Supply management divide hard to bridge

Martha Hall Findlay says consumers should not have to pay inflated dairy prices to support wealthy farmers


The chasm may never close between those who believe in supply management and those who don’t.

Albert Kamps, vice-chair of Alberta Milk, does not want the uncertainty his counterparts face in other countries when the world price of milk fluctuates.

“Price volatility is back and we want the stability of our system. We are content to service the Canadian market in return for that stability. We can’t control what goes on outside of our borders. If we know how much we can consume in Canada, we can match that,” said Kamps after an international symposium held recently at the Calgary Stampede where the topic of supply management was debated.

Martha Hall Findlay, head of the Canada West Foundation, said dairy producers should be willing to compete in the export market and consumers should not have to pay inflated prices for milk to support wealthy farmers.

Using information from Statistics Canada, she said the average net value of a dairy producer in Canada is about $5 million while the average net value of a poultry producer is about $7 million.

“The average income for a dairy farm in Canada after all family salaries have been paid is well over $150,000. It has gone up since then. That is a pretty significant income.”

“When we started this decades ago, there were significant concerns and you had hard-working farmers who were having a hard time. That is not the case now,” she said.

“There is no question poultry, egg and dairy farming in Canada is a lucrative business,” she said.

Kamps said the numbers presented were taken out of context.

“Most farmers take dividends so dividends are counted as farm income. If my wife and I take an $80,000 dividend to live on that is not counted as family wages,” he said.

As for the current disputes with the United States where President Donald Trump is pushing for an end to the system, Kamps said more access would have been granted under trade deals like the Comprehensive and Progressive Trans-Pacific Partnership.

“The U.S. should have joined the TPP. We offered another three percent access to Canada’s market to the U.S. under TPP and Trump walked away from it,” said Kamps.

Milk prices are based on the cost of production. That information is available through sources like an annual economic survey done by Alberta Agriculture.

The dairy cost of production survey works with Alberta farmers to analyze costs. Feed, bedding, utilities, cost of cows at different stages of life, unusable milk that was dumped, machinery, debt, land, fencing, insurance, custom work, as well as services like veterinary and semen-supply companies are calculated.

Dairy Farmers of Canada also commissioned a study on American support by Grey, Clark, Shih and Associates. Based on information in 2015, the report calculated the American government provided about US$22.2 billion in direct and indirect subsidies to the U.S dairy sector. A number of programs were examined for their impact but the money does not necessarily go directly to farmers. These included domestic support, export subsidies, conservation programs, crop and livestock gross margin, risk management programs, disaster relief assistance programs, loan programs, crop insurance, livestock support, renewable fuels incentives and subsidies and irrigation programs.

Hall Findlay said U.S. support has dropped substantially.

“Canada’s dairy subsidy through supply management is seven times greater than the Americans,” Hall Findlay said, referring to a 2017 report from the Organization for Economic Co-operation and Development that calculated support from taxpayers and consumers.

Canadians should be concerned that the federal government is protecting supply management at all costs while 25 percent tariffs on products like steel and aluminum have been levied.

“This is not because Donald Trump is asking for it but because in fact it is the right thing for Canada to do and right now we can make some moves in that direction and give the Americans a bit of a win that might actually help us politically and do the right thing for Canada,” she said.

She argues milk prices are artificially high and that harms lower income, single parents who cannot afford to buy basic nutrition like milk.

On the trade front, Canada has signed a number of trade deals with Europe but protected the system at the expense of other commodities.

“Did we actually sacrifice more opportunity for beef in Europe than we might have had? Were they tougher on hormone requirements for beef because we were so intransigent on dairy? We don’t know because their discussion happens behind closed doors,” she said.

Younger dairy farmers want change and the chance to compete on the international stage, in which a growing middle-income group around the world can afford more and better food.

The conundrum is winding it down with fair compensation for transition assistance. When the program began, dairy quota was free but now in Ontario and Quebec it is $25,000 per cow, while in Alberta it is about $37,000.

Young producers who have leveraged everything to get into the business would not be treated fairly compared to those who got quota for nothing or much lower amounts.

“It is going to be complicated but it can be done and it can be done in a way that is fair,” she said.

The government could make sure producers receive fair compensation and transition assistance. Australia imposed 11 cents a litre for eight years to pay out farmers when it changed to an open market.

“We are going to need political courage and enough of an education to say this is something we need to do to take advantage of opportunities,” she said.

The dairy cost of production in Alberta may be viewed at bit.ly/2JudOO8.

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