Supply management is milking Canadians dry

OPINION: COVID-19 gave farmers a chance to tout the benefits of domestic food production. Instead, they raised prices more than ever
By Matt Gurney - Published on Nov 29, 2021
The Canadian Dairy Commission has announced that next year it will up the price paid to farmers for milk by 8.4 per cent. (Daniel Balakov/iStock)

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We have to be careful to avoid the temptation to blame all our problems on COVID-19. God knows COVID-19 hasn’t helped, but a lot of the challenges we face today and will face tomorrow pre-date the pandemic. 

One example is food insecurity. Even before the pandemic, millions of Canadians, including a depressing number of children, faced long-term challenges affording the most basic and essential necessities of life. Food banks and some targeted government programs tried to make up the difference. But it was a serious problem.

The pandemic had an interesting effect on that: it was economically devastating to many and disrupted supply chains — remember the great yeast shortage? — but emergency government programs helped partially offset much of the impact. Indeed, the recent “Hunger Count,” an annual report by Food Banks Canada, found that some of the government supports actually made food easier to obtain for some Canadians, at least for a time. That’s going to be something we need to take a long, hard look at when this is all over.

But those supports have largely ended. The pandemic grinds on — oh, hello there, Omicron — and now, for a lot of complicated reasons, high inflation is rearing its ugly head again after a 40-year absence. Indeed, inflation is hitting food particularly hard. The last available numbers from the Consumer Price Index, which we use to track inflation, put it at 4.7 per cent. That’s much, much higher than the target of 2 per cent. It also understates how serious this can be for economically vulnerable families. If you face food insecurity or are right on the brink of it, an annualized 5-ish per cent inflation rate for thousands of goods and services isn’t good, but 10 or even 20 per cent inflation in food staples could prove catastrophic for you and your family.

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This is an admittedly long-winded way of getting around to the topic of supply management in Canada, but it was important to set up the context above. Canada is an agriculturally rich country. We produce an enormous amount of food and export much of it. We have excellent agricultural land, and our farming sector is high-tech and efficient. No one should go hungry in this country. It’s absurd.

But, for a lot of reasons, that continues to happen. Canada’s supply-management system for dairy, eggs, and poultry is not to blame for food insecurity or inflation. It does, though, warrant scrutiny and criticism.

There are two general schools of thought on supply management in this country. One is what we can somewhat vaguely describe as the pure free-market conception of it: in this framework, supply management, in which the government has erected regulatory barriers to protect domestic production by freezing out foreign competition, limiting new entrants to the market domestically, and guaranteeing high prices for the goods, is an indefensible interference with the free market, a betrayal of Canada’s professed free-market ideals, and a dangerous sign of the malign political influence a powerful corporate special-interest lobby has over our federal politics. Perhaps worst of all, by keeping prices artificially high, supply management effectively functions as a food tax on the most vulnerable. Milk, butter, cheese, eggs — these are not luxury items. These are absolutely essential food items, and they are particularly vital for growing children. Making them more expensive is frankly immoral.

This is, dear reader, basically where I stand on the issue, for what it’s worth.

There is, in fairness, another way of looking at this. Supply management, for all its problems, has one undeniably beneficial effect: it keeps some essential production of the most strategically vital commodity of all — food — in Canada, in Canadian hands. One does not need to have read too many history books to understand the strategic value of a stable, domestically available food supply, particularly in times of crisis. Anyone who has read those few books will certainly also be aware of the opposite: how dangerous it is to not have the ability to feed your own population. From cities besieged in antiquity right through to the attempt in two world wars to use warships and submarines to starve enemies into submission, food security is an awfully big deal, and we have forgotten this only because of how blessed a country Canada has long been. 

The above argument in favour of supply management is admittedly a grim and extreme one. But could you imagine a better time to make it? Early in the pandemic, before we knew how serious it would be, one of the first things I wanted to learn about is where Canada sourced its vital supplies and where the inputs needed to produce essential goods at home came from. To my immense dismay, I rapidly discovered that our globalized just-in-time food-production and -distribution systems had become so complicated and intricate, but also so efficient, that no one seemed to really understand them. If you needed more of something, you ordered it, and it arrived. I recall one conversation with a senior official at a Canadian agricultural organization who confessed to me candidly and with some embarrassment that the organization did not really know where its membership sourced incredibly basic things like essential chemicals or spare parts for mechanized equipment. Since they had never had to worry about their accessibility or availability before, they never had. 

The pandemic, thank God, did not disrupt Canada’s supply chains for most essential products. But our supply-chain difficulties, if anything, are only getting worse. They were getting worse before British Columbia was subjected to a series of vicious storms that have partially isolated the Port of Vancouver, our busiest port (and it’s not even close — sorry, Montreal). If ever there was a time to make the case, as a kind of strategic insurance policy, for some protected Canadian production of basic foodstuffs, this would be it.

But has anyone? Have you seen this anywhere? I’ve been looking and poking around. I haven’t caught a whiff of this.

In fact, all I’ve seen is the Canadian Dairy Commission deciding to raise the price that every last one of us, from the rich right down to those living under grinding poverty in food insecurity, is going to pay for our dairy.

I am not unsympathetic to the plight of Canadian dairy farmers. Inflation is hitting them, too. The costs of all their inputs are going up. In B.C., many have lost at least some of their herd to the ongoing disaster. I’m not asking them to go bankrupt to prove a point about supply-chain resiliency.

This could have been an opportunity to step forward and make the case for why Canadian domestic production of food is worth paying a little bit extra for. Instead, the public has simply been informed that we are going to hand over more of our bucks for a block of fairly bland cheese or a cool, refreshing glass of milk, and if we don’t like it, there is absolutely zero we can do about it. Unless you live close enough to the United States to go do a Costco run and load up on milk and eggs, you’re just gonna have to pay more. And if you’re already living on the brink of financial ruin, tough luck. Have some butter.

This is a third rail in Canadian politics. Both the Liberals and Conservatives are completely enthralled with big dairy, enough so that former Conservative leader Andrew Scheer openly joked about it by chugging a carton of milk behind a lectern. Haha, great! I like jokes, too! But the concentration of our dairy industry in a small handful of ridings in Quebec and Ontario gives those producers more political power than the millions of Canadians who are going to have to start making painful, impossible choices with every trip to the grocery store. What is good for the farmers in Aylmer is simply not automatically good for the rest of us. Indeed, sometimes, what’s good for them is bad for us!

And the farmers and their lobbyists, despite being perhaps the most powerful lobbying organization in this country, aren’t even trying to make the case for why it should be any different. They don’t need to. They know they have the politicians in the bag. The rest of us are just gonna have to keep paying our food tax. I sincerely hope, for your sake, dear reader, that you can afford it.

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