By Connor Lynch
OTTAWA — A report from two former heavyweights of Canada’s international trade concluded that our supply management system has protected farmers from market volatility without costing consumers more for their bag of milk or wheel of cheese.
The report was released last month by Export Action Global, an Ottawa-based market consultation firm started last year by a former Harper-era trade advisor, Adam Taylor, and a former advisor with Canada Border Services, Fion Anastassiades.
Dairy farmers have been significant economic drivers in their communities across the country, said the report. In 2016, the dairy sector ranked third in net farm receipts across Canada, after grains/oilseeds and red meats. The argument is often made against supply management by pointing to other regions where the quota system has been abandoned, such as Australia, New Zealand, and the European Union (EU).
But in Australia since deregulation, prices for the consumer have held steady but farmgate prices have been turbulent and well below the spike they saw seven years after full deregulation. New Zealand has been a stronger example, but milk prices there, despite being on par with most jurisdictions, were found to be, on average, higher than Canadian dairy prices. Further weakening the argument for deregulation was the noted dominance of New Zealand’s Fonterra Co-op, which distributes part of its revenues back to its farmer members. As of 2016, the co-op had 10,500 members. New Zealand, as of 2014, had 11,927 dairy herds.
Even the EU, which ended its quota system in 2015, has struggled since losing its supply controls. The EU Commission regularly buys cheese and skim milk powder from farmers. As of 2017, it had 380,000 tonnes of skim milk powder stocked, over three times the entire production of skim milk powder in Canada in 2016.
“The stability our system provides in fact has protected our farmers from the inherent volatility in global markets, especially for countries that have chosen to export,” Taylor said. “Our data show that currently, we’re on par with other countries (for retail price of milk), in some cases a bit higher, others a bit lower, including our American counterparts.”
According to the report, Canada’s fluid milk price in 2017 was $1.50 per litre. The cheapest place to buy milk in the world was Poland, at Cdn $0.88 per litre. Most expensive was Norway, at Cdn $2.74. Australia and New Zealand both had higher prices than Canada, whereas regular U.S. milk and fluid milk in Great Britain and Germany were cheaper than in Canada. Hormone-free milk, the only kind available in Canada, is cheaper here than in the U.S.
“After careful consideration of the data, we would argue the status quo in Canada is better for all key stakeholders, including farmers, governments, consumers and taxpayers,” the report concluded.
