During the Liberal Leadership debates some candidates commented on Canada's Supply Management system. The Supply Management System is a quota and price support system for producers. It applies to diary and related products, chicken and related products and turkey. The purpose is to provide a stable price environment for farmers; guaranteeing production and profit and so insulating them from potentially bankrupting market forces. Many Candidates expressed their desire to end this agricultural program. I will be commenting on Martha Hall Findlay's contribution to the debate. Ms Findlay's position and other Supply Management opponents do not vary greater in their arguments; so in commenting on her points I am also addressing the whole.
By far the most popular point expressed in favour of eliminating SM is the cost levied on citizens. It is asserted that the average Canadian family pays $300 more each year for food because of SM. It is a powerful point; struggling families hit with one more unnecessary burden/levy/tax, let your politics decide which word you use the word that best defines your political viewpoint. I accept that SM inflates prices, we can argue about how much. Scraping SM as a remedy for higher food costs is excessive. Such an action would lower prices for the poor but also for the better off; who are less affected by food costs, while increasing the financial risk to farmers. The simple remedy is to provide income support to the less well off. Make available $300 to qualify households paid out over a 12 month period, reducing the eligible amount as income climbs. This meets the needs of the poorer among us, keeps the farmer safe and doesn't by accident reward the better off.
Ms. Findlay asserts that the family farm has been in decline during to existence of the SM program; something that it was supposed to prevent. It is a weak point suggesting the SM system doesn't work because family farms still disappeared. Family farms have declined in concert with the movement of population from rural to urban centres. Price support systems take some of the risk out of farming, like insurance does, but if your children want a different kind of life it won't keep them down on the far. Decline in farms and Supply Management are coincidental not allied.
Ms Findlay remarks at length on the success of Australia and New Zealand dairy industries after they ended similar programs. Each seeing a substantial growth in their agricultural exports; when the effected industries stabilized after a few years. I find direct comparisons can be helpful but also misleading. The object is to suggest that the success found by our commonwealth partners is repeatable by us. Canada labours under different circumstances. Our farmers would compete and innovate after the fashion of their Australian counterparts, consolidation would occur; the poor farmer leaving the industry voluntarily or forced out. Our industry would be leaner, but would our exports grow as a result. Australia had the emerging markets of all Asia to export into; an advantage that should be weighed in considering their success. A newly competitive Canadian agricultural industry won't have an Asia to sell into. Our markets will be the Untied States and Europe. They in turn will now sell freely into our markets. We, unlike our Australian friends will be in direct competition, at home and abroad with first world agricultural industries. I do not intend to disparage Canadian businesses or their ability to compete but that is a lot to face for a newly deregulated industry. It would be reasonable to expect even greater consolidation and abandonment of family farmers than either Australia or New Zealand saw. To top that off both Europe and the United States heavily subsidies their agricultural industries.
Many of the next arguments are bound up in the notion of the Free Market; and for its proponents all the benefits of that system. Supply Management is not Capitalism. It is a form of planned economy, on a very small scale. For Conservatives and now a few Liberals that is an anathema. Depending on the rabidness of your disposition you will quote Adam Smith on the superiority of the Capitalism to efficiently allocate resources or Hayek on the inevitable slide from socialism to an all encompassing Authoritarian state,from the acorn comes the Oak. Supply Management does have an effect on competition, innovation and resource allocation, so the free marketeers have a point, but to what degree. Under Supply Management a farmer can expect to sell their goods and make a profit. They do not produce more than their quotas, they do not under cut others to grab market share. What effect does the lack of competition have?What could the average farmer be discouraged from doing because they are not in a competition with other farmers. They might not have improve machinery, but it would seem that any equipment that makes the task of farming easier would be adopted. They don't have to meet their costumer needs since they sell regardless of customer satisfaction, though I think pride of work might but paid to that. Impaired resource allocation would result in raw materials being diverted from "efficient" farmers "wasteful" farmers. Quality perhaps? The standards are set by government. As we have seen from highly public failures of the Private sector food and agricultural industry, mistakes are not a factor of economics style but of practices. The biggest impact of Supply Management is price and profit. The tendency of "free" market competition to reduce prices is suppressed; as well as the ability one or a few to make huge profits while the rest make few or none.
Since free market ideologues have always brayed against Supply Management, there must be one more thing that moves this debate to the front of the line, and I think it is the strongest and most honest point. Other agricultural producers; are injured by this "special" treatment. Those producers that grow for export face heavy tariffs. Tariffs placed on our producers by other Nations in reciprocation for our Supply Management. The not unreasonable argument is made, that far more valuable export are injured in order to keep in place a regime that benefits relatively few people and profit. To be succinct Supply Management inhibits trade and not just in agricultural products referenced above. It is believed that supply management prevents Canada from entering into very profitable Trade entanglements. We protect a small industry at to the detriment of the rest.
This is the pivotal argument. Is it worth protecting certain farmers at the expense of everyone else. If you believe Canadians suffer from lack of reciprocal trade agreements; that our growth and standard of living is adversely affected by Supply Management then you must clamour for its removal.
This is where I find myself. There is obvious harm to ending supply management; the closing of family farms, consolidation is inevitable. There are potential costs like hollowing out of are agricultural sector, factory farming and foreign ownership of our food supply, and other things we can only guess at. Likewise there are tangible benefits; the decline in certain food prices, an increase efficiency, the possible growth of food related industries and exports.
Change to suit an ideological preference is as ridiculous as refusing change out of distrust of what it may bring. Few things are made perfect and timeless; so it is right to look programs or institutions over now and again with an eye ensure they still serve the public good. It is about public good after all. The improvement of all our lots. Make a good case and I might just change my mind.
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