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In Defense Of Supply Management

on July 17 | in Ag News | by | with No Comments

Christian Farmers Federation of Ontario Commentary

By Henry Stevens, CFFO Director

It never ceases to amaze me how certain topics will hit the news and, over the following few weeks, it unexpectedly becomes open season on that subject. Countless experts come forward with a similar story or complaint. The most recent example is the trashing of the most successful marketing system farmers in Canada have. I am speaking of supply management.

The latest round of goofy, unsubstantiated comments about supply management began when the master of bluster, Donald Trump, began spouting off about Canada’s “unfair” attack on some U.S. dairy farmers. Never mind the fact that he apparently knew nothing about the real facts of the dairy trade between Canada and the United States. A bully never cares about the truth, even after his own constituents, the Wisconsin dairy farmers, quickly contradict him.

We should not have been surprised when this occurred. Nor should we have been surprised when the other so-called experts in the main stream media, academia and economists as well as several politicians, thought it would be cool to jump on the band wagon and begin to trash supply management. It became obvious very quickly that most of them do not understand how supply management has worked successfully for everyone. Neither did they bother to check the facts. Farmers, consumers, taxpayers and the government have benefited from supply management for over 50 years. Could it be that they have bought into the Trump administration’s fascination with alternative facts?

In this two-part commentary, I’d like to explore some of these common misconceptions. Next week, I will address some specific myths around supply management, but today I would like to remind readers that a system that benefits the farmer does not bring harm to the consumer.

The very success of supply management is dependent on the producers’ ability to be price setters, based on transparent cost of production formulas. Along with import controls and production volumes, these cost of production formulas enable producers to earn a fair return for their labour, management, and investment. In return, producers agree to produce only what the market needs, rather than overproduce and dump unneeded product into an already saturated world market. Doing the latter would only lead to increasingly lower farm gate prices and begin a spiral to the bottom. That is the crux of the U.S. problem, in spite of the billions of dollars in subsidies provided by the U.S. treasury. Is that what our so-called experts, including several in the agricultural sector, suggest is a good thing?

A form of supply management is the norm in most of our economic sectors. For example, the auto sector will only make enough cars to supply demand. Every successful business knows it must consider supply and demand in order to be profitable. That is because it makes sense and helps businesses stay in the game. So what is wrong with farmers using supply management as a tool to survive and thrive? What is wrong with independent nations choosing their own food sovereignty policies? To do otherwise would be short-sighted.

A number of commentators, including several in the farm papers, have used what I call “voodoo economic theories” to criticize a marketing system that has worked well for over 50 years. It seems to me that they would prefer to tear down a success story, rather than build upon and improve it. The question is why?

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