A Canadian system that works! - From the Cluttered Desk with Keith Roulston

With prodding from U.S. President Donald Trump, supply management, the system under which many of our farmers in rural Ontario farm, is once again under the spotlight.

 

Trump recently complained against supply management that prevents imports from the U.S. and other foreign markets from undercutting dairy, chicken, turkey and egg producers.

 

A free-market system had dominated Canada until the supply management system began in 1970. It’s a system that has always been controversial. I remember those days. I had grown up on a typical small farm back then that shipped cream to the local butter factory, fed the skimmed milk to pigs, which we sold, kept a few chickens that were sold to the local butcher and sold some beef cattle on the market. In no case did we sell enough of anything to qualify for quota, so we were shut out of the supply management system, left to either sell beef or pork and grow crops.

 

But the farmers who did qualify under supply management succeeded. There was such a secure market for their products that they gained money if they sold their quota to larger, consolidating farmers. The value of that quota, the right to produce up to a certain level to meet the demand for milk, eggs, chicken or turkey, kept increasing. Today, dairy quota costs from $26,000 to $32,000 per cow. 

 

Beef, pork and crop farmers often resented these protected commodities, but few wanted to give up the potential of foreign buyers for a secure portion of the domestic market.

 

That’s what supply-managed farmers gave up. In 2023 Canada exported $296.3 million in dairy products to the U.S. but, under regulations given up as part of the current Canada-United States-Mexico Agreement (CUSMA), we imported $1 billion.

 

The idea of a managed market has always bothered consumers, to the point that, every few years, supply management comes under attack from urban-based media and the public that somehow regards it as something a little crooked.

 

But consumers also don’t like the idea of “farm factories” that produce food. Supply management allows the average Canadian dairy farmer to have 100 cows. U.S. dairy farmers have hundreds or thousands of cows.

 

On the egg production side of things, the State of Iowa, with only 3.2 million population, has 58 million hens that produce 17.1 billion eggs. Ohio has 36 million hens producing 10.7 billion eggs. Ontario, by comparison, with a population of 16 million people has 40 per cent of Canada’s egg production with 430 egg farms producing only 200 million dozen eggs.

 

The U.S. has been experiencing the worst effects of this concentration of egg production recently. Bird flu has invaded these large chicken barns and since the way to fight the disease is to wipe out all the chickens in the barn, egg production has nose-dived. Prices, on the other hand, have soared with eggs reaching up to $9 a dozen in some stores. One U.S. restaurant chain has begun charging 50 cents per egg for any recipe that includes eggs. Canadian consumers, usually envious of their American neighbours, meanwhile are paying $5 a dozen.     It remains to be seen what the effect of bird flu will have on U.S. dairy prices. Cows and dairy workers have been coming down with bird flu with dairy production reduced, but not as dramatically as in egg production. But U.S. dairy farms are so large they employ large numbers of paid workers, many of them the immigrants Donald Trump has promised to exile.

 

The Canadian quota system, meanwhile, continues to work as it was designed to work 55 years ago. Canadians have a reliable supply of supply-managed commodities and farmers have protection against foreign  imports, but also guarantees we won’t be trying to steal anybody else’s market in the U.S. or Europe with exports.

 

But will the system endure? President Trump’s complaints feed into a natural distrust of supply management by urban media. Ironically, this media is also being undermined by huge online competitors from abroad who are making our newspapers weaker every day.

 

That’s a problem for supply management, too. The system only exists in Canada and Canadians have a suspicion that only a system that’s used internationally is acceptable.

 

Living in rural Ontario, I have watched for more than half a century as supply management has given greater stability to milk, egg, chicken and turkey producers. There have been some farms lost, allowing other farms to get bigger, yet sons and daughters have been able to take over their parents’ operations with a sense of security. At the same time we see fewer farms with hundreds of cows.

 

Ignore Donald Trump. Our system works.