Agriculture Minister Gerry Ritz says he’s all about putting “farmers first.”
At first blush, this sounds like a pretty reasonable motto for an ag minister raised on a Saskatchewan farm. Who doesn’t like farmers, after all? They do tough, essential work that feeds us all.
The catch is that “farmers first” often implies “consumers last.” And what Mr. Ritz really means is that some farmers come first, but not all farmers.
As the Harper government pushes ahead with long-promised legislation to overhaul the Canadian Wheat Board, Ottawa’s incoherent and intellectually dishonest farm policy is now on full display.
The government is stripping the wheat board of its grain-marketing monopoly on the grounds that farmers deserve free and open markets, like their brethren in potatoes, cattle, fruits and vegetables. Mr. Ritz insists farmers should choose how they market their products so they can “attract investment, encourage innovation and create value-added jobs.”
But that doesn’t apply to dairy, egg, chicken and turkey farmers. These farmers operate in a hermetically sealed regime marked by tight central control of production, the near-total exclusion of imports, and higher prices for everyone.
And the government has made it quite clear that’s the way it should be. Prime Minister Stephen Harper says he’s ready to defend the so-called supply management system, now and forever.
Beyond history, it’s hard to figure out what makes a dairy farmer so different from a cattle rancher or an apple grower. If open markets are so clearly in the best interests of grain farmers in Western Canada, why aren’t they also good for the dairy farmers of Quebec and Ontario?
The answer, of course, is politics in a country where rural areas are still overly represented in the House of Commons. Supply management has become a proxy for rural entitlement and protection of family farms – a message that helped the Conservatives to a sweep outside the major cities in Southern Ontario in the May election. And by retaining the regime, Mr. Harper presumably calculates he will keep those seats four years from now.
There is no sound economic or policy rationale for keeping supply management. The government is sacrificing the interests of 34 million Canadians for the sake of fewer than 15,000 dairy and poultry farmers.
For a government that claims to put the economy first, the farm-vote calculation is cynical.
Supply management is “a blight on the economic landscape and totally unjustifiable in a world of skyrocketing global dairy prices,” the Organization for Economic Co-operation and Development concluded in its 2008 review of the Canadian economy.
Every year the distortions caused by the system grow larger. Canadians may not realize it when they go to the grocery store, but they’re paying twice the world average for dairy products – and up to three times what Americans pay. That’s a hidden $3-billion a year tax on all of us.
Roughly half the money flows back to dairy farmers, making them richer than other farmers, who work just as hard. Bloated government agencies and marketing boards soak up a significant chunk of the rest.
That’s only part of the cost to consumers. Because Canada must restrict imports to maintain this closed system, our trading partners block the sale of certain Canadian products in their markets. Canada has been shunned from ongoing talks toward a regional Asia-Pacific trade pact because Ottawa won’t budge on supply management.
The OECD also pointed out that supply management hits the poor the hardest because they spend proportionately more on food than other Canadians.
Nor is supply management saving the family farm. Indeed, the system keeps young farmers out of the business by creating prohibitive barriers to entry. When the supply-management system was started in the early 1970s, farmers were allocated free production quotas. If you want to buy a cow and sell milk now, it will cost you an average of $26,000 per cow to buy quota. A typical dairy farm could have $2-million or more needlessly tied up in production quotas.
In all, Canadian farmers have $28-billion of their assets invested in supply management quotas, representing 2 per cent of the country’s gross domestic product. And every year an average of more than 2,500 farms disappear as small operations give way to fewer, larger, factory farms.
Forget all the economic distortions and the steep consumer price. Supply management goes against the Conservative government’s own clearly articulated free-market farm principles and vigorous defence of property rights.
Mr. Harper and Mr. Ritz readily acknowledge that free markets drive innovation, spur investment and create value-added jobs. Yet they are ready to go to the wall to defend a Soviet-style system for some farmers that does just the opposite.