MICHAEL Hart, an Ottawa trade policy wonk, thinks Canada’s supply management sector farmers have deluded themselves into believing their protected income security is better than the open market alternative.
To laugh or to cry? That is the question.
Supply management is riddled with problems and contradictions. Quota values are obscenely high, debt levels are scary, new entrants face a million-dollar barrier, industry leaders peddle the absurd argument that supply management tariff protections are not trade distorting and the system’s protections clearly are on the trade table to be bargained despite industry claims to the contrary.
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But the benefits of supply management income over so-called free market conditions are a delusion? Get real.
Let me quote from a recent anti-supply management analysis Hart wrote for the business-friendly C.D. Howe Institute in Toronto. His argument was that the supply management debate is distorted by the self-delusion of consumers convinced stable supply is worth the cost of price-fixed goods and lack of competition, politicians are deluded about the cost (political and financial) of breaking the system and farmers are just, well, deluded.
“Producers are eager to deceive themselves that stable prices and assured returns are better than the vagaries of competition,” Hart wrote.
Ah yes, the “vagaries of competition” that have produced market losses of billions of dollars for farmers in the past few years. Who wouldn’t want to abandon “stable prices and assured returns” for that?
To be fair, Hart assumes that if Canada bought out its supply managed system, the world trading community would compensate by agreeing to an agricultural trading world free of subsidy distortion, trade barriers and artificial pricing imposed by powerful corporate concentrations on millions of disorganized farm producers.
It is a view promoted by some exporters in the Canadian farm economy who imagine that if Canada just got rid of its most conspicuous protectionism, the world would become a safe and prosperous place for free traders.
And to be fairer, this image of a fair and profitable subsidy and protection-free agricultural trade world is as credible as the late 1990s vision of the Virgin Mary on a Cape Breton Tim Horton’s wall, an image that disappeared when they took the cobwebs off a nearby light.
For the record, Hart worked as a trade bureaucrat, not a profession known for its fierce competition from the outside world.
Now he holds the Simon Reisman chair in trade policy at Carleton University, named after the negotiator of free trade with the United States.
And as this column is being written, he is in Washington on a year-long fellowship to American University, a sinecure presumably without a lot of low-cost competition.
The essence of his argument is that supply management sector farmers should willingly let themselves swim in the same income black hole that their market-dependent neighbours inhabit.
If someone is doing well, they should be dragged down to where others are.
Then the C.D. Howe Institute could issue a report condemning the government handouts to dairy farmers who cannot compete with cheap imports. Spare us.
