CANADA’S supply management system is under attack from abroad and from within.
Complaints from abroad are understandable given that supply management yields some of the healthiest farmer incomes in Canada while allowing scant access to foreign competitors. It regulates prices in the dairy, poultry and egg industries by controlling domestic supply and charging tariffs on most imported products in those sectors.
Within Canada, some of those dependent on foreign markets for their incomes complain that domestic supply management was bought at their expense when the last World Trade Organization deal was signed. It’s been suggested that the desires for more open markets by those dependent on exports were subjugated for supply management protections.
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It is easy to sympathize with producers whose incomes are tied to foreign market access. Their incomes are often unstable, dependent on the whims of world markets and foreign governments.
Within Canada, groups represented by the Canadian Agrifood Trade Alliance and Grain Growers of Canada have called on the Canadian government, in its trade negotiations, to give up supply management and adopt a more aggressive free-trade stance. The federal policy of arguing for better foreign market access while protecting supply management sectors hinders Canada’s attempts to extract concessions from other countries on trade-distorting subsidies, they complain.
But it would be a mistake for Canada to give up the supply management system unilaterally.
After the last WTO agreement, Canada cut its subsidies deeper and more quickly than the letter of the agreement required. Much of it was done as Liberal government cost-cutting measures, but Canadian farmers were told concessions would pay off in the longer term. By giving up some supports, Canadian farmers would become more efficient and would be ahead of the game when subsidy cuts hit other countries, they were told.
Trouble is, meaningful cuts never materialized in the world’s largest agricultural trading countries. Canadian farmers were left with less government support than farmers in either of the two dominant trading bodies. It’s doubtful that Canada’s boy scout behaviour on subsidies has bought it any goodwill in its current trade disputes, such as the U.S. duties on Canadian wheat.
Supply management does have its detractors but no one can dispute that it offers some farmers a guaranteed income when little in agriculture is a sure thing.
Canadian negotiators must enter future talks with the mindset of defending it. They should revisit that stance only if there are guarantees of substantial and measurable subsidy reductions from other countries.
