Canada’s dairy system should be emulated
Supply management restricts dairy production within Canada so that consumers are not oversupplied. Supply, for the most part, equals demand for dairy products in Canada.
Furthermore, according to the April 2018 Export Action Global report, on a global scale when factors are described in common terms, Canadian consumers pay the lowest cost per litre of milk ($0.11 per litre less than the U.S.).
The quota system was initially brought about because producers were losing money and something had to be done to prevent the collapse of the dairy industry. After many years of meetings, including amendments to the Farm Products Agencies Act in 1972 and establishment of the National Milk Marketing Plan, the result was that Canadian dairy producers entering or expanding their operations were required to purchase quota in the market. The quota system then became a stabilizer of dairy prices both to the producer and consumer.
Some countries with the same problem as Canada chose to tackle the problem by paying subsidies to their producers. Subsidies get paid at the mercy of governments and tend to target specific problems. In order to benefit from subsidies, producers need to mould their businesses in a direction that can benefit from those subsidies. Long-term subsidization can, arguably, lead to the oversupply. In countries where subsidies are paid, any income taxes paid by dairy producers in those countries is refunded, in part or in entirety, through the subsidies.
Canada could easily oversupply its domestic market with its current producer base — the excess product would likely be wasted. Increasing dairy production increases costs to producers and decreases their rate of return. There is a minimum amount of product that must be manufactured in order to cover costs, but when producers generate too much supply, they risk a loss to their business if they cannot sell the surplus product at a profit.
Allowing increased imports of dairy products means those imported products will replace Canadian products on the shelves, and if the Export Action Global report is any indication, the replacement products will, in the long term, be more expensive than what is currently on the shelves.
The current system generates profitability for Canadian producers, which translates into income tax payments by producers into federal and provincial coffers. Since Canadian producers are not subsidized, and assuming the secondary tax sources to governments (ie. wages to workers, equipment purchases, store profits, etc.) are equivalent on a litre-per-litre basis between countries, there is a net increase in the tax revenue to Canadian governments.
When a system results in higher net government revenue, lower consumer prices and profitability for the producer, you get a win-win-win situation. Rather than beating up Canada, other countries might be further ahead by adopting Canada’s solution to its dairy industry problems.
MacAulay must not support USMCA deal
To Lawrence MacAulay, federal agriculture minister and MP for Cardigan, P.E.I.:
On Oct. 5, at the hall in Pooles Corner, P.E.I., I was unhappy that you didn’t want to stay and sit there and listen to the victim impact statements from the people who were there to give them. You had to be forced to see what your government was doing to our young people in our industry.
I think you are being used.
I know you are in a bad position as federal minister of agriculture. Prime Minister Justin Trudeau is pushing the new world order of more free trade to benefit the super rich. That is why he finds it acceptable to knuckle under to the terrible USMCA. You will be largely responsible for the destruction of the dairy industry if you toe his agenda.
Make no mistake, taking all our market policy abilities away and giving them to Donald Trump is anti-democratic.
If I were the federal minister I would not condone that terrible deal. I would at least tender my resignation, tell Trudeau I want no part of this and come home.
Please don’t be remembered as the person who destroyed the dairy industry.
Column on Trump deserves recognition
Re: “Dear Mr. President,” column by Michael Raine, WP, Oct. 4.
Michael Raine captured my feelings exactly in the column.
We have been told by some that we should not feel angry at the American people for what their president has said and done with United States-Mexico-Canada agreement, but that is easier said than done.
The ramifications of this deal may not have all surfaced yet, but the direction does not look good. I hope common sense will return sooner rather than later, but my hopes are not high.
Congratulations to Raine for having the fortitude to write this column. A good example of good journalism and certainly not fake news.