The Commission sur l’avenir de l’agriculture et de l’agroalimentaire du Québec hold its hearings.

Despite a worldwide trend toward market liberalization and competition, most politicians and people involved in Quebec agriculture maintain a vigorous defence of supply management of certain farm products. Supply management is the mechanism by which milk, poultry and egg producers in Canada (most of them located in Quebec and Ontario) adjust production to protect their incomes. To this end, domestic demand is evaluated arbitrarily, and efforts are made to match this with production of the goods covered by the scheme.

Publication of an Economic Note on an obsolete, costly and unfair system: supply management.

In the last few months, serious setbacks afflicting Quebec’s pork industry have been making headlines: the closing of slaughterhouses and processing plants, layoffs, and financial losses. A number of causes have been used to explain this crisis, in particular the rise of the Canadian dollar, industry cycles, high sickness levels, a lack of competitiveness among slaughterhouses, added costs to meet environmental standards, rigidities in collective marketing, and so on. A moratorium decreed by the provincial government on increases in pork production from 2002 to 2005 also stalled the rapid growth that the industry had experienced for more than a decade and stymied numerous investment projects.

Publication of an Economic Note on the supply management system in Canada’s dairy industry.

Even with a temporary reprieve from the latest WTO talks in Hong Kong in December 2005, the supply management system in Canada’s dairy industry will have to be reformed in the longer term. The system clearly benefits certain milk producers, but on the other hand it holds Canadian consumers hostage and stifles entire industries that have to pay more for their milk. It erects an obstacle to competition throughout the Canadian dairy industry, penalizing the most dynamic producers by means of extravagantly expensive quotas. When it comes to reforming the dairy supply management system in Canada, a number of concerns have been raised to which the Australian experience provides answers.

MEI Economic Note on the “supply management” model in agriculture.

International talks at the World Trade Organization (WTO) in July 2004 drew attention to the “supply management” model in agriculture. This model was first applied in Australia in the 1920s to protect farmers’ incomes against economic swings and lower prices for their products as well as to increase their power in relation to buyers. Supply management, which is held out today as an indispensable element of Canadian agricultural policy, is in reality a needlessly costly system, particularly where dairy production is concerned.

MEI Economic Note on the “supply management” model in agriculture.

MEI Economic Note on the “supply management” model in agriculture