Beingessner, beingessner@sasktel.net
. The author is a columnist, transportation consultant and
third-generation farmer in Truax, Saskatchewan.
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