The latest in a long string of anti-supply management salvos comes from a one-time influential Quebec ally of the system.
For many years, Mario Dumais worked as an economist for Quebec’s powerful farm organization Union des Producteurs Agricoles and then as secretary general for the Coopérative Fédérée de Québec, which both strongly support marketing boards.
Last week, the conservative Montreal Economic Institute published a study by Dumais that calls for the end of supply management and compulsory farm marketing boards in general.
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He wrote that according to international calculations, supply management in dairy, poultry and eggs has increased prices and cost Canadian consumers almost $4 billion in higher foods prices per year between 2008 and 2010.
Dumais argued that supply management has not achieved its goals of increasing farm income or preserving the family farm. Much of the increase in farm income is capitalized into quota debt, while farm numbers in the affected sectors continue to fall, he argued.
He recommended that supply management be eliminated over seven or eight years and that producers be compensated for quota value loss through a consumer tax that would temporarily fill the gap between lower market prices and what they pay now.
It is the model that Australia used in the 1990s when it ended dairy supply management.
“The liberalization of markets consists of eliminating tariffs and marketing monopolies to bring Canadian prices for products in line with international levels,” he wrote in the report published Aug. 28.
“At the same time, there can be a temporary tax equal to the current subsidy from consumers to producers. By collecting this, the buyback of quotas would be completed in seven or eight years without consumer prices having to be raised any higher than before.”
After that, “processors and consumers would save the equivalent of $3.9 billion from that point onward.”
Dumais argued that the end of the CWB’s export monopoly this year was “an important and laudable step,” but it should be extended to other sectors despite government support for supply management.
“Logically, all farmers should enjoy this freedom to set out on their own and market their products themselves,” he wrote.
He said the end of farmer marketing board monopolies would mean “the agricultural sector would no longer be subject to rigid outdated constraints, which would promote producers’ entrepreneurial initiatives and as a result would lead to more innovation.”
However, Dumais also said there is no consumer resistance against supply management costs because food is a relatively small part of most household budgets.
“The adoption of agricultural policies aiming to promote entrepreneurship and freedom requires informed public opinion and a political class with long-term vision,” he said. “These are necessary conditions to realizing the competitive potential of our agri-food sector and thereby allowing it to contribute to the prosperity of the country.”
