The Western Producer’s Ottawa correspondent Barry Wilson provides this inside look into the politics of supply management and addresses key questions:
Are the tariff and quota systems that manage Canada’s dairy, poultry and egg industries coming under increasing fire?
Will Canada be able to fend off international calls for an end to the protectionism that’s at the core of the system?
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Throughout the autumn, the chorus of Canadian anti-supply management voices has been growing as business leaders, trade analysts and media commentators call for its demise.
Former Liberal deputy prime minister John Manley, now head of the Canadian Council of Chief Executive Officers, has pronounced supply management an unjustifiable drag on the economy and Canada’s international free trade reputation.
News that Canada wants to join the Trans-Pacific Partnership and is willing to put supply management “on the table” brought gleeful media commentator calls for the system of production quotas, price setting and high border tariffs to be traded away.
Supply management “is not only a perennial obstacle in international trade negotiations but also has the effect of making some food staples unnecessarily expensive in Canada,” declared theOttawa Citizen.
Former senior Agriculture Canada official George Fleischmann, now at the University of Toronto after years in the food manufacturers’ lobby, wrote that one obstacle to dismantling the protectionist tariffs is “the self interest of the supply management bureaucracy. There are probably as many, if not more, dairy bureaucrats at the Canadian Dairy Commission and provincial milk marketing boards than there are dairy farmers in Canada.”
The University of Toronto-affiliated Mowat Centre think-tank is publishing a report calling for dismantling of the system.
Meanwhile, the Canadian restaurant lobby has started its annual campaign to complain about the price of industrial milk that it says drives up the price of cheese and threatens to drive pizza restaurants out of business. It is an annual campaign, building to the yearly late December decision by the CDC on next year’s milk prices, usually higher.
Trade analysts have joined the chorus.
“Why should the supply managed sectors be treated any differently than the wine producers were 25 years ago when they opposed free trade but in the end, it was a boost for their industry,” said Toronto trade lawyer Lawrence Herman. “Every other industry in Canada arguably is subject to market forces including people who produce a whole variety of farm products.”
Even former World Trade Organization Canadian negotiators John Weekes and Mike Gifford have said that change is coming and should.
Only the political class seems immune to the anti-supply management campaign with all parties in the House of Commons swearing allegiance, although opposition MPs regularly question the Conservative sincerity.
So what’s going on? Is this a concerted campaign to dismantle the 40 year-old system that produces higher farmgate prices in exchange for production controls and protectionism?
Dairy Farmers of Canada executive director Richard Doyle doesn’t think so.
“I think it is just coincidence that all these things are coming at the same time from different directions,” he said in an interview. “There is nothing new that we haven’t heard in the past 40 years and it’s nave because other countries have sensitive areas that they protect but they don’t use our transparent language. We are an easy target. But it is frustrating.”
Part of the frustration is the prospect of the Trans-Pacific Partnership (TPP) negotiations with supply management in the mix. While Conservatives vow to defend and protect the system, opponents cannot imagine it surviving a “free trade” negotiation with tariffs as high as 300 percent on some dairy products.
For Liberal Ralph Goodale, it is an old story. As agriculture minister in 1993, he was forced to defend supply management protectionism against all other countries at negotiations that led to the Uruguay Round World Trade Organization deal.
“Everybody else found ways to protect their sectors and then pointed fingers at us,” he recalls. “There was a lot of hypocrisy. But when I would raise American peanuts or cotton, Japanese rice, issues like that, the conversation often died away.”
Another part of the mix is the Conservative government determination to end the Canadian Wheat Board single desk, even as it defends supply management monopolies.
“There is an inherent contradiction in the government saying it believes in free market principles in respect of wheat and barley but not in respect of supply managed products,” said Herman.
And then there is the hope among some opponents that the Conservatives don’t really mean it.
“I think with a majority government there is a greater possibility of them acting in areas that affect supply management products than there was in the five years of a minority Parliament,” said Herman.
That view is at the core of opposition allegations that farmers should not trust the Conservatives on the issue.
Still, in government the Conservatives have built a solid record of support that has supply management leaders singing their praises.
Meanwhile, the volume of the choir of critics keeps rising.
All eyes will be on a pending Canada- European Union trade agreement and TPP negotiations to see if it is being heard.
