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Exorbitant Dairy and Poultry Prices: Who’s Protecting Canadian Consumers?

Montreal Gazette - August 29, 2014

Ottawa Citizen - August 30, 2014

Huffington Post - September 4, 2014

Victoria Times-Colonist - September 5, 2014

By Colin Kenny

Stephen Harper is known as a free market enthusiast who believes that unfettered competition is vital to any country’s economic well being. Yet the federal government continues to force Canadian families to squander in excess of $275 per family per year to protect the lucrative Canadian dairy and poultry industries.

What gives?

Sometime early in 2015 the prime minister will introduce a budget that will lower Canadians’ income taxes. Tax reduction is a cynical, long-standing pre-election trick that works. Voters love tax breaks. But they obviously come at a cost – reduction in government services, often in areas where they are badly needed, like protection of the environment and assistance for the poor.

The Canadian government has been busily whittling away at these services in recent years so it can serve up its tax-break treat for voters in the coming election.

But if Harper simply followed his mantra – that open competition is great for the development of efficient industries and great for consumers alike – he could hand the average Canadian family $275 without cutting important government services.

How badly are Canadian consumers being gouged? Based on data from Statistics Canada and the United States Department of Labor, here’s a comparison for June (in Canadian dollars) with what U.S. consumers pay under the American free market system:

Chicken: Canada $3.22 lb., U.S. $1.64 lb.

Dozen eggs: Canada $3.27, U.S. $2.14

Litre of milk: Canada $2.47, U.S. $1.05

Processed cheese: Canada $5.10 lb., U.S. $4.83 lb.

Butter: Canada $4.51 lb.; U.S. $2.74 lb.

We Canadians pay 96 percent more for chickens, 50 per cent more for eggs, 142 percent more for milk, 27 percent more for cheese, and 65 percent more for butter.

Why? To assure our poor farmers adequate compensation and marketplace stability? That might have been the original intention. But as Martha Hall Findlay pointed out in a seminal research paper in June 2012, there are virtually no more small dairy farms – the number has dropped over four decades from 70,000 (a lot of little guys) to 12,000 (not many and not so little any more).

This system isn’t supporting thousands of small Canadian farmers. It’s supporting a small group of agricultural industrialists who are inhaling money at Canadian consumers’ expense. As Ms. Findlay’s paper points out, the quota of milk produced by each of these industrialist’s cows was in 2012 worth about $28,000 annually per cow, or $2 million for the average farm – about $28 billion in all. And that’s just milk.

One might think, because all voters are consumers, that a vast majority of Members of Parliament would be standing up for them and demanding that the government phase out this antiquated system, and phase it out quickly. But there are moments when Monte Python reigns supreme.

On June 18, 2014, Members of the House of Commons unanimously passed a motion (262 to 0) saying that the government should “respect its promise to dairy and cheese producers in Quebec and Canada” by resisting pressure from the Comprehensive Economic and Trade Agreement between Canada and the European Union to dismantle Canada’s system of supply management for the marketing of eggs, butter and poultry.

That system guarantees Canadian producers lucrative returns by (a) limiting production; and (b) imposing tariffs on imports on other countries to the point that those who would export these commodities to Canada have all but given up trying.

So if the system has become warped, why did 262 Members of the Commons vote against moving toward hasty reform, instead suggesting that Canada drag its heels and put stumbling blocks in the way of foreign competition?

The cynical answer to that is because all parties are looking to crucial rural seats in the next election, particularly in Quebec. That’s the answer Members of the Commons give me even as they agree in private that the system stinks.

But this is nonsensical politics – 12,000 farms couldn’t possibly swing vote counts in even the most traditional dairy ridings. MPs could win tons of more votes appealing to consumers.

Nearly every other country that used to impose supply management for these commodities has given them up. Australia did. New Zealand did. Their dairy industries are thriving.

The Harper government is currently trying to avoid being ousted from the 12-country Trans-Pacific Partnership Talks, which will produce one of the most important free trade agreements of our time. Why are other countries involved in the negotiations pointing at Canada as too protectionist to be part of any agreement?

Because we are dragging our heels, trying to preserve parts of this corrupted system that makes no sense for Canada and no sense for the world.

[Colin Kenny is a member of the Senate.]