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October 23, 2008
Parties United Against The Free Market
Kate Heartfield, The Ottawa Citizen, September 23, 2008 Kate Heartfield, The Ottawa Citizen, September 23, 2008
Imagine if Canadian politicians talked about how proud they were of keeping the price of gasoline high to protect the oil companies and gas stations.
It's almost unthinkable -- even the idea of taxing gasoline to protect the environment scares the bejesus out of most politicians. Yet, they're more than willing to talk about the importance of making you pay more for food.
New Democrats can barely craft a sentence without a reference to "working families." Instead of seeing high gas prices as a boon for the environment, they see them as a corporate attack on soccer moms. They want to ban ATM fees, for heaven's sake. Yet, they have no problem making working families pay artificially high prices for their daily bread and butter.
The Conservatives are equally hypocritical. Ostensibly free traders, they have gone out into the world to defend Canada's agricultural protectionism, thereby contributing to the stalling of international trade agreements. Free-market economists hate supply management; that doesn't stop their fellow travellers in Parliament from propping up the system.
The Citizen's editorial board, of which I'm a member, meets with the candidates in all Ottawa-area ridings in every election. The other day, we met the candidates in Stormont-Dundas-South Glengarry.
The Conservative incumbent, Guy Lauzon, spoke of being "proud" of his role as parliamentary secretary for agriculture. "We have a lot of dairy farmers in our area and I've been instrumental in protecting supply management."
I asked him how he squared that with the need for global free trade. He began by proudly describing Canada at international trade talks as "the voice in the wilderness over there. We're the only ones that are maintaining supply management."
He pointed out, quite fairly, that other developed nations do subsidize their farmers, and that Canada can sign bilateral trade agreements without scrapping supply management. "The truth of the matter is that supply management doesn't cost the taxpayer a penny. They get a good quality product at a reasonable price and the producer gets a reasonable return on his investment." He's partly right.
The taxpayer doesn't pay directly for supply management. But the consumer -- generally the same person -- does. That "reasonable" price is higher than it would be if we dismantled the quotas and tariffs that reduce supply. Whether a government collects taxes and redistributes the money to farmers, or keeps prices artificially high in the grocery stores to put money directly in farmers' pockets, the effect is the same.
With one important difference: the poor pay more under supply management than under a subsidy system, because milk costs the same no matter your income.
See why I'm puzzled by social democrats who support supply management?
The Organisation of Economic Co-operation and Development, in its Economic Survey of Canada 2008, expressed bewilderment that Canada would work against a more competitive global market, which could ultimately help our farmers. And it singled out that dairy industry of which Mr. Lauzon is so proud.
"Nowhere in Canadian agriculture are the distortions greater than in the supply-managed sectors and above all in dairy farming. Not only are dairy farmers' outputs protected by prohibitive tariffs that result in retail prices for butter and cheese that are around two and a half times those in the none-too-free U.S. market, but their median annual gross income levels have surged to over CAD $250,000. This represents several million dollars per farm and CAD $26,000 per cow."
In other words, forget the romantic notion of a poor family with three cows, all named Bessie.
If you want to pay more for high-quality, or for local, or for organic, or for sustainable practices, that's your choice as a consumer (and all are good choices). That's not what supply management is about. The OECD points out that the quota system sustains big, "generally affluent" producers. It doesn't encourage small-scale, innovative enterprise.
The OECD goes on to call Canada's supply-management system "a blight on the economic landscape and totally unjustifiable in a world of skyrocketing global dairy prices."
So how do politicians from all parties -- with the exception of the occasional maverick and the better-informed among the Green candidates, who have little to lose -- get away with describing themselves as "protectors" of supply management? Why don't the voters boo them off the community-hall stage?
The only answer I can come up with is this: Most voters have no idea how supply management works. They don't realize they're paying more for their weekly groceries because of it. Big Farm, though, knows all about it.
So supporting supply management is a risk-free political move: it doesn't lose votes with non-farmers, and it does gain votes with farmers. The one value that unites parties from all parts of the ideological spectrum, it seems, is expediency.
Kate Heartfield is a member of the Citizen's editorial board. Blog and podcasts: ottawacitizen.com/worldnextdoor
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