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Council of Canadians says trading away supply management in NAFTA talks wouldn’t mean cheaper milk prices

The Council of Canadians is challenging the notion that ending supply management would mean cheaper milk prices in Canada.

While US President Donald Trump has vowed to eliminate Canada’s “very unfair” dairy supply management system in relation to the upcoming renegotiation of the North American Free Trade Agreement (NAFTA) expected to start in August, various right-wing voices in Canada have joined with him in dismissing a system that has served consumers and farmers well for almost 50 years.

Former prime minister Brian Mulroney, Conservative leadership candidate Maxime Bernier, former NAFTA negotiator Derek Burney, former Canada-US FTA negotiator Gordon Ritchie, along with the Business Council of Canada and the Montreal Economic Institute, have all called for supply management to be phased out in this country.

There has also been the suggestion that if supply management were traded away in the upcoming NAFTA talks it would be a win-win – placating the US president and lower dairy prices in Canada.

Yahoo Canada News reports, “‘I would have my doubts about letting us ditch supply management because it’s somehow going to automatically equate to lower prices for consumers’, said Brent Patterson, political director at the Council of Canadians think tank. ‘It’s ultimately about how business can profit from a new arrangement.'”

In June 2016, CBC reported, “[A study by the] Nielsen research firm, commissioned by the Dairy Farmers of Canada, suggests that the prices Canadians pay for milk are comparable to those in many countries throughout the world, at an average retail price of around $1.30 per litre. …Americans, whom we often use as a benchmark comparison, pay slightly less at $1.15 on average.”

But that article highlights, “Bruce Muirhead, a professor of history at the University of Waterloo who studies food systems, argues that those who say phasing out supply management would make milk cheaper are only looking at U.S. numbers, and that that’s a misguided approach. ‘Look, the dairy industry in the U.S. is heavily, heavily subsidized by the government every year’, he says. In Canada, the cost of milk pays for the price of producing milk. ‘So why bother shelling out billions in taxpayers’ money every year to support an industry that is paying for itself? If we ditch supply management, mark my words, prices will be higher, they will not be lower’, he said.”

Supply management came into effect in Canada in the 1970s to regulate the supply of dairy products. The national system, managed by the Canadian Dairy Commission, means that imports of these goods are limited in areas where domestic products can meet demand. The amount of each commodity that is marketed by producers is controlled through a quota system. The system means consistent prices for both producers and consumers. The price the farmer receives is set by provincial bodies, such as the Dairy Farmers of Ontario, taking into account the Canadian Dairy Commission’s study of production costs.

The Council of Canadians stands with the National Farmers Union on this issue.

Last week, National Farmers Union president Jan Slomp commented, “American dairy farmers are facing the same problems dairy farmers in the European Union, New Zealand and Australia are struggling with: prices so low they don’t cover the cost of production. …[If the United States were to] adopt its own supply management system, it could begin to restore prosperity to rural America.”

NAFTA negotiations are expected to begin this August and conclude by April 2018.