Chirp chirp. Cluck cluck. Moo moo. It’s time, boys and girls, to put on our galoshes and take another stroll through the Canadian farm marketing annual fall fair.
It’s been a while since we toured the supply management system, and so make sure you put on those big, heavy galoshes. The doodoo is still spread around pretty thick after all these years. In fact, there’s a fresh dump out there, just dropped off yesterday by the Commons Standing Committee on International Trade.
After a couple of flash meetings in October and early November, the committee — chaired by Conservative urban cowboy Lee Richardson of Calgary Centre — issued a 3½-page "report" with a sole recommendation: "That the government of Canada affirm its unequivocal support of, and commitment to defend, Canada’s supply management system."
Are there many dairy farms in Calgary Centre? I’ve never noticed them before. Is free trade a Tory principle? If it is, I haven’t noticed it much lately either. It’s also apparently not much of a Liberal principle, since former trade liberalizer Scott Bryson voted to support the trade committee’s report, which is objectively titled: "Defending Supply Management at the WTO."
It more accurately should have been titled "Let’s Keep Screwing Consumers."
The committee certainly doesn’t try to obscure the fact that Canadian consumers are grossly exploited and overpay for milk, cheese, ice cream, eggs and other products.
Under supply management, says the report, "domestic production is controlled, and prices are predetermined and adjusted to reflect farmers’ costs of production. Steep tariffs are levied on imports of these goods to prevent foreign suppliers from entering the Canadian market and competing with domestically produced goods."
At world trade talks to remove barriers to trade in farm products, Canada has now become an outsider, a rank protectionist so low on the free trade ladder that it is ignored as a serious participant in any effort to liberalize trade. At the World Trade Organization (WTO) in Geneva, where these so-called Doha talks on agricultural products are stalled, there is currently little hope of success.
Yesterday’s blustering report from the Commons committee adds fresh pessimism. Free trade in farm products, which promises to expand farm production and trade around the world, is now on hold and Canada is one of the main obstacles.
Trade Minister Stockwell Day, cited by the committee, even appears ready to scupper the whole WTO process if any attempt is made to dismantle Canada’s trade protectionism.
According to the committee report, Mr. Day said that "WTO agreements are negotiated by consensus and Canada cannot be coerced into an agreement; it can walk away from the negotiating table."
With that, the Tories are ready to walk away from lower consumer prices for dairy products. French cheese isn’t expensive because the French make expensive cheese. It’s expensive because Canadian policy manipulates supply and price.
American cheese is rarely seen in Canada, because 200% tariffs make American imports impossible. The fact that Canada’s high dairy prices hit lower-income consumers hardest is well documented, but apparently of no interest to policymakers.
Perhaps even more important for Canada’s long-term economic prosperity is the crippling effect supply management has on industrial development.
Canada is a dairy industry production backwater. Over the past 10 years, the value of Canadian exports of dairy products has dropped by 30% to $255-million. Last year, Canada had a dairy product trade deficit of $422-million.
Supply management keeps Canada out of the world market for dairy products, although some plants do export to the United States and elsewhere under a bizarre program that in fact does nothing but protect consumers from low-cost, made-in-Canada cheese and ice cream. It’s called the Imports for Re-Export Program(IREP).
Two IREP examples: There’s a Baskin-Robbins ice cream plant in Peterborough, Ont., that imports cheap American milk and cream at U.S. prices, turns the cheap milk into ice cream, and then exports the cheaper ice cream to the United States. But that cheaper ice cream cannot be sold in Canada. For Canadians, Baskin-Robbins has a separate production run that uses overpriced, supply-managed milk and it then sells overpriced Canadian ice cream. No wonder Canadian ice cream sales are falling.
At a Parmalat cheese plant near Belleville, Ont., American milk is used to make Black Diamond cheese for export to the United States. But the Black Diamond cheese made for Canadian consumers must use more expensive Canadian milk.
Even with the IREP import-export scheme, Canada’s cheese and dairy product manufacturing sector is going nowhere. A whole sector of the economy is stalled, unable to grow and expand nationally or internationally.
Consumers are being fleeced. And Canada’s parliamentarians — Liberal, Conservative, NDP and Bloc — have again unanimously voted in favour of it all. So keep those galoshes on.
