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Canadian Think Tank Questions Rationale of Supply Management

26 October 2012

CANADA - Canada has maintained its milk supply management policies long after other countries have reformed or abandoned similar policies, notes The Conference Board of Canada in its second report in a series examining supply management.

Released last week, the report also points out that Canada has seen its dairy production and industry growth level off in recent decades.

"The continued presence of this policy has contributed to stagnating production, reduced Canada's ability to negotiate for freer trade for all Canadian goods and services, and created incentives for individuals to allegedly smuggle cheese from the United States and resell it at a massive profit in Canada," said Danielle Goldfarb, association director of the Conference Board's Global Commerce Center.

"All of the evidence points to a definitive need to fundamentally examine the rationale of the supply-management system."

The report, titled "Canada's Supply-Managed Dairy Policy: How Do We Compare?", examines how the United States, the Netherlands, Australia and New Zealand dropped policies such as price supports, programmes to remove surplus milk and production quotas. The first report, released in September, concluded that Canada's supply management system has made its dairy industry stagnant compared to other countries and that the success of the Canadian dairy industry has come at a cost.

A similar supply management programme is proposed for the United States dairy industry as part of the Dairy Security Act, which is included in the Farm Bill that awaits Congress when it returns on November 13. IDFA opposes the programme because, as shown by the Canadian experience, it would stifle industry growth in both export opportunities and future investment in the industry.

"Congress should consider the findings of this report and reconsider the compromise, bipartisan Goodlatte-Scott amendment, which would leave the provisions of the Dairy Security Act 80 percent intact but remove supply management," said Jerry Slominski, IDFA senior vice president of legislative and economic affairs. “The question is whether we want to grow or remain the same."

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