Connect with us
[the_ad id="89560"]

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

Before Post

Todayville is a digital media and technology company. We profile unique stories and events in our community. Register and promote your community event for free.

Follow Author

More from this author

Agriculture

Robbing Western Canada’s Farmers to Pay for Eastern Canada’s Car Batteries

Published on

From the C2C Journal

By Gwyn Morgan

That the Liberal government would put productive, self-supporting western Canadian canola farmers at risk in order to protect heavily subsidized jobs in Ontario and Quebec is despicable but hardly out of character

If one were to rank contenders in the global trade wars, Canada would likely sit somewhere between pint-sized and pipsqueak. Then why would such a nation’s government choose frontal assault against the world’s biggest and most ruthless economic combatant, one wielding a range of weapons and tactics to organize a counter-attack? Yet this is just what the Justin Trudeau government has done in imposing massive import taxes on electric vehicles from China, writes Gwyn Morgan. And worse, Morgan notes, Trudeau & Co. are sacrificing farmers from western Canada on an altar dedicated to eastern auto workers – while taxing those farmers to help pay for the vast subsidies needed to keep the auto workers employed.

October 1 the federal Liberals’ new “surtax” of 100 percent on the import of Chinese electric vehicles (EVs) kicked in. Announced in late August and echoing a U.S. move three months earlier, the surtax comes on top of an existing 6.1 percent import tariff and doubles the landed price of those considerably less expensive EVs made across the Pacific Ocean. (New tariffs are also being imposed on imported Chinese aluminum and steel products.) China wasted no time in striking back where it would hurt most, launching an anti-dumping “investigation” into exported Canadian canola. Since there’s no evidence Canada’s agriculture sector is engaging in this anti-free-trade practice – which technically involves selling a product in a foreign market at a lower price than domestic buyers pay in the producing country – there’s a very high likelihood China’s investigation is a procedural pretext to halting imports of Canadian canola.

China’s move on the versatile oilseed was predictable given what happened following Canada’s arrest of Huawei’s Chief Financial Officer, Meng Wanzhou, in 2019. Along with arresting two innocent Canadian expatriates and triggering the infamous “two Michaels” imbroglio, the Communist regime  also blocked imports of canola from two major Canadian export handlers. Canola producers in Alberta, Saskatchewan and Manitoba lost an estimated $1.5-$2.4 billion in revenue as a result of that year-long boycott.

Striking back where it hurts most: Following the Justin Trudeau government’s (top left) new “surtax” of 100 percent on the import of Chinese electric vehicles (EVs), China wasted no time in launching an anti-dumping “investigation” into exported Canadian canola, Canada’s second-most important farm crop. Shown at bottom right, Chinese President Xi Jinping. (Sources of photos (clockwise starting top-left): ©Kyodonews via ZUMA Press; Ethan Llamas, licensed under CC BY-SA 4.0Paul Kagame, licensed under CC BY-NC-ND 2.0Paul Howard Photo, licensed under CC BY-NC-SA 2.0)

Canola seeds are Canada’s second-most widely grown agricultural commodity, generating a critical 25 percent of the nation’s farm crop receipts, totalling $13.6 billion last year (agricultural prices fluctuate significantly). China has long been Canada’s biggest foreign canola buyer – importing 4.5 million tonnes worth nearly $4 billion last year – and was expected to purchase 70 percent of this year’s bumper crop.

The Justin Trudeau government’s initial press release described Chinese EVs as an “extraordinary threat” to Canada’s auto workers. (There aren’t any Chinese EV brands for sale in Canada yet.) But the reality is that Canada produces almost no EVs and there are few projects on the table to do so. The genuine long-term threat to Canada’s auto workers is the Trudeau government’s “mandate” that the auto industry phase out the manufacture of internal combustion engine-powered cars and light trucks by 2035.

Much of the global auto industry has been sliding into a state approaching panic over such national mandates, which are now regarded even by some of the industry’s most established and storied brands as an existential threat. Some countries are showing signs of abandoning the 2035 changeover or at least extending the timeline. Italian Prime Minister Georgia Meloni, for example, recently termed the European Union’s phase-out policy “self-destructive”, while her energy minister has urged the EU to lift the impending ban on gasoline/diesel-powered engines.

“Self-destructive”: While the Trudeau government continues to push for the phaseout of gasoline and diesel-powered vehicles by 2035 in order to force Canadians entirely into EVs, some European leaders are beginning to question similar mandates, including Italian Prime Minister Georgia Meloni (bottom left). (Sources of photos: (top right) DealerOn; (bottom left) AP Photo/Czarek Sokolowski; (bottom right) FaceMePLS, licensed under CC BY 2.0)

But not Canada, at least not under the current government. What is on the table are subsidies – some $52.5 billion as of April, according to the Parliamentary Budget Officer – to Honda, Swedish battery maker Northvolt, Ford, Stellantis, Volkswagen and General Motors to build EV battery plants in Ontario and Quebec. The total government support exceeds what the private-sector manufacturers are themselves investing. The labour forces at these facilities will thereby represent some of the costliest jobs ever “created” in Canada, and it is entirely guesswork whether any of these plants will ever recover their prodigious expense.

There are valid reasons for great concern about the importation of Chinese-made EVs. One is the recently voiced allegation that the regime is having EV manufacturers embed technology in the cars’ computers so that China’s military could one day remotely turn them off en masse, causing chaos in the targeted countries. But Canada’s options as a trade warrior are severely limited. A crude response like the one Trudeau has attempted – levying a “surtax” steeper than anything that was ever imposed by former U.S. President Donald Trump, the man Trudeau probably despises more than anyone else in the world – is definitely not one of them. Canada’s canola exports – our country’s number-one item sold to China – offered China an easy target for a punishing tit-for-tat response.

That’s because the American situation is substantially different from Canada’s. While the U.S. does manufacture EVs, the U.S.-China trading relationship is more complex and involves multiple large industries. This means there is no obvious single target for China to strike. And this makes Trudeau’s mimicking of the American tariff profoundly irresponsible. China holds the top cards at this trade table. Late last month, for example, China initiated further steps towards retaliation when its Commerce Ministry announced a three-month-long “anti-discrimination” investigation into Canada’s new tariffs.

Not-so-mighty trade warrior: With canola being Canada’s primary export to China, Trudeau’s crude “surtax” on Chinese EVs, steel and aluminum opened the country to a foreseeable – and foreseeably punishing – tit-for-tat response. (Source of graph: Janice Nelson)

That the Liberal government would put productive, self-supporting western Canadian canola farmers at risk in order to protect heavily subsidized jobs in Ontario and Quebec is despicable but hardly out of character. The Trudeau Liberals have a long record of making decisions or imposing policies that harm the West – and western farmers in particular.

Data from the Agricultural Carbon Alliance show that during just one month in 2023, livestock farmers paid an average of $726 per month each in carbon taxes, field crop farmers $2,024 and greenhouse operators $17,173. A sampling of 50 farms showed total carbon tax payments of $329,644 in just that one month. With the tax rate rising inexorably every year, within a few years those same 50 farms will be paying nearly $900,000 per month – $11 million in 2030 alone. There are 190,000 farms in Canada. The carbon tax has become yet another inter-regional financial transfer that skims wealth generated in the West to be spent on subsidy-dependent industries in Laurentian Canada.

A sampling of just 50 of Canada’s 190,000 farms showed total carbon tax payments of $329,644 in one month, an amount projected to triple by 2030 – while battery manufacturers based in eastern Canada are to receive $52.5 billion in subsidies. Shown at bottom, Ontario Premier Doug Ford and Prime Minister Justin Trudeau observe an assembly line at an event announcing plans for a Honda electric vehicle battery plant in Alliston, Ontario, April 2024. (Sources: (graph) Agriculture Carbon Alliance; (photo) The Canadian Press/Nathan Denette)

The harmful new 100 percent EV tariff comes at a time when the entire Canadian farming sector’s future is in doubt. A study sponsored by the Royal Bank of Canada predicts that by 2033, 40 per cent of Canadian farm operators will retire. A shortfall of 24,000 general farm, nursery and greenhouse workers is expected over that period. “These gaps loom at a time when Canada’s agricultural workforce needs to evolve to include skills like data analytics,” the study states. “To meet our medium and long-term goals, we’ll need to build a new pipeline of domestic operators and workers.” Every new policy move that adds to the agriculture sector’s woes makes such a metaphorical pipeline as unlikely as the physical pipelines that the Trudeau government’s other policies have killed, from Energy East to Northern Gateway. Ruinous policies such as the carbon tax need to go, and new policies that place agriculture at risk must be avoided.

The most perverse aspect of this lengthening saga is that the future of those battery plants that the Liberals intend to subsidize with $52.5 billion and counting, raised through carbon taxes and additional debt we cannot afford to incur, is itself in serious jeopardy. That is because the grandiose global plan to transition the world to EVs is looking increasingly like a house of cards, as we have long warned (please see herehere or here). As this has seeped into public consciousness, the once-exponential growth in EV sales has flattened.

As Forbes magazine recently reported, “Fully-electric passenger car demand is softening, fast. Unsold inventories have been clogging dealers’ lots. Manufacturers – from the biggest brands down to the smallest startups – are cutting back on production and investment plans.” Some prospective EV builders – like Apple – are dropping out entirely. Even before the U.S. and Canadian tariffs on Chinese EVs, reports and images came out of China showing fields packed with unsold (and possibly abandoned) EVs, a problem that lately is being “exported” as tens of thousands of Chinese EVs clog ports and shipping hubs in destination markets.

How does the future of Canadian EV manufacturing relate to the future of farming? The answer is that the first cannot exist at all without gigantic taxpayer-funded subsidies, while Canada’s farming sector – despite being an innately risky undertaking at the mercy of fickle Mother Nature and unpredictable market swings – is generally self-supporting and on balance profitable, at times highly so. What it needs above all is to be relieved of debilitating policies – first and foremost the carbon tax. We should not be robbing Canadian farmers to pay subsidies to battery-makers.

Global house of cards: With consumers awakening to the profound shortcomings of EVs, tens of thousands of unsold battery-powered cars have been clogging Chinese ports and shipping hubs (top right) – a problem now being “exported” to destination markets including Canada’s auto dealerships (bottom right). (Source of bottom right photo: Golden Shrimp/Shutterstock)

Instead, we need to encourage young people to enter the farming industry and provide them with the skills needed to “build that new pipeline” of agricultural workers. A country that can’t fuel and feed itself is a vulnerable country even in good times, and a starving, freezing one in bad. We Canadians are fortunate to have the natural resources needed to both fuel and feed ourselves plus create wealth by exporting the products that we derive from those resources. Canada’s oil, natural gas, coal, forests, fisheries and soils represent natural advantages that Canadians long ago became adept at leveraging into livelihoods and prosperity.

We have every reason to be outraged at a government that spends tens of billions of dollars subsidizing an entirely artificial industry in which our country has no innate economic advantage, while imposing heavy taxes on an industry that is absolutely vital to thousands of rural communities and to the food security of us all.

Gwyn Morgan is a retired business leader who has been a director of five global corporations.

Source of main image: bill barber, licensed under CC BY-NC 2.0.

Continue Reading

Agriculture

Trump Floats Massive Tariffs On John Deere If Manufacturing Shifts To Mexico

Published on

From the Daily Caller News Foundation 

 

By Mariane Angela

 

Former President Donald Trump issued a warning Monday about imposing 200% tariffs on John Deere products if the company relocates its manufacturing operations to Mexico.

Trump engaged with local farmers and manufacturers during an event in Smithton, Pennsylvania, about the impact of China’s economic policies on the U.S. economy, according to the Associated Press. The former president highlighted his economic strategy against Vice President Kamala Harris by pointing out the potential benefits of tariffs and increased energy production, which he argued could help lower costs and protect local industries.

Trump highlighted John Deere’s recent decision to move some manufacturing to Mexico, and he threatened a 200% tariff on the company should it proceed with its plans under his potential administration, the AP reported.

“I just noticed behind me John Deere tractors, I know a lot about John Deere. I love the company, but as you know, they announced a few days ago that they’re gonna move a lot of their manufacturing business to Mexico,” Trump said, according to a video posted on X. “I’m just notifying John Deere right now. If you do that, we’re putting a 200% tariff on everything that you wanna sell into the United States. So that if I win, John Deere is gonna be paying 200%.”

John Deere previously announced that it will lay off roughly 610 employees across three of its plants in Illinois and Iowa. The company announced on May 31 that it will relocate skid steer and compact track loader production from Dubuque, Iowa, to Mexico by the end of 2026 as part of a broader strategy to enhance efficiency and manage rising manufacturing costs amidst changing business conditions.

Continue Reading

Trending

X