When supply management was introduced half a century ago, there were more than 145,000 dairy producers in Canada. Today, there are approximately 9,000 dairy farms left.DARRYL DYCK/The Canadian Press
John Manley was minister of finance in the Chrétien government and Eddie Goldenberg was chief of staff to the prime minister. Mr. Manley is now a senior adviser at Bennett Jones LLP, where Mr. Goldenberg is a partner.
Canadians have been frustrated by higher prices over the past four years, and they expect their government to do something. The increases in the price of groceries in particular have hit a lot of Canadians hard. Many of the increased prices have been caused by general worldwide inflationary pressures and particularly by supply chain disruptions or are weather-related. There is really little if anything that any government can do about those price increases.
The idea of a code of conduct for grocers that the federal government is pushing may help some food suppliers but could also raise prices for consumers. The Conservative Opposition Leader’s fixation with the consumer carbon levy as the source of all evil including food inflation is nonsensical. The position of the New Democratic Party that the problem is simply increased profits of big companies makes good rhetoric but is not supported by Statistics Canada analysis of grocers’ margins on products they sell.
However, what makes no sense at all is that all three major political parties are unable to escape the tentacles of a lobby that represents 9,000 dairy farmers and keeps food prices higher than they need to be for 40 million Canadian consumers.
Even simple politics should drive at least one party to come to the aid of the embattled consumer because there is something that can be done that will reduce the prices Canadians pay for dairy and poultry products, including milk, butter, cheese, eggs and chicken. That something is the abolition of supply management.
Instead of moving to lower food prices, a private member’s bill was passed in the House of Commons with the support of all parties that would keep consumer prices high by precluding Canadian negotiators in the future from engaging in any negotiation with any other country over supply management. Not only is it bad consumer policy, but it would inevitably lead to Canada being forced to make damaging concessions in other areas to protect supply management in the 2026 review of the United States-Mexico-Canada Agreement (USMCA). The private member’s bill is now before the Senate. The Senate should reject it and send it back to the House of Commons for reconsideration.
In 2023, general food prices in Canada increased by 7.8 per cent year-over-year. However, because of supply management, the government itself mandated a 23.7-per-cent increase in the cost of chicken, more than 13 per cent in the cost of milk, and over two years more than 22 per cent in the cost of eggs, Senator Peter Harder told the Senate in a speech in April. In order to compensate farmers as a result of the slight easing of supply management in two recent trade agreements, in addition to protectionist tariffs, the government today forks over billions of taxpayer dollars annually in direct payments to producers despite the fact that cash receipts for producers and actual milk production by Canadian farmers actually increased substantially after both deals came into effect. All of this ensures that cash-strapped Canadian consumers pay much more than they should be paying for essential foods.
When supply management was introduced half a century ago, there were more than 145,000 dairy producers in Canada. Today, there are approximately 9,000 dairy farms left. The elimination of supply management will reduce prices now paid by 40 million Canadian consumers for all these products.
Australia and New Zealand both had supply management policies analogous to what we have in Canada. Both countries eliminated supply management approximately 25 years ago. Consumer prices were reduced immediately and, to compensate for the elimination of government protection, dairy and poultry farmers received generous compensation over a transitional period of a number of years.
Abolishing the tariffs and subsidies did not destroy their industries. On the contrary. Today, after having done away with tariffs and subsidies, the dairy industry is New Zealand’s biggest export industry. Australia lowered consumer prices and its industry today is one of the most efficient and dynamic in the world. So much so that major Canadian processors have set up shop there, to serve global markets that are closed to them from Canada.
Canadian dairy and poultry farmers are just as good as Australians and New Zealanders and, with appropriate compensation for the abolition of supply management, will have every reason to prosper while consumers will be much better off than they are today.
It is time for the government to move boldly to do the one thing in its power to reduce prices of essential products in the grocery stores.