The Conservative Party of Canada should be a happy home for believers in free trade, competition and less regulation.
But it’s not – at least when it comes to open talk about the merits of the supply-management regime in the dairy and poultry sectors.
Just look at the mayhem at the party’s recent convention in Halifax, where insiders and dairy lobbyists worked furiously behind the scenes to quash debate on the subject. Frustrated delegates accused the party of dodging and stalling to make sure a motion committing the party to get rid of steep dairy tariffs never reached the floor.
And that’s remarkable, because by any objective measure, supply management is the antithesis of what conservatives should stand for. The system is an anomaly – a relic of Soviet-style economics, where regulators calibrate supply and demand by deciding who can produce what, where and at what price. The system depends on a near-impenetrable wall of tariffs and quotas to shield this artificial construct from global markets and keep domestic prices dependably high. And the system exists only for dairy, chicken and egg farmers. Producers of beef, pork, grain, fruit or vegetables are left to deal with the vagaries of the free market.
The consequences are also distinctly unconservative. These include higher prices for consumers ($600 a year for the average family), stifled competition, lower productivity and severely limited export opportunities for farmers and processors.
Conservative Leader Andrew Scheer’s staunch defense of supply management is all the more awkward with Canada’s dairy and poultry tariffs in U.S. President Donald Trump’s cross-hairs in the renegotiation of the North American free-trade agreement.
In his speech at the convention, Mr. Scheer attacked Prime Minister Justin Trudeau, saying “Canada’s international trading prospects have never looked more grim” as they do under Liberal management.
But he completely ducked the obvious conflict between his unequivocal defense of supply management and the tariff concessions the United States wants in a NAFTA deal.
Mr. Scheer also lashed out at MP and anti-supply-management crusader Maxime Bernier, who recently quit the Progressive Conservatives to form his own party. On his way out the door, Mr. Bernier responded with a shot of his own: “I still cannot understand how a party that is supposed to defend free markets supports a small cartel that artificially increases the price of milk, chicken and eggs for millions of Canadians.”
So just how does Mr. Scheer finesse the obvious contradiction between his position on supply management and the party’s free-market ideals?
Mr. Scheer insists he is being true to conservative values by standing up for Canadian farmers. “It is a conservative principle to protect our businesses, our family farms, to ensure that our small towns can have economic growth,” he told reporter Jöel-Denis Bellavance of La Presse.
It’s a dubious argument. Supply management has done little to save the family farm. The number of dairy farms in Canada had shrunk to fewer than 11,000 in 2017, down from 145,000 in the 1970s, when the system was put in place. Every year, another 500 or so farms disappear. U.S. dairy farms have experienced a similar pace of rationalization.
The inescapable conclusion is that Mr. Scheer’s defence of supply management is not about economics, in small towns or anywhere else. It’s about small-town politics. Half the country’s dairy farms are in Quebec; another third are in Ontario. Mr. Scheer narrowly won the party leadership against Mr. Bernier last year, in part by recruiting new party members in rural Quebec.
Mr. Scheer will need all of those supporters and more if the Conservatives hope to make inroads in Quebec, where the party has just a dozen seats, but clearly covets more.
Before he and the Conservatives get that chance, however, supply management’s fate could be bargained away at the NAFTA negotiating table.
Mr. Scheer and his friends in the dairy industry risk finding themselves on the wrong side of history.