After decades of consumers paying far more than they should for staples like dairy, eggs, and poultry, it’s time to finally end supply management.
It’s impossible to deny that Canada is at an inflection point. For too long, our leaders have coasted, allowing old and failing policies to remain in place without taking action to strengthen and diversify our economy.
President Donald Trump’s tariff agenda is proof that Canada’s leaders can no longer be complacent.
One dinosaur from the past that Canada should have done away with long ago is the country’s antiquated system of supply management.
Supply management both serves as a major trade irritant in Canada’s relations with the Trump administration and makes dairy, eggs, and poultry more expensive for consumers.
What should our leaders be doing in the wake of Trump’s tariffs? Diversifying our economy and removing whenever possible trade irritants that are souring relations with our neighbours down south.
Trump has specifically cited Canada’s system of supply management as one rationale for his tariffs.
It makes no sense for Canada’s leaders to insist on further irritating the Trump administration by clinging to a system that was designed for the 1970s, one that makes the cost of everyday staples far more expensive for consumers.
Canada’s system of supply management artificially raises the price of dairy products, eggs, and poultry through a complex web of production quotas, import restrictions, and regulations.
By limiting production domestically and severely curtailing imports from abroad, supply management makes prices more expensive for consumers. And it serves as a major source of conflict with Canada’s largest trading partner.
Before the pandemic, the average Canadian household was paying between $300 and $444 more per year for dairy, eggs, and poultry because of supply management than if the system was not in place or did not exist.
Over the past few years, things have only gotten worse. Food inflation has hit Canadians hard, which suggests that the cost of supply management for the average Canadian household could be significantly more today.
In today’s Canada, 50 per cent of households say they’re $200 away from not being able to pay their bills. Canadian consumers can’t afford to pay hundreds more for products they could and should be getting for far less.
Supply management also hurts U.S. farmers because, in the vast majority of cases, Canada’s system of supply management imposes tariffs of between 150 per cent and 300 per cent on dairy products, eggs and poultry.
At a time when Canadians are rightly up in arms about a barrage of tariffs imposed on various Canadian industries by the Americans, how can Canada justify continuing to place tariffs on American produce that are far higher than any tariffs Trump has imposed thus far?
All major party leaders have so far refused to put supply management on the negotiating table. But doing so would benefit both consumers and our trading relationship with the United States.
Canada’s complex constellation of production quotas and tariffs leads to higher prices for Canadian consumers. For example, buying milk in Canada is no less than 20 per cent more expensive than buying milk in the United States.
Ending supply management would also benefit Canadian producers protected by that very system today over the long term.
Because of production quotas and inflated prices, Canada exports very little in the way of dairy, egg, and poultry produce.
In a world in which Canadian farmers were forced to compete, prices would fall, efficiency would improve, and Canadian products would become attractive to consumers beyond our borders.
Supply management’s best-before date was decades ago. In the face the present trade conflict with the United States, it’s never been more important to put this relic of the past into the history books.
Jay Goldberg is the Ontario Director at the Canadian Taxpayers Federation. He previously served as a policy fellow at the Munk School of Public Policy and Global Affairs. Jay holds a Ph.D. in Political Science from the University of Toronto.
