DFC Response to the Montreal Economic Institute

August 18th, 2017

On August 17th, 2017, the Montreal Economic Institute released yet another misleading paper in their ideologically fuelled quest to rid Canada of supply management. The paper itself, titled “Does Agricultural Prosperity Require Supply Management?” offers little, if any, evidence to back up that claim.

The paper’s central premise is that while production in export-focused commodities often drastically outstrips domestic demand - production under supply management is typically in line with domestic demand. Given that one of the stated objectives of supply management is to match supply with domestic demand, this should not come as a surprise to anyone, and hardly required a two-page report to elucidate.

In Canada, supply managed commodities have chosen to focus on serving our domestic market, for a variety of reasons. When it comes to dairy, the Canadian domestic market is growing, with national demand up 13% between 2013 and 2016. The truth is, dairy is not a major export commodity; less than 10% of all global milk production is exported, and the global export market is already saturated with milk.

Looked at from another angle, the Montreal Economic Institute seems to be advocating for overproduction; overproduction is the exact reason why the global dairy market continues to be in crisis. When too much milk is produced, prices crash. The end result is job loss, loss of income for farmers, and, in some cases, farmers being forced to shut down their operations.

The impacts of overproduction during the current global dairy crisis on non-supply managed jurisdictions have been stark. In 2016, Australia announced a $579 million (AUS) support package for dairy farmers. Between September 2015 and June 2016, the European Union offered a combined €1B in bailouts to their dairy farmers – including €150M to entice farmers to voluntarily reduce their production. In 2016, the U.S government purchased upwards of $40M (USD) in cheese to help cut down on their massive surplus and help raise milk prices for producers.

By contrast, as noted in the report, supply management ensures overproduction is largely avoided, and the system significantly reduces the impact of devastating market fluctuations, which have negatively impacted milk prices in other countries.

With little evidence, and a report that says nothing about dairy that you couldn’t discover by Googling ‘supply management definition’, one can only come to the conclusion that the Montreal Economic Institute is willing to take any pretext to stay in the spotlight and continue its vendetta against supply management.

Fortunately for Canadian supply managed farmers, the Prime Minister of Canada supports supply management, the Canadian government supports supply management, and a poll conducted by Campaign Research in May showed that 75% of Canadians support supply management. It may be polarizing for some, but the fact is – Canadians overwhelmingly support it, and it works.

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