Case made against marketing boards

The author argues that supply management practices implemented through marketing boards reduce supply and significantly increase prices for dairy products, chicken and eggs.  |  File photo

Sometimes political parties forget that they exist to improve and enhance the lives of the Canadians who vote for them. So it made me happy to see the federal Conservatives pressuring the Liberal government to let us know what a carbon tax would cost the average Canadian household.

But Conservative concern over the cost of the carbon tax has been overshadowed by the party’s strident support of supply management practices for the poultry, egg and dairy industries. The party even removed Maxime Bernier from the shadow cabinet for daring to oppose this bad policy.

The supply-management practices implemented through marketing boards reduce the supply and significantly increase the prices for dairy products, chicken and eggs. Quotas limit the quantity produced in Canada and tariffs keep out imports. These are exactly the kind of practices we’re so opposed to when they’re threatened to be used against us.

It’s rare to find a meal that isn’t more expensive than it should be because of the inclusion of these products: eggs, yogurt or milk on cereal for breakfast, cheese on the burger or pizza for lunch, chicken for supper — you get the picture.

Who benefits? The producers of dairy, eggs and chicken. Unlike most other businesses, they get a guaranteed market. They can keep prices high. They don’t have to worry about competition. Nice for the almost 15,000 farmers who are so protected.

Canada’s population is now at more than 37 million people, so this means that more than 200,000 Canadians face inflated food bills for each subsidized farmer.

A quick estimate could be calculated by determining what we spend on poultry, eggs and dairy and how much less it would cost us if we paid American prices.

Apart from this, supply management has other costs. Canada is a trading nation and our protectionist marketing boards and supply management policies are a major impediment to successful trade agreements. Why should the U.S. not put barriers up against our products when we so effectively keep out some of theirs?

Canada’s best strategy for growing trade as a major component of our long-term economic well-being is to diversify our markets beyond the U.S. We have a trade agreement with Europe but it was not easy to put in place because of marketing boards. Our negotiations for trade across the Pacific with its growing markets are hampered by the protectionist policies of our marketing boards.

Lack of quality and variety is another price of monopoly suppliers. The quality of our products meets basic health and safety standards, but it doesn’t have to go beyond that. That can be a problem in some situations. For example, many bakers find that Canadian butter is not up to making the flakey croissants and other specialty products enjoyed in countries with more choice.

I’m not against the dairy and poultry farmers. I have great respect for them and I’m sure that they’re at least as good at what they do as their counterparts in the U.S. and elsewhere. When we finally get free trade in this industry, these producers will react like good business people and develop productivity, products and markets that will allow them to prosper.

That is what happened in Australia and New Zealand when agriculture protectionism was removed.

Protected industries form associations and speak to politicians with a single loud voice. It’s time for all Canadians to remind politicians that we’re aware of what we’re paying to subsidize a small number of farmers and we think of it every time we pick up groceries, order a pizza and vote.

Troy Media columnist Roslyn Kunin is a consulting economist and speaker. This column was edited for length.

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