Supply Management Part 3: Addressing Recent Globe and Mail Article

Mondays are busy days on the farm and in the farmhouse. We generally take care of just the necessary chores on Sunday, so Monday really signals the start of a new, busy work week. But I’ll still usually find time to sit down with a cup of coffee, usually after the kids are on the bus to school, to go through my twitter feed. This is mostly a pleasurable, relaxing time of day for me. Not today. I was confronted with this article in the Globe and Mail by Barrie McKenna, who has added to his rather lengthy repertoire of anti-supply management opinion pieces with this: http://www.theglobeandmail.com/report-on-business/the-world-is-rapidly-closing-in-on-canadas-dairy-industry/article23678491/

I contacted a few of my friends in the industry, a dairy farmer and an industry leader. Here is what they had to say:

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Jennifer Hayes’ thoughts on the article. Find her on Twitter @FarmShigawake for more thoughtful commentary on supply management.

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Wally Smith, President of Dairy Farmers of Canada, reacts to the article.

 

Initially, I was tempted to just move on with my day, but the more I thought about this article, the more I realized that I have much to say to Mr. McKenna, and that I would like to have my opinion, and the opinion, I believe, of all Canadian dairy farmers, heard as well. I don’t pretend to be an expert on trade, or supply management either, for that matter. But Mr. McKenna’s biased opinion piece leaves me with the impression that either he doesn’t understand the system or that he blatantly takes advantage of his readers’ lack of knowledge on the subject presented here.

Mr.McKenna’s first sentence already shows his bias. He says our dairy “regime” is sealed off from the rest of the world. While I know that we do use tariffs to limit imports of dairy products from other countries, Mr. McKenna conveniently leaves out the fact that we allow more tariff free imports than the US and the EU – 6% of imports are tariff-free in Canada, with only 2.75% tariff free imports allowed into the US. Additionally, as part of the new CETA agreement, Canada will allow 9% of the cheese consumed in Canada to come from the EU tariff free, up from the current generous access of 5%. The (EU) currently imports only a modest number of Canadian dairy products, despite the fact that the EU is a market about 15 times the size of Canada.

Moving further along in the article, Mr. McKenna references a confidential report from the Dairy Farmers of Ontario. But rather than being what he seems to think is a smoking gun detailing Canada’s dairy woes, it rather is a piece that “indeed is confidential, and was prepared in the context of reviewing policy and identifying growth opportunities among farmer delegates … it actually identifies that there is an opportunity for more competitive pricing to compete in the domestic dairy ingredients market which is already directly subject to international price competition from duty-free imports. More competitive pricing will create some export opportunities but these are small compared to the opportunities within the domestic market and below current permitted exports.” https://www.milk.org/Corporate/News/NewsItem.aspx?id=5461

I have difficulty believing the statement that Canada is facing a growing glut of unwanted milk. How on earth would Mr. McKenna like to explain the extra quota allotted to Canadian farmers over the last year and a half? BC farmers have received an extra 10% of quota, and Ontario, Quebec, Nova Scotia, New Brunswick and PEI have received 5%, while the remaining Western provinces have received an amount in-between these numbers. This extra quota has been allotted to encourage farmers to produce more milk to fill the increased demand for milk products by Canadian consumers. I’m sorry, Mr. McKenna, but numbers don’t lie.

Further in the article, the author states that creating a new market to compete with foreign imports of milk proteins or export at world milk prices amounts to an “illegal subsidy.” The irony is actually laughable. Mr. McKenna would like to see our borders open to imports – imports that are very highly subsidized by their country of origin. Care to explain your double standards, Mr. McKenna?

Mr. McKenna drops his two most infuriating comments at the end of the article. First of all, he says that consumers pay an inflated price. Now, if you remember, I addressed this in a previous post, here. Farmers are paid the cost of producing the milk. Period. The recent reduction in the price paid to farmers ($0.06/L for us on our farm) because of decreased costs of production illustrates this perfectly. Keeping prices artificially low in the store by supplying farmers with government subsidies (like in the US, which appears to be Mr. McKenna’s ideal system) does not benefit the consumer, but rather inflates their taxes. Secondly, he indirectly calls farmers greedy. Now, I personally take offense to this, and I’m sure other dairy farmers do as well. Is wanting a fair price for the product we produce “greedy”? Maybe he should talk to dairy farmers in the UK and France who are dumping their milk to protest the dropping milk price, a price with which they cannot cover the cost of production. Are they, too, greedy?

Let me paraphrase my opinion like this: supply management is a great system. It ensures a stable economic outlook for farmers and stable prices in the grocery stores for consumers. Stability on the farm means that farmers can dedicate more of their time and investments in sustainability, technology and advancing animal welfare. With supply management, we all win, consumers and farmers alike. And no, Mr. McKenna, dairy farmers don’t think the system is broken. I am a dairy farmer, and I support supply management – because it WORKS.

4 thoughts on “Supply Management Part 3: Addressing Recent Globe and Mail Article

  1. When I first read McKenna’s article I thought he was showing concern for the dairy industry in Canada. I’m not sure what his motives are. However, it seems like outside forces are at play here that the average family farmer has no control over. I would find it frightening as a business owner to be supplying a market that is almost completely out of my own control. All it takes is for the government to remove its protection and your market would evaporate in a day. I’m interested to know if you or other farmers ever plan for that fateful day which could possibly happen or if you simply believe that it never will? Is there some kind of succession or transition plan that could help farmers to shelter themselves from the worst possible outcome. For the large corporate farms it would probably mean getting vertically integrated, buying out many of the smaller farms and competing on the world market. I think there could also be a good opportunity for some of the more resilient small family farms to have a good income as well by focusing on farm-direct sales and specialty or value added products. What are your thoughts on this? BTW nice blog. I really enjoy reading your articles.

    Liked by 1 person

    • Thank you for your thought provoking comment. Glad you enjoy the blog 🙂

      Mr. Mckenna has a history of writing anti-supply management articles. I’m not sure if he means to incite fear among dairy farmers or to sway the general public’s support with these opinion pieces. However, the picture is not as dire as he claims it to be.

      Government officials continue to voice their support of supply management. They know that the dairy and poultry industries are vibrant, strong, and are contributors to Canada’s economic welfare.

      Of course, as farmers, we know that “fateful day” could happen, as it has in Europe. However, such a process would take years, and there would likely be a process involved to help farmers transition. For the present, we’ll continue to farm with confidence, knowing that our system is a good one and that our government realizes this and supports us.

      I agree with your outlook for the dairy industry should supply management fail. As organic farmers fillling a more niche-type market, I believe we would stand a better chance of being able to succeed while farming in the same way we do now in that type of environment. But let’s hope that we’ll never see the day when those beliefs are tested!

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  2. Cj Lock says:

    Barrie McKenna is very irritating. He probably thinks he is succeeding because dairy farmers are up in arms over his anti-supply management articles. The other side to his viewpoints never appear in his articles, like subsidized international markets, and definitely plays off of a naive audience that doesn’t understand the quota system.
    Supply management is a good, fair system. But like the current need to change how its products are priced I believe it needs reform to other policies as times change. I’m a young dairy enthusiast and have many friends that are as well. We work on farms, even manage farms, but don’t own one and the possibility of this changing isn’t great. I understand how the different provinces have differing entry programs for people like myself. Without financial assistance from other people most of these programs are still very difficult for a new entrant.
    My thoughts are that in todays market where existing farmers are receiving large increases could not more be done to start more new people into the industry? I’m not going to go as far as McKenna and labelling all dairy farmers greedy but I have come across many in my area that are. Dairy farmers trying to enter the chicken lottery! Farmers telling me the GEP should be scrapped because why should they give me free quota?! Farmers saying their marketing is the reason for the increase in demand for butter so why should they only get 9.5% increase in quota and 0.5% go to new entrants (a suggestion of mine) instead of the full 10%?! I am fully aware that many don’t think like this but unfortunately many of your peers do. This type of attitude is what drives the SM critics. This industry needs new blood. The number of farms is decreasing. The size of farms is rapidly increasing which goes against the ‘small, family run’ dairy farm the Canadian dairy industry is advertising. In a time where BC received a 10% increase in quota a grand total of 5 ‘new’ entrants were invited into the industry. Only a few exceptions that made alot of money in another industry do not need help to get into this industry. If you weren’t handed a farm by your parents, had family members give large financial contributions to help you get started, or used an entry program you have little to no chance to succeed. I believe a little more could be done by the industry to help new people into the industry. It’s in their best interest because Canada is trending further and further away from the small family run farm that appeals to the consumer.
    I just want people in the industry to understand how it us for those longing to be in the industry. Our oppurtunities aren’t many or overly encouraging and the attitudes of many in the industry leave us frustrated. We give up stat pay, overtime pay, and a better wage in a different industry for the love of the job. It’s not like farmers couldn’t afford to pay us more!

    Liked by 1 person

    • Again, you’ve voiced our thoughts on this perfectly! I’d really like to meet you someday; if you see us at an event, please introduce yourself, it’s always great to connect with likeminded people. I’m horrified at the responses you have had to your ideas on the new entrant program. As farmers new to the industry ourselves, we’d love to have more “new blood”. Sometimes it can feel a bit like an old boys club. We actually were just discussing the idea of part of the allotment going to new entrants – I certainly think it’s good idea!

      From recent discussions with certain board members, I think you can look forward to an improved system once this whole double dipping mess is sorted out. At least, that was the impression I got – they seem to want to make the program better and more feasible for new entrants.

      Just as an aside: at the recent spring producers meeting we spoke to a bigger producer (700ish) and he actually said he’d like to see five small farms on his road, not just one big one. He’s planning to split his cows & quota between his children someday. Mega farms are definitely not in the industry’s best interest, it was nice to hear this from a bigger farmer!

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