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SOURCE C.D. Howe Institute
TORONTO, March 13, 2013 /CNW/ - Canada's controversial but politically
untouchable dairy supply management system can be reformed, while
addressing the concerns of wary politicians, consumers tired of
overpaying for milk and cheese, and farmers worried about their future.
In "Putting the Market Back in Dairy Marketing," authors Colin Busby
and Daniel Schwanen call for better representation of consumer
interests in milk marketing decisions, a cap on milk prices, and steps
to measure efficiency and open new markets for dairy farmers.
"These are politically feasible reforms that could be achieved in the
near-term, reducing costs for consumers and bringing lasting benefits
to dairy farmers and agrifood producers, through greater efficiency and
access to growing international markets," commented Colin Busby.
Canada's system of dairy supply-management, note the authors, restricts
the availability of milk to Canadian households, food processors and
restaurants, in service of maintaining a higher price for milk and
dairy products than Canadians would otherwise pay. The beneficiaries of
the outdated system are Canadian dairy farmers who own production
"quotas." New dairy farmers must purchase quota, often at prices they
can ill afford, to sell milk in Canadian markets.
The system relies on an import tariff on dairy products and federal
legislation under which Ottawa delegates power over interprovincial
trade and exports to the provinces. But the lynchpin is the Canadian
Dairy Commission (CDC), a federal Crown corporation created by the Dairy Commission Act.
The authors say that current restrictions on the Canadian milk supply
are unnecessary to meet the twin objectives of the CDC to provide a
fair return for farmers and a continuous and adequate supply for
consumers. "Consumers can have a better deal on milk without denying
efficient farmers the opportunity to earn a fair return," said Daniel
Schwanen.
The paper recommends:
-
changing the membership of the CDC board of directors to ensure consumer
and industrial users' interests are represented in decision-making,
consistent with the regulatory set-up in many other industries;
-
capping prices for milk set by the CDC, until a reasonable benchmark is
reached for an "efficient farm," using national and international
comparisons; and
-
restoring to the federal government the powers over export and
interprovincial trade that it delegated to the provinces so that
interprovincial trade can expand, and efficient farmers who wish to
operate entirely outside of the quota system may export outside of
Canada.
"A sharper focus on efficiency would also benefit the industry, where
many new farmers are beset by debts, high quota values make entry
difficult, and opportunities to access new markets are lost." added
Daniel Schwanen.
For the report go to: http://www.cdhowe.org/putting-the-market-back-in-dairy-marketing/20967
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