April 29, 2017

Supply MISmanagement: Politicians milk the system for votes but destroy family dairy farms

Holly NicholasRebel Commentator

Supply management protects Canadian farmers from foreign competition but producers pay ridiculous amounts of money for quotas in order to be able to operate and those quotas are limited which then limits supply, which leads to higher prices. 

When I was younger and our family lived in Vancouver, we made weekly trips to the U.S. where it was cheaper to buy just about everything, including dairy products.

Researchers at the University of Manitoba figure the added cost of supply management for Canadian families can be up to $466 yearly.

The fact is, supply management in Canada is a costly problem for consumers and also hurts dairy farmers.

Watch as I explain the other practices employed by Canadian governments, left or right, that have knee capped the family dairy farm with protectionist measures for political gain.

As you know, recently these tariffs and protectionist measures have irked President Trump and now he’s calling out the Canadian government over it.

While it’s true that the states also subsidize their dairy industry, the bottom line is, Trump is after Canada over the issue and he’s right - NAFTA needs to be renegotiated.

Besides, this could be the first step towards dismantling supply management and letting the free market reign.

Family dairy farms have always been great, let’s just make them competitive again.

Something must be done about this government mismanagement that’s been going on for far too long.

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commented 2017-04-30 16:28:13 -0400
Andrew Stephenson this kind of thing did not work out so well for Ukrainians under Stalin.
commented 2017-04-30 16:25:13 -0400
Andrew Stephenson crap like this and the CWB destroyed small farms, not the open market. My uncle was one of them he could only grow Canola so often and it became pointless to farm.
commented 2017-04-30 15:46:20 -0400
Andrew Stephenson commented – “What country’s that? It’s not the US”

Yep, Although omly larger producers are subsidized US dairy is almost 50% less than Canadian domestic prices – France and Europe vary but are cheaper.

Canada has long maintained a huge tariff wall on dairy products. The duty on milk is 270 per cent. That keeps most imports from the United States and elsewhere out of Canada, while helping to prop up artificially high domestic prices. Canadian supply management regulates every aspect of the dairy/egg/poultry supply chain. The system uses high tariff to block imports, strict quotas that limit supply and determine how much each farmer can produce and fixed prices paid to producers.

The World Trade Organization has ruled that the high prices paid to Canadian farmers are subsidies, making exports very difficult. For Canadian consumers, supply management also means consistently higher retail prices for dairy, chicken and eggs in spite of the fact there is world over-production of milk. When the supply-management system was created, Canada had nearly 140,000 dairy farms. Today, it has fewer than 12,000, and every year, a few hundred disappear as farmers leave the business and sell their quota. It’s concentrated in Quebec and Ontario – these are the hold outs for supply management.

Canada is producing too much milk, but not enough butter, and that is putting downward pressure on overall farm incomes. Our processing for finished dairy products is down. U.S. farmers, meanwhile, are suffering from overproduction AND falling global milk prices. The United States enjoys a large dairy trade surplus with Canada.

Some blending of the two agri-economies must occur , but I cant see it happening until the dollar is par – and that is a matter of federal tax restrictions on our productive capacity. Carbon taxing will just about break this system’s back.
commented 2017-04-30 15:21:00 -0400 · Flag
“ron joseph commented 2 hours ago
Andrew Stephenson—-“The US is overproducing and dumping it in sewers” probably true and sounds terrible when the poor children are doing without, however Canada also dumps milk in sewers when Supply Management has too much in stock. They have a mandate to keep the price high, so dump it if that is what it takes to accomplish their mandate. "

I don’t disagree. What we have isn’t working very well. Fixing it is not going to be simple, and no matter what you do, will prove painful to the established sector. Perhaps the small farmer will prosper in a true open market … more likely, economies of scale will favour the megaproducers who at this point do have some limitations placed upon them by the quota system. And, again, the elephant in the room is the barriers to imports, if those are removed our dairy sector is done, particularly in regions with high operating or land costs such as Ontario or the Lower Mainland.

This seems to be the opposite to the increasingly protectionist policies that the world seems to be moving towards.
commented 2017-04-30 13:47:07 -0400 · Flag
Heaven forbid if consumers in the United States and Canada have to dish out a little more of their disposable income for food! They certainly seem to be in a position where they can more then afford to do so…
http://www.huffingtonpost.com/2015/03/23/disposable-income-map_n_6924568.html

This second article by “International Buisiness Times” points out that, “U.S. residents spent on average about $2,273, or about 6.4 percent of their annual consumer expenditures, on food in 2012, according to the United States Department of Agriculture (USDA)… As a percentage of consumer expenditures, that is less than any of the 83 other countries for which the USDA tracks data”.
http://www.ibtimes.com/us-spends-less-food-any-other-country-world-maps-1546945

As it is, the agricultural industry is already in a downward spiral thanks to cheap food policies that cater to the industrialization of agriculture that in turn exploits foreign workers, undermines the integrity of the soil, and unnaturally manipulates crops and farm animals.
commented 2017-04-30 13:40:45 -0400
Andrew Stephenson—-“The US is overproducing and dumping it in sewers” probably true and sounds terrible when the poor children are doing without, however Canada also dumps milk in sewers when Supply Management has too much in stock. They have a mandate to keep the price high, so dump it if that is what it takes to accomplish their mandate.
commented 2017-04-30 13:38:51 -0400
Ron,
Supply management has done little to protect the small family dairy farm… Indeed it’s future under supply management in Ontario began to look grim when the marketing board removed the cap on quota that each individual farmer could hold. As well, when the board removed the restriction on the transfer of quota to Southern Ontario from Northern Ontario it became clear that the board desired to see the bulk of milk produced in the south and shipped north.
commented 2017-04-30 13:38:51 -0400
Ron,
Supply management has done little to protect the small family dairy farm… Indeed it’s future under supply management in Ontario began to look grim when the marketing board removed the cap on quota that each individual farmer could hold. As well, when the board removed the restriction on the transfer of quota to Southern Ontario from Northern Ontario it became clear that the board desired to see the bulk of milk produced in the south and shipped north.
commented 2017-04-30 13:38:50 -0400
Ron,
Supply management has done little to protect the small family dairy farm… Indeed it’s future under supply management in Ontario began to look grim when the marketing board removed the cap on quota that each individual farmer could hold. As well, when the board removed the restriction on the transfer of quota to Southern Ontario from Northern Ontario it became clear that the board desired to see the bulk of milk produced in the south and shipped north.
commented 2017-04-30 13:25:13 -0400
Bill Elder commented 17 hours ago
Anyone who has travelled outside Canada discovers immediately upon entering a grocery store, that Canadians are not paying food prices which reflect the true cost of production"

What country’s that? It’s not the US, their milk is heavily subsidized by the government, although in their case there’s no limit to how much the can produce (they’re overproducing, which is why they’re trying to get into Canada – better to sell it even below cost, than pour it into the sewers as they are now.

The problem with ending supply management is that it goes hand in hand with ending the tariffs and import regulations, and the world’s so awash in subsidized milk that the domestic production simply doesn’t stand a chance.
commented 2017-04-30 12:52:54 -0400
#EndSupplyManagement #IStandWithMaximeBernier2017 #MCGA2019 #CanadaFirst #NoToLeftistGlobalistAgenda

RON JOSEPH commented 13 hours ago
Harper was starting to dismantle Supply Management in order to close his European Free Trade Deal. He said that the Gov’t was going to buy out licenses; I thought these lucky farmers are already rich because of these licenses, why give them more?

There are thousands of Gov’t employees managing Supply Management. When it ends , will they get laid off like Private Sector employees would ? Probably Trudeau will keep a building full of them.

LIZA ROSIE commented 14 hours ago
It’s time. Just do it. Buy them out and just end it.

ANDY NEIMERS commented 9 hours ago
Do some basic research people!… New Zealand prospered after eliminating marketing boards in 1991 and have a booming economy now from dairy exports… Canadian butter on the other hand is protected with tariffs of up to 299 per cent!… And yes Holly, British Columbians are STILL heading off to Lynden and Bellingham and Blaine to buy blocks of cheese and gallons of milk…. And why is that given that the Canadian dollar is heading back to “peso” status again under the Boy Blunder’s government?… Dairy products are still a bargain “across the line”…
commented 2017-04-30 12:22:04 -0400 · Flag
RON JOSEPH commented 13 hours ago
Harper was starting to dismantle Supply Management in order to close his European Free Trade Deal. He said that the Gov’t was going to buy out licenses; I thought these lucky farmers are already rich because of these licenses, why give them more?

There are thousands of Gov’t employees managing Supply Management. When it ends , will they get laid off like Private Sector employees would ? Probably Trudeau will keep a building full of them.
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LIZA ROSIE commented 14 hours ago
It’s time. Just do it. Buy them out and just end it.

ANDY NEIMERS commented 9 hours ago
Do some basic research people!… New Zealand prospered after eliminating marketing boards in 1991 and have a booming economy now from dairy exports… Canadian butter on the other hand is protected with tariffs of up to 299 per cent!… And yes Holly, British Columbians are STILL heading off to Lynden and Bellingham and Blaine to buy blocks of cheese and gallons of milk…. And why is that given that the Canadian dollar is heading back to “peso” status again under the Boy Blunder’s government?… Dairy products are still a bargain “across the line”…
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commented 2017-04-30 12:19:19 -0400
Bill Elder—To see the future of the family dairy farm without Supply Management, just look at the small grain farmers situation; there are none left as the giant corporate farmers took over with their modern and efficient equipment. The small guy had no chance unless he got together with other small farms.
Years ago I had a small retail store; to sell something at a profit, I had to charge 20-30% more than a big-box store as they paid that much less for the item.
The more you buy or sell, the cheaper the price. Good Bye Small Dairy Farmer.
commented 2017-04-30 10:59:28 -0400
I see the commentary has gravitated to the real question at hand here – specifically, who does government market and supply control of agricultural produce benefit – the family farm/small independent producer or the corporate agri-biz? I don’t farm but I do know some farmers and the economics of farming is that you must go big or go home. The larger your operation, the more secure you are with single stream income, but the larger the risks and, of course the more subsidies and safety nets. Small producers have none of this advantage but are surviving on a small growing local farm organic consumerism.

Will killing supply management be good overall – yes. But my gut instinct is that in the super competitive market once the subsidies are gone this will spell the end of the family farm
commented 2017-04-30 10:35:41 -0400
It would be interesting to hear from a cross section of real dairy farmers what they think about all of this.
Although farmers are generally independent-minded and self sufficient, dairy farmers have been under the yoke of this commie, state-run, er supply-management system in Canada for several generations, and may have a similar affliction that our children in the public school/post secondary school system have been victimized with by the state…

You also might want to look into what the penalties are for the farmer for even giving away his unpasteurized milk…

I definitely do not miss milking (by hand) that old Jersey cow, but I sure do miss drinking and cooking with her fresh, whole, unpasteurized milk!
commented 2017-04-30 08:33:59 -0400
Jamie,
If you refer to the following link you’ll notice that retail sales of raw milk and raw milk cheese is legal in Washington State and likely one of the reasons British Columbians are heading south of the boarder.

https://www.farmtoconsumer.org/raw-milk-nation-interactive-map/

I’m not a proponent of supply management… However, that being said, conventional dairy farmers in the US are having a hard go of it… they’re dropping like flies.

My father was a proponent of that “get big or get out” way of thinking. Indeed, a way of thinking that was and still is influenced in large part by a government proclaimed, “improved efficiency doctrine” that promotes increasing the size of farm operations in order to become more efficient… And guess whom those “tax brakes, subsidy programs and trade policies that I mentioned above tend to cater to?

As I’ve queried the experts on a number of occasions… “How much more efficient can we realistically be expected to get and where does one draw the line without sacrificing food quality?”

More then ever and based on ongoing erratic farm gate prices that fail to keep pace with increasing input cost; especially in the province of Ontario where the current liberal government recently introduced Cap and Trade and a carbon tax that came into effect as of January,1st of this year.
If a dairy farmer makes the decision to remain small then they have little other option but to establish a reliable source of off farm income. Those farmers that have chosen not to subsidize the farm with off farm income have quit farming, hence the reason why dairy farms in my district have dwindled from over 35 to 6.
commented 2017-04-30 06:45:36 -0400
“I’ve been farming for over 57 years (dairy and beef) and when all is said and done I wouldn’t be on the farm today if it weren’t for off farm income.|

This is dairy country, KEN CONRAD. I dont know one dairy farmer who relies on off-farm income. Some wives have off-farm jobs, but then again, the spouses of plumbers and electricians and mill-workers do too.
commented 2017-04-30 03:29:38 -0400
Do some basic research people!… New Zealand prospered after eliminating marketing boards in 1991 and have a booming economy now from dairy exports… Canadian butter on the other hand is protected with tariffs of up to 299 per cent!… And yes Holly, British Columbians are STILL heading off to Lynden and Bellingham and Blaine to buy blocks of cheese and gallons of milk…. And why is that given that the Canadian dollar is heading back to “peso” status again under the Boy Blunder’s government?… Dairy products are still a bargain “across the line”…
commented 2017-04-30 01:21:27 -0400 · Flag
I’ve been farming for over 57 years (dairy and beef) and when all is said and done I wouldn’t be on the farm today if it weren’t for off farm income. Farmers across Canada and the United States rely heavily on off farm income in order to provide for themselves and their families… In essence, subsidizing the food that goes onto the consumer’s plate, a fact of life that many have become accustomed to.
http://www.wisfarmer.com/story/opinion/columnists/2017/04/26/sad-month-wisconsin-dairying/100913926/

The politicization of food production via government cheap food policies that primarily reveal themselves by way of tax brakes, subsidy programs and trade policies has resulted in a dilemma that no amount of supply management can prevent. In fact mandated supply management is merely another government appendage that the nanny state use to control the dairy industry…

What many fail to realize is that dairy farmers do not own the quota that is granted to them by way of the milk marketing board. Indeed, lending institutions steer away from taking quota as security for that very reason. The quota that a farmer owns represents a fee or contract if you will that he or she have to pay in order for the privileged to produce milk, which can be taken away at any time and at the marketing board’s discretion if the farmer fails to fulfill his or her end of the bargain.
commented 2017-04-29 23:52:21 -0400
Ross, in answer to your question, they buy their quota from another farmer who already has one. So the farmers with quotas, (that they inherited, received for a small or no amount a long time ago or that they bought from another farmer) have a valuable asset (the quota) that they can sell now or in the future.
commented 2017-04-29 23:38:53 -0400
Harper was starting to dismantle Supply Management in order to close his European Free Trade Deal. He said that the Gov’t was going to buy out licenses; I thought these lucky farmers are already rich because of these licenses, why give them more?

There are thousands of Gov’t employees managing Supply Management. When it ends , will they get laid off like Private Sector employees would ? Probably Trudeau will keep a building full of them.
commented 2017-04-29 22:39:44 -0400
It’s time. Just do it. Buy them out and just end it.
commented 2017-04-29 22:35:38 -0400
So somebody coughs up say a million dollars to,ourchae a quota. Who gets that money and what is it used for?
commented 2017-04-29 22:18:14 -0400
Many years ago some of my friends were trying to get into the dairy industry. They purchased farms, cattle and set up their businesses so that when they could finally purchase milk quota they would be ready to go. Sadly it was all for naught. The milk quota never came and most lost their dreams, at best in selling out or at worst in bankruptcy. In a free market system they might have been able to eek out a living doing what they wanted to do. With supply management they were doomed. Supply management condemns the family farm to oblivion. The only people who win are the corporate farms who want to keep the price of their product up so that their profits swell.
commented 2017-04-29 22:03:49 -0400
Now Holly has got me curious of her age. So she’s over 25. That is all I got.
commented 2017-04-29 21:47:19 -0400
They can’t phase out supply management overnight, there is simply to much money tied up in quota by farmers and banks. I am guessing a minimum of 10 years is needed to get rid of quota if the banks quit borrowing on quota immediately.
commented 2017-04-29 21:18:37 -0400
Great report Holly Nicholas. The government has a knack for decimating industries here in Canada. I echo Bill Elders comments.
commented 2017-04-29 20:49:08 -0400
Anyone who has travelled outside Canada discovers immediately upon entering a grocery store, that Canadians are not paying food prices which reflect the true cost of production – Soviet commissariat styled supply control systems create false market rices by controlling /restricting supply. In a nation this wealthy in Agri-resources , there is no reason a family food bill should take a sizable chunk of a paycheck. Eggs, dairy, bread, chicken, pork and beef are plentiful in supply and most operations run at far less capacity due to quotas, making prices artificially high.

Similarly, a producer should not be taxed so severely that they cannot make profit if commodities sold at their true market value. Free our farmers from restrictive taxation and make basic food items affordable
commented 2017-04-29 20:48:44 -0400
One of Trumps better attributes is the fact that, like 90% of Canadians, He hates Justin Trudeau.

Politicians should stay away from Farms, Especially Notley. I wonder how much money Unions make, from Unionized Farm Workers.