Why Supply Management Works for Canadians

Canadians are satisfied with the range, quality and price of dairy products

In a recent Abacus poll released April 25, 2017, Canadians reiterated their support and satisfaction with Canadian dairy including 92% indicating they are happy with the range and quality of dairy products available in Canada.

This study was not commissioned by Dairy Farmers of Canada or affiliate nor were the questions provided to dairy organizations ahead of the release of results.

It builds communities

Dairy farmers get a fair return from the market, allowing farm families to make a living that is similar to average Canadian working families without relying on government subsidies. Farmers reinvest 90% of the farm income on the farm’s operation. Farmers spend money locally, re-investing in the local economy across Canada.

It keeps prices stable

Prices of milk and dairy products have risen less than the Consumer Price Index in Canada over the past 30 years. The price consumers pay for a litre of milk in Canada is lower to that in China, New Zealand, higher than some countries in the EU and similar to many parts of the U.S. And a few years ago, prices around the world increased significantly and quickly when the last world food crisis hit (2009). Then in the last two-three years, dairy farmers around the world saw their (farm) price plunge, rise again for some time and in recent years, prices remain low long enough to worry even the most efficient farmers. In contrast, farm and retail prices for dairy in Canada have remained much more stable throughout the last decade.

It requires no government assistance

People living in the EU and U.S. pay twice for their milk — once in the store and a second time through subsidies. In the United States, there are dairy subsidies of roughly $4 billion paid each year to the dairy industry. That’s not the case in Canada -- Canadian dairy farmers do not rely on subsidies to produce milk. Those who propose a change in dairy system in Canada have never answered the following question: “would you prefer a system that pays hundreds of millions each year in taxpayer dollars to dairy farmers, with no guarantee of lower retail prices?” That’s not our preferred approach: we would rather continue to get our returns directly from the marketplace.

Retail prices are comparable worldwide

The part of Canadian disposable income spent on food – and dairy products – has decreased over the years. According to Neilsen’s data of product prices in stores, the weighted average price for the year 2017 for cheddar cheese is $13,98/ kg in Canada, slightly lower than the $14.81 for the US. Canadian butter averages $9.34/kg while American stores sold butter at an average of $10.77/kg. The price of milk – and other products - in stores varies from region to region and store to store. It costs between $4.00 to 6.00$ for 4-litres in Canada. (Nielsen extensive data points reveal a weighted average of all milk sold being $1.50 a litre in Canada), while in the US, consumers pay about $1.12 a litre ($1.64 if they seek ‘rbGH-free’ labelled milk), in China $2.58, in New Zealand $1.83, and in Australia $1.57.

It lets in imported products

Some critics say that Canada closes its doors to dairy imports. The statement is just plain wrong. Canada does not close the doors to imports. In fact, about 8 to 10% of dairy products on Canadian shelves are imported - tariff-free! The EU, with heavy subsidies for dairy products, exports to Canada 10 times more dairy products than what it imports from us, even though it has more than 500 million consumers. Cheese imports from Europe are increasing, as the CETA trade deal that was ratified in 2016 is implemented. With the recent CPTPP deal signed, various dairy products will also be imported from the 10 participating countries. The trade balance between Canada and the United States for dairy products is 5:1. This means Canada imports five times the amount of dairy it exports to the US.

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