No Crying Over Spilled Milk
June 1st was World Milk Day. Another day some might say to celebrate something trivial. But milk production in Canada is serious business. There are nearly 12 thousand dairy farms across the country. Thirty seven hundred farms are in Ontario alone. World Milk Day is an opportunity to explain just what it takes to get that litre of milk on your table.
In Canada, it all starts with a system called Supply Management. The basic idea is that by using quotas, farmers produce the volume of milk that consumers are demanding. A price is negotiated for the farmer that covers the cost of production. Supply Management prevents vats of milk that don’t have buyers from being intentionally spilled.
The price and supply of milk, cheese, eggs and poultry are all determined by supply management, which has been in place since the 70’s. During that time critics have been calling for the system to be dismantled. They say it over charges consumers while limiting imports with high tariffs. They call supply management an “anti-competitive cartel” and a “protectionist racket.”
I’ve heard both sides of the argument on supply management and I believe the advantages outweigh the disadvantages. The Conservative Party of Canada has also affirmed its official support for supply management.
The system protects the family farm from being squashed by big agribusiness. Consider this. The average dairy farm in Ontario is about 70 milking cows. The average farm in the U.S. is three times that size. The really big players south of the border have as many as 10 thousand cows.
There are those who say supply management should be phased out. They say eliminating such regulations would lower the price of milk, eggs and poultry. Then they point to the price of milk and eggs in the U.S.
In Canada, dairy farmers don’t receive a dime in subsidies, while U.S. dairy farmers have been milking taxpayers to the tune of $300 million in subsidies every year. How can a Canadian farmer compete with that? Supply management offers them a stable price and keeps the family farm operating.
That’s important to consumers. They’ve said repeatedly they want high quality food and they want to buy local. A poll released in April shows Canadians support and are satisfied with the range, quality and price of dairy. And no, this study was not funded by the dairy industry.
The assumption is that prices for milk, cheese, eggs and poultry are always higher in Canada. But that’s not true. Look at a recent price comparison. Loblaws was selling boneless chicken breast for $5.99 a pound. Over the river at Wegmans, boneless chicken breast was selling for $4.49 a pound. Factor in the exchange and that works out to be $6.20 a pound at Wegmans.
Poultry farmers aren’t millionaires. They say their share of a restaurant plate is usually less than the tip you give your server. While in the past four years beef prices have risen by 33% and pork by 20%, the price of chicken has gone up just 7.5%.
Of the more than 200 million chickens raised in Ontario every year, more than 11% are grown right here in Niagara Region. Poultry and dairy farmers in Niagara believe managing supply to match demand is a good thing. It guarantees farmers a stable price. It means they can walk into a bank confident of getting a loan. The system supports the family farm.
If you want to know what would likely happen if we get rid of such regulations in the dairy and poultry business, simply look to Australia. When supply management was phased out consumers continued paying the same prices, while more farmers were going broke and the middle men were eating up the savings.