Canadian Manufacturing

MEI blasts supply management, says NAFTA tweaks can expand market access

The Montreal Economic Institute says Canadian farmers governed by supply management could prosper in international markets without support measures


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MONTREAL—In Canada, 92 per cent of farmers perform well in global markets without the benefit of substantial support measures, according to a newly released viewpoint from the Montreal Economic Institute.

The right-leaning think tank says NAFTA renegotations present an opportunity to expand market access for the minority of producers who remain under supply management, which MEI believes limits their growth prospects.

“Subsidies and support measures to producers outside supply management account for less than 3 per cent of gross receipts, compared to 43 per cent for milk production subject to supply management,” said Alexandre Moreau, Public Policy analyst at the MEI and author of the publication.

MEI says products outside supply management are in high demand in global markets, with Canada ranked third among the world’s top oilseed exporters and fifth for beef and veal. Almost 60 per cent of Canada’s agricultural and agri-food production is bound for foreign markets, with nearly half of this going to the U.S. market.

However, the think tank says that for the 8 per cent of farms that come under supply management—milk, egg and poultry producers—exporting and importing is made nearly impossible by a restrictive system.

Canadian dairy producers cannot benefit from growing global consumption to boost their output because their products are subject to a system of quotas and tariffs that limit production to the domestic consumption level, according to MEI.

The organization also asserts that saturation of the Canadian market has driven dairy processors to establish operations outside the country to meet global demand.

Despite arguments that Canadian businesses under supply management can’t be competitive with the U.S. and would lose their domestic market share without the current system, MEI is not convinced.

“This argument does not stand up to scrutiny. For many types of production outside supply management, Canadian farmers draw far less support than what their American or European competitors enjoy, and yet this doesn’t prevent them from doing well in the global marketplace,” said Moreau.

“Without access to global markets, production in the Canadian agriculture and agri-food sector would be significantly lower, and thousands of jobs would be lost,” said Michel Kelly-Gagnon, president and CEO of the MEI. “If 92 per cent of farms do well without supply management, there’s no reason to believe the others couldn’t do the same.”


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