Although I grew up in Saskatchewan, I really know very little about agriculture. My uncles and aunts were mostly farmers in the Melville/Goodeve districts of East Central, Saskatchewan and I have fond memories of familial visits and occasionally helping out with the harvest once I was old enough to drive a grain truck.
Farming has certainly changed in the last 30 years or so. A recent trip to the farm of Red Deer MP Earl Dreeshan reinforced for me that in order to survive, farms have gotten bigger and equipment more expensive. It is big business, modern but still reliant on uncontrollable factors such as weather and markets and therefore extremely risky.
As I stood yesterday at the Walde farm just south of Kindersley, Saskatchewan to celebrate Grain Marketing Freedom Day, I was struck by just how momentous this rural moment was. Western Canadian Grain farmers now have options—if they choose to, they can still sell their grain through the Canadian Wheat Board. However, if they wish to sell their wheat or barley directly to a mill or carry it across the border, they now have the liberty to do so. I believe in free markets and although I do not represent a single grain farmer, I am pleased that western grain farmers are no longer facing a monopsony.
Although western grain farmers were disadvantaged by the former monopsonist single desk at the CWB, it is quite the opposite for dairy, egg and poultry suppliers who are shielded from competition by the monopsonist supply management boards. Farmers, currently holding a quota costing, in the case of dairy: $28,000 per cow, enjoy tariff protection ranging from 168% for eggs to almost 300% for butter. The high tariff discourages external competition, while the quota prevents domestic competition.
As indicated, I know little about agriculture, but I have a reasonably good understanding of economics. Controlling (in fact reducing) supply invariably increases price. Good for producers; terrible for consumers. Worse, this market distortion is regressive. Lower income Canadians allocate a higher percentage of their incomes on food necessities (milk, eggs, cheese, chickens) than do middle and higher income consumers. Low- income Canadians spend 20% of their income in grocery stores, whereas upper income groups spend less than 5%. Economists have calculated that Canadians pay 38% more for milk than US consumers and if your family consumes 4 liters/week, that equals $300 per year.
A market economist would consider a system that limits competition and fixes prices to the detriment of the consumer a cartel; however, when the legislation creating the supply management boards was created, Parliament specifically excluded them from the operation of the “Competition Act”. The supply management system therefore results in a legal transfer of income from millions of Canadian consumers, who pay higher prices for regulated food products, to less than twenty thousand domestic farmers.
It is difficult to justify maintaining a sector of our economy that is protected from competition thanks to a government-sanctioned system that restricts supply to ensure a higher price. There are 34 Million Canadian consumers but less than 14,000 dairy farmers, 3,000 poultry producers and 1,000 egg farmers.
Possible entry into the Trans-Pacific Partnership is going to necessitate a critical examination of supply management. I do not represent any of the 14,000 dairy farmers who benefit from supply management; I do, however, represent 140,000 consumers of their artificially priced milk. Their interest also necessitates a critical review.
As the grain farmers near Kindersley can attest, grain and beef farmers in Western Canada have proven that they can successfully compete without a government-sanctioned cartel.