Supply Management System Under Question Again

[Azure]

"It is a cartel. It is the opposite of free markets."

That's how Conservative Party leadership candidate Maxime Bernier this week described the highly contentious practice of supply management for Canada's dairy, poultry and egg production. He encouraged his party comrades to follow suit.

It's certainly not the first time a politician has railed against supply management.

There are few issues that conjure more discord than supply management, especially in rural Canada, where farmers produce our milk, chickens, turkeys and eggs without the boost of direct government subsidy. Instead, they work on a quota system based on demand in return for predictable, stable prices.

http://www.cbc.ca/news/business/milk...ment-1.3612834

50% of my problem with the supply management system is with how corrupt and unfair the dairy board is and how ridiculously expensive it is for someone to purchase additional quota. Setting prices is one thing, charging $50,000 per liter of milk that will be produced is completely insane.

[GP_Matt]

The price is equal to the perceived value of getting into the cartel.
ie. that is less than the farmer thinks he will be able to recoup from overcharging his customers.

[Azure]

The benefits are the high quality of dairy products we enjoy. I don't think many of us would complain about that. In fact, some Canadians might be okay with paying a little more for that quality. Especially if it is hormone free.

However, paying more does not explain why the cost of having a quota is so expensive, and why the quota is limited to certain people.

To me it is always amusing when they do the 'draws' for additional quota. Pay the $600 and you get a chance to win a laying hen quota valued at a million dollars. The same people win over and over again.

[East Coast Flame]

What a crock. I can't believe we still have this system.

[Zarley]

The supply management system is an absolute disaster that is legally raping the consumer while incentivizing inefficiency. The system should've been dismantled with as part of the TPP negotiations - it's a travesty that didn't happen.

[Hack&Lube]

I've heard of stories of farmers pouring milk down drains etc. for Supply Management Quotas and to constrain the supply, etc. Don't know if it's hyperbole.

Milk isn't the problem, it's the price of cheese and the stranglehold the supply management rules place on cheese imports. Canada probably has some of the worst cheese selection and prices of developed nations because of the protectionist dairy market. Only a small percentage of cheese can be imported every year from Europe and then it's priced incredibly highly.

[Azure]

Originally Posted by Hack&Lube

I've heard of stories of farmers pouring milk down drains etc. for Supply Management Quotas and to constrain the supply, etc. Don't know if it's hyperbole.

Well, if your quota calls for x amount of liters being picked up everyday, and you have extra, what exactly should be done with it outside of pouring it down the drain? That is why there is a rather large black market for raw or even pasturized milk, and if you have a good relationship with a nearby dairy, they'll give you the milk for cash because they would be pouring it away anyways.

Milk isn't the problem, it's the price of cheese and the stranglehold the supply management rules place on cheese imports. Canada probably has some of the worst cheese selection and prices of developed nations because of the protectionist dairy market. Only a small percentage of cheese can be imported every year from Europe and then it's priced incredibly highly.

Plus, there are huge restrictions on bringing cream cheese from the US into Canada as well, which is completely bonkers.

SebC convinced me that supply management needs to go a few years ago, and the more research I do the crazier I think the system is.

[calgaryblood]

Isn't there the same problem with fruits and vegetables as well or is that not here? Remember watching a video about it but can't remember where they were talking about.

[Azure]

Potatoes are not run through a supply management system, but it is the same corrupt process.

I'm not sure how other fruits and vegetables are handled.

[Clarkey]

The fact that Max Bernier is willing to take this politically sensitive topic on tells me he's the Conservative Leader this country needs. Prudent fiscal conservativism, socially moderate. Trudeau's flash, Harper's substance.

[GGG]

Originally Posted by Azure

The benefits are the high quality of dairy products we enjoy. I don't think many of us would complain about that. In fact, some Canadians might be okay with paying a little more for that quality. Especially if it is hormone free.

However, paying more does not explain why the cost of having a quota is so expensive, and why the quota is limited to certain people.

To me it is always amusing when they do the 'draws' for additional quota. Pay the $600 and you get a chance to win a laying hen quota valued at a million dollars. The same people win over and over again.

Most milk in the U.S. is anti biotic and hormone free and labeled as such and sold for $2 per gallon. You can get fancy free range organic milk for the $4 U.S. Per gallon we pay for milk.

[krynski]

As someone who is closely linked to the supply management system, I am a full supporter. I am not a farmer nor part of the marketing board. The costs to operate and ensure a quality product are far higher in Canada, than in the US. You could factor in the need to provide heat in the winter (and with that, actually closed barns), the increased ingredient costs, etc as factors.

The other thing is that Canada produces a higher quality product with more stringent standards than the US. Also, unlike the US, most animal production farms are owned by families.

Let me give you this example: In Canada, after a flock of chicken is raised and sent for slaughter, the barn is completely cleaned out and disinfected before placing baby chicks. In the US, it is common practice to put a layer of hay over the manure and put in baby chicks on top of the previous flocks' manure. Disgusting? I would say so.

[krynski]

Originally Posted by Hack&Lube

I've heard of stories of farmers pouring milk down drains etc. for Supply Management Quotas and to constrain the supply, etc. Don't know if it's hyperbole.

Milk isn't the problem, it's the price of cheese and the stranglehold the supply management rules place on cheese imports. Canada probably has some of the worst cheese selection and prices of developed nations because of the protectionist dairy market. Only a small percentage of cheese can be imported every year from Europe and then it's priced incredibly highly.

Yes, the quota system works so that a producer is paid for the milk that they are entitled to. I would challenge your source as to the milk being dumped. Over production usually results in financial penalties (which means they basically gets paid below average price for any extra product that is over supplied). I have heard of milk being dumped because of high microbial or contamination issues, which should be common practice.

[Dan02]

Originally Posted by krynski

The costs to operate and ensure a quality product are far higher in Canada, than in the US. You could factor in the need to provide heat in the winter (and with that, actually closed barns), the increased ingredient costs, etc as factors.

The other thing is that Canada produces a higher quality product with more stringent standards than the US. Also, unlike the US, most animal production farms are owned by families.

This very much may be true, but it still doesn't explain why someone who can meet all those same standards at a lower price should be excluded from the market. It is the standards which dictate the quality of the produce not the quota system.

If American products don't meet our health standards then it's academic, don't let them in. But to artificially limit supply and raise the price under the quise of it being for higher quality is a bunch of bunk.

[CliffFletcher]

Originally Posted by Hack&Lube

Milk isn't the problem, it's the price of cheese and the stranglehold the supply management rules place on cheese imports. Canada probably has some of the worst cheese selection and prices of developed nations because of the protectionist dairy market. Only a small percentage of cheese can be imported every year from Europe and then it's priced incredibly highly.

People I've known who have moved here from the UK, Europe, and Australia have always been shocked by the price of cheese in Canada. In most of the developed world, cheese is a cheap staple. In Canada it's almost a luxury item.

[4X4]

Originally Posted by krynski

As someone who is closely linked to the supply management system, I am a full supporter. I am not a farmer nor part of the marketing board. The costs to operate and ensure a quality product are far higher in Canada, than in the US. You could factor in the need to provide heat in the winter (and with that, actually closed barns), the increased ingredient costs, etc as factors.

The other thing is that Canada produces a higher quality product with more stringent standards than the US. Also, unlike the US, most animal production farms are owned by families.

Let me give you this example: In Canada, after a flock of chicken is raised and sent for slaughter, the barn is completely cleaned out and disinfected before placing baby chicks. In the US, it is common practice to put a layer of hay over the manure and put in baby chicks on top of the previous flocks' manure. Disgusting? I would say so.

Couple of things here... Is heat in the winter and closed barns really so outrageous? If my grandfather wasn't dead, I'd ask him. Somehow he managed to raise livestock, cows included. He literally put doors on the barn. Not sure if he ran a space heater, or fired up the John Deere, but somehow, that a-hole managed to farm the land here in Alberta, and keep the cows warm. Do the people in Texas A/C their barns in the summer? Is that a thing?

As far as raising chicks go, and I really don't want to sound flippant here, how necessary is clean hay? Do they need hay every day? Once a week? Just when they start to stink? Honestly, how often does hay need to be changed? Obviously, 'never' is the wrong answer. But you sound like you know the industry, so if you would elaborate on hay and the frequency that it needs to be changed, I might start to be a little bit convinced that it's reasonable for the farming industry to be all jacked up in Canada, and that a door stopper of dutch cheese should cost ~10-15 dollars. I listen to the news pretty regularly, and I'm not hearing alarming death tolls out of the States over Gouda nor milk. I like having higher standards, but paying double for something that isn't even in question just a couple hundred km away is stupid.

[Azure]

Originally Posted by krynski

As someone who is closely linked to the supply management system, I am a full supporter. I am not a farmer nor part of the marketing board. The costs to operate and ensure a quality product are far higher in Canada, than in the US. You could factor in the need to provide heat in the winter (and with that, actually closed barns), the increased ingredient costs, etc as factors.

The other thing is that Canada produces a higher quality product with more stringent standards than the US. Also, unlike the US, most animal production farms are owned by families.

Let me give you this example: In Canada, after a flock of chicken is raised and sent for slaughter, the barn is completely cleaned out and disinfected before placing baby chicks. In the US, it is common practice to put a layer of hay over the manure and put in baby chicks on top of the previous flocks' manure. Disgusting? I would say so.

Supply management has zero to do with cleaning out the barn after chickens are sent to slaughter.

If we want to uphold standards without relying on the buyer to set them, that is fine, but the supply management system isn't needed.

[Azure]

Originally Posted by CliffFletcher

People I've known who have moved here from the UK, Europe, and Australia have always been shocked by the price of cheese in Canada. In most of the developed world, cheese is a cheap staple. In Canada it's almost a luxury item.

On top of that, cheese is a low carb 'healthy' alternative to junk food that Canadians could use.

[Azure]

Originally Posted by 4X4

Couple of things here... Is heat in the winter and closed barns really so outrageous? If my grandfather wasn't dead, I'd ask him. Somehow he managed to raise livestock, cows included. He literally put doors on the barn. Not sure if he ran a space heater, or fired up the John Deere, but somehow, that a-hole managed to farm the land here in Alberta, and keep the cows warm. Do the people in Texas A/C their barns in the summer? Is that a thing?

As far as raising chicks go, and I really don't want to sound flippant here, how necessary is clean hay? Do they need hay every day? Once a week? Just when they start to stink? Honestly, how often does hay need to be changed? Obviously, 'never' is the wrong answer. But you sound like you know the industry, so if you would elaborate on hay and the frequency that it needs to be changed, I might start to be a little bit convinced that it's reasonable for the farming industry to be all jacked up in Canada, and that a door stopper of dutch cheese should cost ~10-15 dollars. I listen to the news pretty regularly, and I'm not hearing alarming death tolls out of the States over Gouda nor milk. I like having higher standards, but paying double for something that isn't even in question just a couple hundred km away is stupid.

Something who is on top of things would always clean the barn with each rotation. Bringing in new chicks without doing so is a great way to create a disease problem. Of course, the hog industry is not under supply management, and most hog farmers I know always wash down the barn after each rotation. Like I said before, supply management isn't needed to do that.

As for raising cows in the winter, we never had heaters either, and like your grandfather, literally just put doors on the barn as well. Chickens, turkeys, etc, are a different breed, and there needs to be more climate control. Again, someone who is on top of things will do this or risk losing money.

The market is perfectly capable of dictating all of this. We need to get rid of the supply management side, and setup an independent organization to uphold standards for how our food should be raised.

[Zarley]

Originally Posted by krynski

Yes, the quota system works so that a producer is paid for the milk that they are entitled to. I would challenge your source as to the milk being dumped. Over production usually results in financial penalties (which means they basically gets paid below average price for any extra product that is over supplied). I have heard of milk being dumped because of high microbial or contamination issues, which should be common practice.

From 2015:

"There have been days in the last couple of weeks when we have had to dispose of skim milk in lagoons,” DFO chairman Ralph Dietrich said in the letter. “Right now, we continue to be challenged on a daily basis and there is no obvious end in sight.”

Ontario farmers have produced 5.4-million litres of excess skim milk in the past month, according to DFO spokesman Graham Lloyd. Since late May, roughly 800,000 litres of milk has been poured into farm manure pits, called “lagoons.”

http://www.theglobeandmail.com/repor...ticle25030753/

Originally Posted by krynski

As someone who is closely linked to the supply management system, I am a full supporter. I am not a farmer nor part of the marketing board. The costs to operate and ensure a quality product are far higher in Canada, than in the US. You could factor in the need to provide heat in the winter (and with that, actually closed barns), the increased ingredient costs, etc as factors.

Which is exactly why we should be taking advantage of free trade to import items from places that can produce more them efficiently and focusing our efforts on producing the agricultural commodities that we have a competitive advantage in. The current system simply props up small inefficient farming operations at the expense of the consumer.