Home   News

Ag economist calls for an end to supply management

Ag economist calls for an end to supply management

Supply management can cause issues during trade discussions, according to Danny Le Roy

By Diego Flammini
News Reporter

A Canadian marketing system designed to ensure dairy and poultry farmers are profitable should be dropped, according to an agricultural economist from the University of Lethbridge.

Supply management does not protect Canadian producers from foreign competition, but rather protects them from Canadian consumers who may want to buy imported dairy and poultry, according to Danny Le Roy.

Danny Le Roy

The system also ties up a lot of financial assets, he said.

“All things being equal, it’s difficult for producers in Canada to compete with producers around the world who don’t have this obligation to purchase the right to produce,” he told today. “In terms of improving the competitiveness of Canadian producers, if they did not have this obligation, they could re-direct those financial resources in other productive ways.”

Supply management has come up many times during the current NAFTA negotiations.

Canadian representatives have continually defended supply management, calling it a “non-starter and non-negotiable item” during the trilateral discussions.

And that hardline stance on supply management can be problematic, Le Roy said.

“When the trade negotiator for the federal government is in a position to try and increase access to markets while at the same time denying access to our own, it’s a difficult trade position to be in,” he said.

“At one point, dairy producers in Canada were considered the most important on the planet. Now we have this system in place that makes satisfying the wants of anybody outside of our geopolitical jurisdiction essentially zero.”

Many dairy producers may challenge Le Roy’s position and highlight the benefits of a supply managed system.

In addition to minimizing the risk of overproduction, supply management helps keep prices stable and helps producers adjust milk production to meet consumer demand, according to Dairy Farmers of Canada.

Supply management is fair for consumers and producers, according to Thérèse Beaulieu, assistant director, communications and policy, Dairy Farmers of Canada.

"Supply management has never prevented Canada from entering into a trade agreement – and Canada already allows significant access to the dairy market," she said in an emailed statement today. 

"Canadian dairy farmers derive our profits directly from the market, at a fair price, which takes into account our costs of production and other factors. For consumers, retail prices of dairy products are currently in line with that of other jurisdictions. Meanwhile, unlike the market-based solution employed in Canada, the U.S. government provides generous support to its agriculture and dairy industries."