The Globe and Mail has uncovered a wide-ranging conspiracy to inflate food prices, a dastardly scheme that has driven up the costs of basic groceries even as inflation pinches household budgets. Even worse, this plot has existed for decades, enriching the conspirators at the expense of Canadian families, year upon year.
We speak, of course, of agriculture supply management and its “marketing boards” whose aims are not so much about marketing as they are to constrain supply, to dampen innovation and competition – and to keep prices elevated.
There have been lots of conspiracy theories swirling around of late about what is behind the increase in food prices, which have outpaced the general rate of inflation. The leader of the NDP, for instance, remains convinced, without citing anything approaching solid proof, that corporate greed – so-called greed-flation – is the culprit.
The House of Commons agriculture committee is busily digging into the issue, calling grocery industry executives in for a grilling in December. Absent from the invitee list was anyone from, say, the Canadian Dairy Commission, who might be able to give a detailed explanation to Canadians as to why it felt the need to raise its benchmark price three times in 12 months.
Politicians of all partisan stripes are quite studiously averting their attention from any scrutiny of supply management. It’s unsurprising but still disappointing that no party is willing to challenge the entrenched interests of farmers benefiting from supply management.
The media, too, is myopic for the most part, as evidenced by the recent ruffled feathers over eye-popping prices for chicken. A host of possible reasons were cited, price-gouging chief among them. Nowhere was there a mention of the supply management system that props up poultry prices.
But a stroll through recent inflation statistics reveals some interesting patterns. The price of fresh or frozen chicken purchased in stores, for one example, rose 10.8 per cent last year through to December, slightly higher than the overall inflation rate of food purchased in stores, 10.6 per cent. Dairy product prices in stores rose even more, jumping 11.8 per cent. Egg prices rose 19 per cent. All of those supply-managed foods outpaced the general rise in inflation of 6.9 per cent for that time period.
By contrast, pork prices actually fell slightly over the first 11 months of last year. That’s not just a matter of timing.
Pork prices also have not kept pace with inflation since the disruptive arrival of the pandemic in early 2020. Egg prices, meanwhile, have risen by more than double the general inflation rate over that same span.
It doesn’t necessarily follow that egg producers, and other farmers protected by supply management, are pocketing those benefits. The cost of energy and fertilizer has risen. Transportation costs will always be an added expense in a country as far-flung as Canada. And it is certainly possible that some grocers are acting opportunistically to jack up some retail prices.
What is certain is that supply management is playing some sort of a role, and that the Commons agriculture committee should scrutinize that role as part of its inquiry into food inflation. How, for instance, did the dairy marketing board (run by and for dairy farmers) calculate its increase, including an extraordinary emergency rise last fall?
Sylvain Charlebois, director of the agri-food analytics lab at Dalhousie University, argues that the decisions of the dairy board, among others, should be spelled out in detail for the public. Prof. Charlebois contends that governance needs to be changed as well, ending the spectacle of the dairy industry deciding how consumers can best benefit the dairy industry.
There should be a broader debate about the benefits of supply management. As a policy to keep the family farm intact, supply management has been a notable failure. Still, without some sort of market restrictions, the dairy industry, at the very least, would be unlikely to hold out against U.S. competitors with lower energy costs and greater economies of scale. Prof. Charlebois and others believe that the system can be reformed, with greater – but still circumscribed – exposure to competition that would spur more innovation.
It may be that Canadians, fully informed, will agree that the benefits of supply management outweigh the costs. But that overdue debate needs to start with the recognition that Canadian consumers pay that bill.