The Canadian Supply Management Issue

By Alexander Robak | Canada

In 1972, the government of Canada implemented the Farm Products Agencies Act. This gave the federal government control over both the dairy and egg industries in Canada through crown corporations such as the Canadian Dairy Commission (CDC). Basically, the CDC, as well as its counterpart, the Canadian Hatching Egg Producers (CHEP), both subsidiaries of the federal government, is responsible for supplying Canadian dairy and egg farmers with quotas.

On top of this, the Canadian government restricts the sale of American dairy and egg products within Canada. Over 46 years, these policies have given Canada a complete monopoly over the sale of dairy and egg products to 36 million Canadians. If this isn’t a blatant violation of free market principles, I’m not sure what is.

A Monopoly on Dairy and Eggs

The government continues to hold this control so they can inflate prices when they see it fit. The government sets quotas on how many eggs and dairy product the farmers are legally allowed to produce. So, following the laws of supply and demand, supply is artificially low. As a result, demand continues to increase at a stagnant rate. Thus, the prices of eggs and dairy continually rise for Canadians. If the government didn’t issue quotas to farmers, they would simply produce enough to match demand and sell more. However, there is no profit incentive for the government to simply allow the market to function. By creating artificial dairy and egg shortages, the government is exploiting the industry for their benefit.

The second issue that arises with these industries is the restriction of control from American competitors. Since the government needs to protect its subjects within the dairy and egg industries, they have restricted the sale of competing products within Canada. While American farmers can produce and sell eggs and milk at much lower prices than Canadian farmers, due to less government interference, the government does not give them access to the Canadian consumer base.

In upstate New York, eggs sell for as little as 10 cents each. According to Statista, as of June 2018, Canadian eggs go for $3.07 per dozen. That is a little over 25 cents per egg: more than double the American rate! The price of Canadian eggs has not dipped below $3.00 in recent memory. Millions of Canadians are suffering from high costs because buying cheaper eggs is illegal. Following free market principles, if Canadians wish to purchase American eggs at their local supermarket, that is their choice. The federal government must realize that this restriction of competition only hurts Canadians.

Lobbying for Supply Management

Why hasn’t this policy been changed over the past 46 years? Basically, the Canadian dairy and egg farmers lobby the government when anyone challenges this policy. They love the federal government because they receive subsidies from it. Moreover, it takes away their competition, giving them more profits. That’s right, Canadian taxpayers are funding this whole operation.

In August of 2018, in preparation for the Canada-EU comprehensive trade agreement, the Canadian government implemented a program entitled the Dairy Farm Investment Program. What resulted was a $250 million dollar investment to Canadian dairy farmers to prepare themselves to be more competitive when facing competition from European producers. Even when working trade deals with the European Union, the Canadian government still decreases competition. Once again, this only raises prices.

With massive investments such as these, it’s no wonder the farmers love their current position. In total, the government of Canada milks the taxpayers out of their hard-earned money. Then, they give it to dairy and egg farmers. Once all is said and done, the farmers use this money to lobby the government into giving them more. This operation is a scam and a cartel. The government and the dairy and egg farmers have colluded against the Canadian taxpayer, against the goodwill of the people.

What Can Be Done?

We, the Canadian people must do something to combat this injustice that has existed for 46 years. We should not be forced to pay over double the price of dairy and eggs simply because the government wishes to spend our money bolstering the wallets of already-rich farmers. A policy such as Supply Management has no part in a Western Liberal Democracy. This is the type of policy that one would expect to see in Maoist China or Stalin’s Soviet Union, not Canada.

The government, in collusion with the dairy and egg farmers of Canada, has coerced the Canadian taxpayers into supporting an illegitimate cartel that is against our interests, as well as the interests of those beyond our borders. We must open up our markets to outside competition, just as the other 98% of non-government sponsored Canadian farmers do.

Rather than restricting our trade to within Canada, we should open up free trade with the United States and beyond in the dairy and egg industries. I believe that the Canadian farmers in these industries will continue to grow and prosper without tax subsidies, as long as the free market continues to support them. Together, we the Canadian people can free the markets in pursuit of a better economy, and a better future for all. 

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