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There are a couple mentions of Canada's dairy supply management system, which the U.S. recently pushed hard for the elimination of in the recent NAFTA 2.0 talks
by beloch 8y ago
There are a couple mentions of Canada's dairy supply management system, which the U.S. recently pushed hard for the elimination of in the recent NAFTA 2.0 talks. (Note: Concessions were made, but dairy supply management was not eliminated.)
In Canada's system, farmers must buy production quota allotments from the government in order to sell their products. The number of quota allotments sold is calculated depending on demand in each province. Hence, supply does not exceed demand and dairy prices in Canada are several times what they are in the U.S.. We pay a lot more for milk, cheese, etc. than people in the U.S.. The import duties on U.S. dairy are over 300%, and American products are still able to sell at lower prices most of the time. This policy has not been particularly popular with average Canadians, for obvious reasons.
Despite this, Canada has the same problems with many, smaller farms giving way to fewer huge farms, but not to the same extent as the U.S.. Small dairy farms are not wildly profitable, but they can survive.
Meanwhile, the U.S. system has led to such massive overproduction that U.S. farms are flooding Mexico with subsidized dairy and are doing their best to do the same in Canada. Canadians generally view U.S. dairy as being of suspect quality due to laxer laws on the use of growth hormones such as rBST, but shoppers will still frequently just buy whatever's cheapest.
U.S. dairy producers looking for endless market growth are running into a brick-wall of domestic market saturation and resistance from foreign countries who know lowering trade barriers could mean the annihilation of local production and replacement of quality products with ones of questionable quality. Big dairy in the U.S. is rapidly becoming an international problem.
- sonnyblarney 8y ago"supply does not exceed demand" This is a misrepresentation of the microeconomics at play. However much milk is produced, it will all get consumed, because there is a massive demand for Milk, it would just be at very low prices, possibly below the cost of production. Supply management is better described as price fixing - the amount produced will enable the product to yield a certain price at a certain demand, and therefore be economically viable. " shoppers will still frequently just buy whatever's cheapest." - if they knew one product was superior to another, i.e. if the ostensibly efficient market which relies upon information clearing actually worked ... then the dynamics of the market would help solve these problems. This can be communicated through brand awareness, labelling, all sorts of things. Yes, as you point out, it's an issue basically everywhere because food production, like banking, telecoms, entertainment etc. - is a highly protected industry.
- jogjayr 8y ago> dairy prices in Canada are several times what they are in the U.S. I visited Ontario earlier this year and it didn't seem that way to me, at least in milk prices. I bought 4L (approx 1 gal) of organic milk in Real Canadian Superstore for something like CAD 10 which is USD 7.50. A gallon of organic milk costs around USD 6.50-7 in California, at the low end. So Canadian milk is only about 15% more expensive, it would seem. I think cheese might be more expensive than the US, but that's not the worst thing in the world. Cheese is a bit of a luxury. Your kids don't need to drink cheese every day; you don't need to put it in your tea or coffee or protein shake.