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Does Supply Management Really Mean Canadians Pay More for Milk?
June 6, 2016

It is a cartel. It is the opposite of free markets. “That’s how Conservative Party leadership candidate Maxime Bernier this week described the highly contentious practice of supply management for Canada’s dairy, poultry and egg production. He encouraged his party comrades to follow suit. 

It’s certainly not the first time a politician has railed against supply management.

There are few issues that conjure more discord than supply management, especially in rural Canada, where farmers produce our milk, chickens, turkeys and eggs without the boost of direct government subsidy. Instead, they work on a quota system based on demand in return for predictable, stable prices.

Do we really pay more?

Calling it a cartel may be a bit dramatic, all things considered, but there’s arguably some merit in the “free markets” part of Bernier’s surprise declaration. And that’s convinced some Canadians that supply management means we pay more than most other countries for milk, cream, butter and cheese.

But a new look from the Nielsen research firm, commissioned by the Dairy Farmers of Canada, suggests that the prices Canadians pay for milk are comparable to those in many countries throughout the world, at an average retail price of around $1.30 per litre.

Americans, whom we often use as a benchmark comparison, pay slightly less at $1.15 on average. But Norwegians, for example, pay a whopping $2.90 for a litre of milk. And in China, it’s $2.35 per litre, though individual Chinese tend to consume far less than Europeans.

Over the years there have been many attempts to quantify how much consumers pay for milk, a product that is consumed and used for all sorts of applications all over the world, and often the results of those studies are spectacularly different.

‘Protectionist nightmare’

Part of the problem, however, is that it is “very, very difficult to come up with a number for what Canadians or Americans or Australians really pay for milk because there’s so many different factors involved in that calculation,” says Al Mussell, a researcher and founder of Agri-Food Economic Systems, Inc., in Guelph, Ont.

An oft-cited look by the Organization for Economic Co-operation and Development, for example, found that Canadians pay $2.6 billion more for milk each year than if supply management was phased out, though that study has been criticized for comparing apples to oranges, generating an astronomical number.

But there are still many authoritative voices who say supply management should be phased out of the dairy sector.

In an op-ed published earlier this spring, Sylvain Charlebois, dean of the Faculty of Management and a professor in food distribution and policy at Dalhousie University, called Canada’s supply management system a “fiscally inept … protectionist nightmare.”

“It is supported by production quotas and high tariffs on imports that have clearly reached their expiry dates,” he wrote, adding that Ottawa has failed to take the lead on the issue and let it fester.

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Summer 2018