MONTREAL, Aug. 17, 2017 /CNW Telbec/ - In Canada, 92% of farmers perform well in global markets without the benefit of substantial support measures, a Viewpoint released today by the MEI shows clearly. NAFTA renegotiation therefore presents an opportunity to expand market access for the minority of producers who remain under supply management, which limits their growth prospects.
"Subsidies and support measures to producers outside supply management account for less than 3% of gross receipts, compared to 43% for milk production subject to supply management," says Alexandre Moreau, Public Policy Analyst at the MEI and author of the publication.
Products outside supply management are in high demand in global markets. Canada ranks third among the world's top oilseed exporters and fifth for beef and veal. Over all, nearly 60% 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, this reality is alien to the 8% of farms that come under supply management (milk, egg and poultry producers). This system makes exports or imports nearly impossible.
For example, 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. Saturation of the Canadian market has even driven dairy processors to establish operations outside the country to meet global demand.
To justify maintaining supply management, producers' associations claim they could not be competitive on the U.S. market and that, without the existing system, they would lose even their domestic market share. "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," Mr. Moreau says.
"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," concludes Michel Kelly-Gagnon, President and CEO of the MEI. "If 92% of farms do well without supply management, there's no reason to believe the others couldn't do the same."
The Viewpoint entitled "Does Agricultural Prosperity Require Supply Management?" is written by Alexandre Moreau, Public Policy Analyst at the MEI. This publication is available on our website.
The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.
SOURCE Montreal Economic Institute
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