Canadian Manufacturing

Supply management survives the TPP, but question of higher costs for consumers remains

Farmers "cautiously optimistic" following tentative agreement on trade deal

OTTAWA—As the massive amount of dust kicked up by the Trans-Pacific Partnership begins to settle, the outlook for the handful of Canadian industries that seemed poised to lose the most, now appears remarkably positive. As the Egg Farmers of Canada themselves said, the tentative TPP agreement has left the organization feeling “cautiously optimistic.”

Just as it survived NAFTA and other minor trade deals since, supply management has survived the TPP.

Over the past several months, negotiations have brought the divisive issue to the fore. The battle saw countless scathing editorials run across the country when it appeared Canada’s dairy, egg, turkey and chicken farmers would be the straw that broke the largest-ever trade deal’s back. Then, when it seemed negotiators were ready to trade away the supply management system to ensure Canada’s place in a deal, farmers were up in arms, marching Holsteins through the streets of Ottawa in protest.

The ultimate agreement, however, did little to justify to build-up. The Canadian government agreed to phasing in small percentages of additional imports, while maintaining supply management for the vast majority of the industries. The level of dairy imports allowed will climb 3.25 per cent, eggs 2.3 per cent, chicken 2.1 per cent, turkey 2 per cent and broiler hatching eggs 1.5 per cent. Meanwhile, Canadian industries will gain easier access to more than a third of the world’s market.

“We recognize the opportunity the Trans-Pacific Partnership brings to Canada and the overall benefits the agreement brings to the economy as a whole,” Egg Farmers said.

The organizations representing the four other industries had similar things to say, thanking the government for its efforts to protect supply management, but noting their displeasure about the concessions.

“Although the additional access granted to the Canadian turkey market will certainly be challenging, the finalization of the TPP agreement removes the cloud of uncertainty farmers have been living with over the last several years,” Turkey Farmers of Canada chair, Mark Davies, said. “We trust this will provide a stable, predictable trading environment moving forward, as the Government predicts.”

To compensate the industries the government announced plans to introduce programs that will assist farmers to the tune of $4.3 billion over 15 years.

For consumers, however, the largely business-as-usual outcome does little to answer the question of what exactly supply management provides everyday Canadians.

“Supply management hurts all 35 million Canadian consumers by forcing them to pay consistently more for milk, chicken, and eggs, as well as for other products that use these foodstuffs as ingredients,” a Montreal Economic Institute report, released earlier this year, found.

The report noted supply management adds $339 to the poorest Canadian households’ costs. And the MEI is far from alone in the claim that supply management has a damaging effect on consumer prices.

Alternatively, groups representing the supply managed industries have consistently argued the systems do not raise prices for consumers, however, saying costs are more reliant on where consumers shop. Recently, the groups pointed to the fact consumers paid $1.30 per litre for fresh milk in Canada, $1.83 in New Zealand, $1.81 in France, $1.15 in the U.S, $1.19 in Germany.

While the “cloud of uncertainty” hanging over supply management has been removed, the issue will continue to aggravate many Canadians who feel they are overpaying for milk, eggs, chicken and turkey, as well as international entities hoping to ship their goods to Canada.

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