Canada can eliminate supply management by following Australia's lead

Appeared in the Financial Post, July 17. 2018

Canada can eliminate the supply management of the offer by following the leadership of Australia. And as the trade tensions between Canada and the United States continue due to the renegotiations of NAFTA, and President Trump places Canada in the protection of several sectors of its agricultural sector in the front and center, Canadian policymakers they should learn the lessons from their Commonwealth cousins ​​in Australia about the phasing out of supply management.

In this way, Canada’s supply management policy means that Canadians pay much higher prices for basic foods such as milk, cheese, eggs, and poultry. These higher prices apply in two ways. First, the amount of domestic production is limited by government regulation. And second, imports face heavy sanctions, which makes them significantly more expensive than domestic production substitutes.

High prices

It is a fact that tariffs range from 168 percent for eggs to almost 300 percent for butter. And it’s no surprise that higher prices for staple foods disproportionately hurt low-income families across Canada.

However, such trade tension due to the supply management of Canada is established as an opportunity for the nation to gradually eliminate a policy that should have already been eliminated. For its part, Australia provides a real world, an example of work.

And in 2000, Australia dismantled the agricultural subsidies that had protected the dairy industry since the 1920s. For most of the 20th century, successive governments stabilized the supply and price of milk, butter, and cheese to through protectionist policies and subsidies, which, as in Canada, meant higher prices for consumers and less efficient farms.

There is no doubt that the Australian reforms reduced consumer prices, which disproportionately benefits low-income households while making the industry much more efficient and competitive internationally.

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Source: Jon Berry, Alan Oxley, and Danny LeRoy | Fraser Institute