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The attack on supply management

Posted on April 21, 2010 at 11:26 PM

It’s amazing to listen to some of the arguments about why supply management should be ended:

 

- Consumers would benefit from cheaper dairy, egg, and poultry prices

- Food companies would benefit from cheaper ingredient prices

- Imports of low priced dairy, egg, and poultry products would increase

- Domestic production would expand

- Exports would increase

 

When has it become a farmer’s mandate to feed the world for free?

 

We all put in a day’s worth of work and expect an honest wage in return. Why should a farmer be any different? A farmer’s cost keeps going up but his gross income stays the same. Supply management helps to guarantee a fair return for his work and investment. Something we all think we are entitled to.

 

More supply of milk, eggs, and chicken would lower the cost at the grocery store, allowing low-income consumers a greater chance of being able to afford these staples. But what about farmers? They pay the same prices at the grocery store as everyone else but their incomes are on the decline. Costs to produce food are going up but they are expected to sell their production for less and less just so urban people don’t have to spend so much of their income on food.

 

Yes, supply management limits domestic production but is that necessarily a bad thing? Just look at the hog and beef industries.

 

Production was pushed – raise more hogs! Raise more beef! Exports became the main focus of the industries. Until the collapse of the US economy. Until two disease outbreaks – one human related, one animal related. Doors slammed shut all around the world and have seemed to virtually rust over. Our exports were replaced by supplies from other countries. It has been, and will continue to be, a very slow and arduous task to pry open those rusty hinges. Producers are being forced out of the industry, selling their stock at prices below break-even prices because they cannot afford to lose any more money. They have given up on the “better times coming in a few years”.

 

Large-scale feedlots and hog barns have come under a lot of pressure from environmental groups and animal welfare groups. Hog manure is polluting our water systems. Cows are polluting the air with their methane burps. Dairy cows, chickens and turkeys are all raised in barns. For domestic production to be competitive with the low world prices, these barns will have to be very large with thousands of animals in them. What happens to all this extra manure and methane? And where do all these new barns go? Manitoba has a moratorium on new hog barns. Are they suddenly going to allow chickens and dairy cows?

 

The world is currently swimming in low priced milk, eggs and poultry. European farmers dumped truckloads of milk on the ground last fall in protest of low prices and to demand government support. US dairy farmers initiated a herd cull program to try to reduce the amount of milk produced to limit supply and increase prices so they have a chance of survival. Our Canadian producers have weathered the recession relatively well and have not had to stand in line with their hats out.

 

The documentary, Food Inc., bemoans the prevalence of large-scale factory farms in American agriculture. Large corporations own barns of chickens and turkeys where each bird is little more than a dollar sign. Humanity is checked at the door. American agriculture has been moving more and more to large factory farms because of low prices. Economies of scale dictate that big is the only viable option. Yes, there are still some small family farms. But they have had to turn more and more to small niche markets where they can demand a higher price. And that market is limited, in size and geographically, so only a few players can be supported.

 

In Canada, dairy and poultry operations are still predominately family-run operations. There has not been the need for corporate investment to keep the farm afloat. But that will change without the price support of supply management.

 

And if anyone thinks that an unmanaged industry would mean more family farms in dairy and poultry, they need to get their head out of their ass. The dependence on export markets have resulted in more and more hog barns being vertically integrated with feed and food processing companies. Those barns tightly connected to the food processing companies are the ones that will survive in the years to come at a greater rate than the family-owned hog barn. A farmer’s pockets are not deep enough to outrun too many bad years.

 

Consumers need to compensate farmers a fair value for their production. Either that or government’s have to be willing to provide effective support to farmers. The alternative is for the world market to supply all our food. And not complain about questionable quality or production practices.

 

Car manufacturers would not sell a car below the cost of production. And they will still receive millions of dollars in bail-out money. Farmers should not be forced to sell their production at prices below their costs without support. It is consumers’ choice then – support farmers through higher prices at the grocery store or support farmers through higher taxes to cover support programs. Or, forget about the local farmer and “Made in Canada” products, about the 100 mile diet and eating local. Support, instead, some farmer half way around the world who will probably never come to your town or city and spend money.

 

Right now, everyone wants access to the Canadian market because prices are higher than world prices. What happens when the doors are opened and the welcome mat put out? Prices will plummet and then we will all be back to square one – world-wide over production and too-low prices.

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