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Originally Posted by peter12
Why is it that the only people who defend supply management are people invested in supply management continuing to exist?
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I've found this to be the case as well (and I know a lot of people tied into the quota system).
I also know that the price of actually obtaining the quota very much is a factor when trying to figure out how long it takes to pay off, and that if the value of quota wouldn't continue to increase, a lot of people wouldn't purchase it.
Because right now in the dairy / laying hen industry, in combination with the barn & other resources (land, equipment, etc) you need in place, buying new quota will take to 20-30 years to pay off if you try to live modestly. After 15-20 years the barn needs to be renovated and you need new cages etc. From the perspective of making money and paying off your debt, it is negligible. The only reason people do it is because the value of their 'asset', the quota itself keeps going up.
From 2002.
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The provinces' milk quotas generally are expressed as the right to produce one kilogram of butter fat daily. In 1998, that was worth roughly $15,000 in Ontario. In 2000, when the stock market was at its peak, it was worth around $20,000. Last month, it was $22,950. In Quebec, in May, it was $29,900.
That translates into some extraordinary statistics. The total value of the milk quota in Canada is now about $20-billion. That means the cost to buy the quota controlled by an average farm is worth just over $1-million.
There are about 1.14 million cows in the country, meaning the value of quota per cow -- that is, the right to sell the milk from that cow -- is about $17,500. That's about seven times more than the cow itself would cost at auction.
Getting into the other supply-managed sectors is even more expensive. The average chicken farm in Canada has 28,000 birds -- and would require $1.5-million in quota to run. The average turkey farm needs $1.4-million in quota.
The quota for an average egg operation -- with about 13,000 hens laying one egg a day -- is $1.75-million. The quota of $135 per hen is roughly six times what it was two decades ago, and has risen about 18 per cent just since February. There are a few agricultural economists across the land who regret the day they told their parents they were leaving the farm to pursue academia.
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https://www.theglobeandmail.com/repo...article755831/
Completely bloody insane. I don't want to know what the value of these quotas is today in 2021. I'd expect it to have doubled or tripled.
Some friends I know recently sold $4.5 million in laying hen quota. Their reasoning was simple. They needed a new barn & new cages. They only made $180k in profit per year from their existing operation. The new barn & cages would cost them $3-5 million. If they take the $180k profit per year, and use $80k of it to pay off the debt, and keep $100k to pay themselves, cover incidentals, etc, it will take them 62 years to pay off $5 million. If they use the full $180k per year and apply it towards the debt, it will take them 27 years. So instead they sold the quota.
Its even worse if you buy NEW quota. Right now the cost is $500 per bird.
$5 million for the barn and cages, plus $500 per bird for 9000 birds = $4.5million for the quota.
Thats $10 million in total. How on earth do you pay for that with the income you generate?
Its bonkers.