Feds Target Cross Border Price Difference(s)

[hatty]

One thing I wonder though, is for this to actually work, Canada itself would have to change some of the duties they charge on product. We are charged higher duty on certain products here, then the US. I know on certain products, they (USA) Don't charge a duty at all, and in Cananda its 6% or more.

[SebC]

I'd just like to point out that unilaterally dropping duties isn't a good idea. We need to negotiate reciprocity for our exporters, and getting those free trade deals done takes time.

[calgarywinning]

The consumer does not want negotiation for reciprocity of government involvement in price. They want the best price/value for the product. I would argue that currency reflects the trade inequality and that government has little effect on Gross Exports or Imports if they just stay out of the equation, unless politically motivated.

The government is brutal in their excise tax which is only increased when the currency is below the US dollar amount. They want to charge 18% on all non-nafta goods imported from the US. This 18% is on the canadian value which is the american value times 16% today x 18%. Then add shipping and brokerage to this fee. Not to worry a lot of mega-retailers are able to skirt the law through illegal importation and lack of enforcement. Also, this duty regime is not applied to travellers and some importers by freight.

The real burner is on goods not directly imported into Canada, but routed through the US there is an additional 11% duty excise that the US government has already added into the cost of goods. For many companies the cost of a distributorship in Canada to avoid this fee does not outweigh the costs.

[SebC]

Originally Posted by calgarywinning

The consumer does not want negotiation for reciprocity of government involvement in price.

Consumers are also producers, and will have less buying power if we can't export our products.

[Zarley]

These populist crusades by the Tories are getting tiring. Nothing is going to come from this.

[krynski]

Price is only one consideration of supply management.

Yeah. Chicken is a higher price, but that is because of what is implemented up here in regards to ensuring that we have domestic production, but also in regards to food safety, and animal welfare. Chicken from the US is a poor quality product. Producers in the US are not required to clean their barns every time the get a new flock. This means that the feces remains in the barn from the previous flock. Stocking density requirements are less, so they will jam-pack chickens into a barn. Regulations are more strenuous here than they are for US producers. Producers in the US have low costs of production because a lot of them do not endure heating costs like Canadian producers do.

If you want to get rid of supply management, say goodbye to your domestic production, get ready to welcome inferior products, and say goodbye to animal welfare.

[Ducay]

This is about 2 years too late. $1.05 was the time to do this, not at $0.87 when all the imports are justifiable expensive again.

[Dan02]

Originally Posted by krynski

Price is only one consideration of supply management.

Yeah. Chicken is a higher price, but that is because of what is implemented up here in regards to ensuring that we have domestic production, but also in regards to food safety, and animal welfare. Chicken from the US is a poor quality product. Producers in the US are not required to clean their barns every time the get a new flock. This means that the feces remains in the barn from the previous flock. Stocking density requirements are less, so they will jam-pack chickens into a barn. Regulations are more strenuous here than they are for US producers. Producers in the US have low costs of production because a lot of them do not endure heating costs like Canadian producers do.

If you want to get rid of supply management, say goodbye to your domestic production, get ready to welcome inferior products, and say goodbye to animal welfare.

So which of the supply managed industries are you connected to???

This might come as a suprise to you but you can still regulate food safety, animal welfare and restrict imports from areas without those regulations without having supply management inside Canada.

[GGG]

Originally Posted by krynski

If you want to get rid of supply management, say goodbye to your domestic production, get ready to welcome inferior products, and say goodbye to animal welfare.

No you get rid of supply management and set heath and safety requirements that importers have to meet. Then have the importer have to pay for all inpsection required. Just like a lot of other industries.

[Flash Walken]

Originally Posted by Ducay

This is about 2 years too late. $1.05 was the time to do this, not at $0.87 when all the imports are justifiable expensive again.

But there wasn't an election 2 years ago.

[krynski]

Originally Posted by Dan02

So which of the supply managed industries are you connected to???

This might come as a suprise to you but you can still regulate food safety, animal welfare and restrict imports from areas without those regulations without having supply management inside Canada.

It doesn't. Generally speaking, if you're willing to pay for it, you can get it. But that is what we are talking about here, is cost. Fine, you go in that direction and lets say you are able to save a little money. The issue that remains is that canadian producers can not compete on an international scale, and domestic production would cease.

[krynski]

Originally Posted by Dan02

So which of the supply managed industries are you connected to???

This might come as a suprise to you but you can still regulate food safety, animal welfare and restrict imports from areas without those regulations without having supply management inside Canada.

How did you know? Was I that obvious?

Technically, I am not (or at least employed by any supply managed sector). I do have some strong connections in the supply managed sector, however. My educational background is partially based on food animal production systems. My major is Food Safety and Quality. Again, if you would like to regulate, the consumer has to be willing to pay for it. Chances are the consumer would end up paying very similarly for a lower quality international product, as they pay for a high quality domestic product. The downside is the destruction of a domestic industry. It is my opinion and there is no real way to test besides removing supply management, but i do not believe that is a feasible or easy task.

[SebC]

If supply management was merely a way to cover the costs of tighter regulations, quota licenses would not hold the insane value they currently do.

Supply management is a government-sactioned oligopoly that diverts money from the general population to a political lobby.

[krynski]

Originally Posted by SebC

If supply management was merely a way to cover the costs of tighter regulations, quota licenses would not hold the insane value they currently do.

Supply management is a government-sactioned oligopoly that diverts money from the general population to a political lobby.

These are some strong statements, but can you support them?

Regardless, here's my 2 cents.

Quota prices are a moot point to this discussion. Their values are not relative to monetary returns, but rather on a right-to-produce model. Quota prices fluctuate based on producer willingness to pay for the right to produce a set amount of commodity. Like major industry and economies of scale, it is more economical to have a capacity and output to maximize your output per dollar spent. This artificially drives up the price of quota if there is constant demand for quota.

I can agree that it is essentially an oligopoly in a sense, but I disagree with the second part of your statement. The money is diverted from an international scale, to a domestic one. Here, the money is used to employ people in sales, distribution, processing, transportation, and production of all of these materials (so, essentially people that are employed in the production of any commodity). If that is what you mean by "lobby", then sure. Producers are not the only ones that play a part in pricing. There are pricing committees for each board consisting of producers and processors, along with governmental if need be. Processors want to take a cut, so they advocate for lower priced product so that they can sell a larger amount of lower priced product (particularly in the case of chicken, as chicken competes directly with pork and beef sales) and garner more sales. Honestly, I feel the proportion that processors take is pretty standard across the board. Producers usually advocate for a higher price, given that they would earn more if it is higher. However, all prices are set from a cost-of-production (COP) model, so producers are guaranteed a percentage of revenue based on this model. It takes a lot in order to prove that any stakeholder deserves more compensation. It's not that all of the added costs are because of the producer, but there are also greater costs to process products in Canada, which also influences the price the consumer pays.

[krynski]

Originally Posted by SebC

If supply management was merely a way to cover the costs of tighter regulations, quota licenses would not hold the insane value they currently do.

Supply management is a government-sactioned oligopoly that diverts money from the general population to a political lobby.

I never said it was just regulations. It also guarantees the production of domestic product. This allows more Canadian money to stay in Canadian industry, and contributes to the strength of the Canadian economy.

[SebC]

Originally Posted by krynski

These are some strong statements, but can you support them?

It's pretty simple - if quota right merely provided enough value to cover the costs of operating in Canada, why would anyone pay money for it?

Originally Posted by krynski

I never said it was just regulations. It also guarantees the production of domestic product. This allows more Canadian money to stay in Canadian industry, and contributes to the strength of the Canadian economy.

Protectionism is a prisoner's dilemma - it's great if you're the only one doing it, but cooperation is better than non-cooperation. When we consider the effect of missing out on exports because other countries don't want to give us access to their markets when we don't give them access to ours, it's a net loss.

[krynski]

Originally Posted by SebC

It's pretty simple - if quota right merely provided enough value to cover the costs of operating in Canada, why would anyone pay money for it?

Protectionism is a prisoner's dilemma - it's great if you're the only one doing it, but cooperation is better than non-cooperation. When we consider the effect of missing out on exports because other countries don't want to give us access to their markets when we don't give them access to ours, it's a net loss.

Farmers are not looking to simply produce something for free, they- like you and me- are employed for obvious reasons. Approach a supply management farmer and ask about it. Like I said before, quota guarantees a particular price for a product, provided a farmer can provide a quality product. It's an investment for almost a guaranteed return. Sounds like a good investment to me. That's why the price of quota is so high. Obviously it has benefits to some, but it also has benefits with sustaining a domestic agriculture production. Again, they are moot to the discussion at hand, given that they are not in any way indicative of how a product is priced. Quota is NOT involved in the cost of production model that I outlined before. If a farmer wishes to purchase quota, he or she has to either have the money for it, or be able to finance it.

Weighing the costs and benefits its key. If you think about all the milk and dairy products and poultry products that are produced, that's a fair contribution to the economy. Now, assume that we lose all domestic production of dairy and poultry products by getting rid of supply management and this economic share goes elsewhere. According to 2011 data, Dairy alone was approximately $16.2 billion sector, employing about 218, 330. Do you think the loss of this amount (plus chicken, turkey, eggs) would be able to be retrieved by using increased exports? I would say that's highly debatable.

We likely have quite differing views about supply management. I encourage people to really think about the whole picture and consider all the players in supply management before forming an opinion. This is a good discussion.

[Tinordi]

We likely have quite differing views about supply management. I encourage people to really think about the whole picture and consider all the players in supply management before forming an opinion. This is a good discussion.

Lets think about the whole picture. Eggs and milk are about 100% higher in price then they otherwise would be. Who benefits? A small group of producers with no incentive to become more efficient. Who loses? All other Canadians especially the poor where eggs and dairy, dietary staples, take up a larger share of household income.

Your argument that artificially higher prices leads to greater GDP and wealth can be continued to a reducto ad absurdum. If protecting industries makes us all wealthier why stop at cheese omelettes? Because it has nothing to do with economic growth instead about pandering to a politically influential industry and continuing a moronic status quo bias. The whole point of market economies is to make good cheaper, to become more efficient, and to reduce costs for consumers to be able to extend their money furthest.

[Tinordi]

Approach a supply management farmer and ask about it. Like I said before, quota guarantees a particular price for a product, provided a farmer can provide a quality product. It's an investment for almost a guaranteed return. Sounds like a good investment to me. That's why the price of quota is so high.

Exactly. That's the problem. Why is this the only industry in Canada where you're guaranteed a return? There's a thing in business and industry (and lets not kid ourselves this isn't mom and pop down on the farm - these are large agribusinesses) it's called risk. It's a basic factor in all parts of life except, it seems, laying eggs. If I open an electronics store should I guaranteed a return? If I'm a soybean farmer should I be guaranteed a price? Why should dairy be different?

[krynski]

Originally Posted by Tinordi

Lets think about the whole picture. Eggs and milk are about 100% higher in price then they otherwise would be. Who benefits? A small group of producers with no incentive to become more efficient. Who loses? All other Canadians especially the poor where eggs and dairy, dietary staples, take up a larger share of household income.

Your argument that artificially higher prices leads to greater GDP and wealth can be continued to a reducto ad absurdum. If protecting industries makes us all wealthier why stop at cheese omelettes? Because it has nothing to do with economic growth instead about pandering to a politically influential industry and continuing a moronic status quo bias. The whole point of market economies is to make good cheaper, to become more efficient, and to reduce costs for consumers to be able to extend their money furthest.

That's not very nice.

I appreciate any and all impartial and objective statements.

I not statde above that it is more than just the producers who benefit.

Here are the three pillars of supply management (from Alberta Milk):

Three Pillars
There are three pillars of supply management that ensure that our system works effectively.

1. Production Management
Using a quota system, producers can ensure that a steady supply of quality products are available to meet consumer demand.

2. Predictable Imports
Canada’s federal government has committed to limit imports to ensure Canadian dairy market requirements are primarily met by Canadian milk production. (This is also applicable to other sectors of supply management)

3. Pricing Mechanism
Dairy producers receive prices that provide a reasonable return, which enable producers to cover production costs. Our producers do not rely on taxpayer subsidies.

- See more at: http://www.albertamilk.com/supply-ma....4Mvh0Y5e.dpuf

I understand the scale of market economies, and yes, they are intended to be how you claim. That may not always be the case. Also, it is important to note that producers do not rely on government subsidies, where both pork and beef have relied on governmental subsidies in the past.