Supply management: a worst-case scenario
By Patrick Meagher
If youíre reading the daily newspaper headlines to get a gist of what Canada should do, youíll find that almost every columnist with an opinion thinks supply management should get the heave-ho.
As the argument goes, why make poor families pay three times the market price for milk to prop up capital-rich farmers? Yet supply management does not cost taxpayers a cent and we donít know if the price will drop by two-thirds in a freer system. The poor families that columnists pretend to defend receive a minimum $200 monthly government cheque per child under six to help pay for diapers and milk. Many also get subsidized housing, free food, free bus fare. So, the cry to end supply management is not about poor families.
The current debate is about power and trade. Dairy processing companies want more power and other sectors want more trade. The processors launched their attack on supply management in time to use the Trans-Pacific Partnership (TPP) as a scapegoat. Farmers Forum columnist Ian Cumming said a group of processor executives, standing with him under Florida palm trees at an industry convention last year, laid out their strategy to take down the protectionist system. It included the push for a lot of media coverage. Theyíre getting it while farmers are losing the propaganda war.
Supply management was meant to sustain the family farm but when it creates millionaires on paper it becomes an easy target. Itís no secret that even many non-supply managed farmers would not shed tears if supply management were dismantled.
Wrote The National Postís John Ivison on June 21: "Itís long been known that supply management is a racket ó an indefensible, anti-competitive cartel. Politicians of all parties have known it, condemned it in private and then voted unanimously in support, as they did in November 2005."
You get the same line reading a plethora of recent articles in The Globe and Mail and The Toronto Star, both of which are so far left they disagree with The National Post nine times out of 10.
It helps that Prime Minister Stephen Harper was never a friend of fixed prices but we donít know what heís thinking. Who wouldnít want to sit in on trade talks to have a look-see? But if itís pull-plug that he wants, this could be the moment.
And now there are so few Canadian supply-managed farmers ó about 15,000 ó a new argument is that support for supply management will not give a politician a significant number of votes. "There are few, if any, ridings where dairy votes could plausibly swing elections ó particularly compared to the votes of all those in those same ridings who would benefit from dismantling supply management," wrote Martha Hall Findlay, whose mischievously-timed academic paper on the issue added fire to the debate last month, particularly because the former MP is a possible choice for the federal Liberal leadership.
Only a few months ago, I wrote that supply management is safe for now. Under the current climate it begs the question: how long is safe?
Consider that for the past three years farmers are cash flowing purchases of new milk quota since there is so little available (see page 7). Prior to that, the Farm Credit Canada quota loan policy for dairy, poultry and eggs was a 10-year term, which means dairy farmers have seven years to pay off existing loans. Do you think multiple countries would strike a deal with Canada, if Canada were to end supply management, starting with dairy, in seven years? Of course they would as talks could take years anyway and rule implementation a few more.
This brings us to the farmersí trump card: Quebec. What politician would want to diss la belle province? Try Prime Minister Harper. He has so few friends in Quebec ó support hovering just above 10 per cent ó that he has nothing to lose. "No one ever speaks in favour of Mr. Harper in Quebec," longtime Quebec Tory Peter White told The National Post (June 23). Harper already crossed the line with Quebecers when he rightly shelved the long gun registry and made changes to employment insurance. He could advocate dwarf tossing and banning Jos Louis sponge cakes and he couldnít be worse off. Moreover, Quebec farmers with shares in its milk processing company have a soft landing. The earnings from Agropur are known as the 13th milk cheque and in a free market system that cheque is likely to get a handsome boost.
All of this unpleasant news is important to consider. Iíve laid out a worst case scenario in which supply management has seven years in a climate of screaming critics. But as St. Isidore dairy farmer Thomas Kirchmeier points out: "You donít usually eat the soup as hot as you cook it."
Other reasons indicate that supply management might have a long, healthy life.
One telling sign will be whether Canada thinks the access it can get from up to10 foreign markets is more beneficial to the economy than protecting 15,000 farmers who no longer have quota debt.
Patrick Meagher is the editor of Farmers Forum.