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Agriculture

Time to End Supply Management

Published

8 minute read

From the Frontier Centre for Public Policy

By Marco Navarro-Génie

According to a 2021 report from the Montreal Economic Institute, Canadian families pay up to $600 more per year on dairy products alone due to supply management.

The New Democrats and the Liberals have pledged to tackle inflation, curb price gouging, and address child poverty. Leaders like Jagmeet Singh have railed against corporate greed while Prime Minister Justin Trudeau’s government has introduced programs claiming to feed your children.

But despite these announcements, food affordability remains a serious problem in Canada. If our political leaders are truly committed to making nutritious food accessible for all Canadians, they must confront the largely ignored factor: Canada’s supply management system.

Supply Management Hurts Families

Supply management, which governs the production and pricing of dairy, eggs, and poultry in Canada, was designed  to stabilize farmers’ incomes. However, it now acts as an unnecessary burden on consumers, artificially inflating the cost of essential food items. Farmers are given strict quotas on how much they can produce, and sky-high tariffs—often more than 200%—are imposed on imports.

This creates a closed market that keeps prices far higher than in a free-market system. According to a 2021 report from the Montreal Economic Institute, Canadian families pay up to $600 more per year on dairy products alone due to supply management. This is no small sum to households already feeling the pinch.

To put it in perspective, a litre of milk in Canada costs between $1.50-$2.50, compared to USD 1.00 (around $1.35 CAD) in the United States, where such market controls don’t exist. The cost of other staples, such as eggs and chicken, follows the same pattern, with Canadians paying significantly more than their American counterparts.

These artificially high prices disproportionately affect families struggling. As inflation continues to drive up the cost of housing, fuel, and other essentials, paying extra for basic food becomes the tipping point between having three meals a day or skipping meals to cover rent or bills.

The Conservative Opportunity: Free Markets and Family Values

The Conservative Party has historically championed free markets and policies promoting family well-being, but they also support the food cartels.

In a genuinely free market, prices are determined by supply and demand, leading to lower consumer costs and more production efficiency. Ending supply management would achieve both goals.

While Conservatives have long supported free markets, they have been reluctant to challenge supply management, largely due to political concerns in Quebec, where the system is popular among producers. Being pro-trade and supporting supply management are incongruous political positions.

However, with the Conservatives drawing closer to forming government, potentially without significant electoral support from Quebec, now is the time for a strategic shift. Shedding the protectionist policies would be a bold and forward-thinking move to distinguish the party as serious about free markets and family welfare.

It would also send a powerful message to voters across the country, particularly in regions where food insecurity is rising. Conservatives could frame the policy change as a direct effort to reduce food prices, ease the burden on low-income families, and protect Canadian consumers from the high costs supply management imposes.

The Ethical Case: Dumping Food While Canadians Go Hungry

Perhaps the most shocking aspect of supply management is the appalling waste it produces. To keep prices high, in 2023 alone, tens of millions of litres of milk were discarded—wasted food that could have gone to Canadians in need. This is an unconscionable practice in a country where nearly 2 million people rely on food banks to survive. How can wasting food while so many families struggle to afford basic groceries be justified?

This waste flies in the face of compassion and fairness, and contradicts the principles of a free market.

The Bloc Quebecois’ Game

Given that the significant dairy industry in Quebec benefits immensely from supply management, the Bloc Quebecois is seeking to leverage the weakness of the Trudeau minority in exchange for a Bloc bill, Bill C-282, that would shield supply management from future changes.  The Bloc Québécois Bill C-282 wants to amend the Trade and Development Act. Reportedly, it has support from all parties in Parliament.

One of the key setbacks is the restriction supply management places on open market access. It hinders the ability to fully embrace free trade agreements. A primary objectives of Bill C-282 is to prevent the Canadian government from making concessions in international trade agreements that could undermine the supply management system. This is particularly relevant in trade negotiations where foreign countries often seek increased access to Canada’s agricultural markets.

Consequently, this limits the potential for growth in agricultural exports. Central Canada benefits the most from supply management, and although its trade reverberations hurt everyone, they seem to hurt Western producers the most.

A Call to Action for All Parties

For New Democrats and Liberals, the solution to supporting families and children through food affordability lies  in targeting alleged corporate greed and expanding social programs. But if they are serious about addressing child poverty and food insecurity, they would confront supply management. Likewise, for Conservatives, ending supply management is a natural extension of their free-market impetus and commitment to family values.

The time for change is now. Regardless of party, all political leaders should recognize that dismantling supply management would be a direct, meaningful step toward making food more affordable for all Canadians, as well as maximizing agricultural chances to expand Canada’s exports. With the rising cost of living pushing more families into food insecurity, we cannot afford to let outdated policies continue to inflate prices, immorally perpetuate waste, and curtail chances for greater growth in Agrifoods.

Dismantling supply management would offer tangible relief to millions of Canadian consumers, particularly low-income families.  All other parties should start by killing Bill C-282.

Marco Navarro-Génie is the Vice President of Research at the Frontier Centre for Public Policy

Agriculture

Ottawa may soon pass ‘supply management’ law to effectively maintain inflated dairy prices

Published on

From the Fraser Institute

By Jerome Gessaroli

Many Canadians today face an unsettling reality. While Canada has long been known as a land of plenty, rising living costs and food insecurity are becoming increasingly common concerns. And a piece of federal legislation—which may soon become law—threatens to make the situation even worse.

According to Statistics Canada, rising prices are now “greatly affecting” nearly half of Canadians who are subsequently struggling to cover basic living costs. Even more alarming, 53 per cent are worried about feeding their families. For policymakers, few national priorities are more pressing than the ability of Canadians to feed themselves.

Between 2020 and 2023, food prices surged by 24 per cent, outpacing the overall inflation rate of 15 per cent. Over the past year, more than one million people visited Ontario food banks—a 25 per cent increase from the previous year.

Amid this crisis, a recent academic report highlighted an unforgivable waste. Since 2012, Canada’s dairy system has discarded 6.8 billion litres of milk—worth about $15 billion. This is not just mismanagement, it’s a policy failure. And inexcusably, the federal government knows how to address rising prices on key food staples but instead turns a blind eye.

Canada’s dairy sector operates under a “supply management” system that controls production through quotas and restricts imports via tariffs. Marketing boards work within this system to manage distribution and set the prices farmers receive. Together, these mechanisms effectively limit competition from both domestic and foreign producers.

This rigid regulated system suppresses competition and efficiency—both are essential for lower prices. Hardest hit are low-income Canadians as they spend a greater share of their income on essentials such as groceries. One estimate ranks Canada as having the sixth-highest milk prices worldwide.

The price gap between the United States and Canada for one litre of milk is around C$1.57. A simple calculation shows that if we could reduce the price gap by half, to $0.79, Canadians would save nearly $1.9 billion annually. And eliminating the price gap would save a family of four $360 a year. There would be further savings if the government also liberalized markets for other dairy products such as cheese, butter and yogurt. These lower costs would make a real difference for millions of Canadians.

Which brings us back to the legislation pending on Parliament Hill. Instead of addressing the high food costs, Ottawa is moving in the opposite direction. Bill C-282, sponsored by the Bloc Quebecois, has passed the House of Commons and is now before the Senate. If enacted, it would stop Canadian trade negotiators from letting other countries sell more supply-managed products in Canada as part of any future trade deal, effectively increasing protection for Canadian industries and creating another legal barrier to reform. While the governing Liberals hold ultimate responsibility for this bill, all parties to some degree support it.

Supply management is already causing trade friction. The U.S. and New Zealand have filed disputes (under the Canada-United States-Mexico Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership) accusing Canada of failing to meet its commitments on dairy products. If Canada is found in violation, it could face tariffs or other trade restrictions in unrelated sectors. Dairy was also a sticking point in negotiations with the United Kingdom, leading the British to suspend talks on a free trade deal. The costs of defending supply management could ripple farther than agriculture, hurting other Canadian businesses and driving up consumer costs.

Dairy farmers, of course, have invested heavily in the system, and change could be financially painful. Industry groups including the Dairy Farmers of Canada carry significant political influence, especially in Ontario and Quebec, making it politically costly for any party to propose reforms. The concerns of farmers are valid and must be addressed—but they should not stand in the way of opening up these heavily regulated agricultural sectors. With reasonable financial assistance, a gradual transition could ease the burden. After all, New Zealand, with just 5 million people, managed to deregulate its dairy sector and now exports 95 per cent of its milk to 130 countries. There’s no reason Canada could not do something similar.

Bill C-282 is a flawed piece of legislation. Supply management already hurts the most vulnerable Canadians and is the root cause of two trade disputes that threaten harm to other Canadian industries. If passed, this law will further tie the government’s hands in negotiating future free trade agreements. So, who benefits from it? Certainly not Canadians struggling with food insecurity. The government’s refusal to modernize an outdated inefficient system forces Canadians to pay more for basic food staples. If we continue down this path, the economic damage could spread to other sectors, leaving Canadians to bear an ever-increasing financial burden.

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Agriculture

2024 harvest wrap-up: Minister Sigurdson

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As the 2024 growing season comes to a close, Minister of Agriculture and Irrigation RJ Sigurdson issued the following statement:

“While many Albertans were enjoying beautiful fall days with above-average temperatures, farmers were working around the clock to get crops off their fields before the weather turned. I commend their continued dedication to growing quality crops, putting food on tables across the province and around the world.

“Favourable weather conditions in August and early September allowed for a rapid start to harvest, leading to quick and efficient completion.

“The final yield estimates show that while the South, North West and Peace regions were slightly above average, the yields in the Central and North East regions were below average.

“Crop quality for oats and dry peas is currently exceeding the five-year average, with a higher rate of these crops grading in the top two grade categories. In contrast, spring wheat, durum, barley and canola are all grading in the top two grades at rates lower than the five-year average.

“Crop grading is a process that determines the quality of a grain crop based on visual inspection and instrument analysis. Factors like frost damage, colour, moisture content and sprouting all impact grade and affect how the grain will perform during processing or how the end product will turn out. Alberta generally produces high-quality crops.

“Farmers faced many challenges over the last few years and, for some areas of the province, 2024 was a difficult growing season. But Alberta producers are innovative and resilient. They work constantly to meet challenges head-on and drive sustainable growth in our agricultural sector.

“Alberta farmers help feed the world, and I’m proud of the reputation for safe, high-quality agricultural products that this industry has built for itself. Thank you to our producers, and congratulations on another successful harvest!”

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