Opinion: Farmers deserve a system that offers a fair share
Commentators have had a field day lately over seemingly scandalous revelations that milk produced on Canadian dairy farms is sometimes dumped instead of sold into the marketplace.
However, far from being a damning indictment of a corrupt system, the recent study, accompanied by the predictable tsunami of moral outrage, highlights some flaws in the arguments for ridding Canada of supply-managed dairy, poultry and eggs.
Authors Sylvain Charlebois from Dalhousie University, Benjamin Goldstein from the University of Michigan and Thomas Elliot from Aalborg University in Denmark published their research in the journal Ecological Economics.
A cow in a dairy farm, Tuesday, January 23, 2024 in Saguenay Que. THE CANADIAN PRESS/Jacques Boissinot
They multiplied the number of dairy cows in Canada by average milk yields and compared that number with the volume sold to Canadian processors. The difference, they concluded, is the amount that gets wasted, which amounts to about seven per cent of the milk produced between 2012 and 2021.
“By our estimates, over 6.8 billion litres of raw milk vanished from Canadian dairy farms since 2012 (totalling a value of $14.9 billion CAD). We calculate this is equivalent to 8.4 million tonnes of CO2 emissions and enough milk for 4.2 million people (11 per cent of the Canadian population) annually.”
They blame inefficiencies in Canada’s supply management system, which controls production and pricing while limiting imports. Formulas used to set prices include a reasonable allowance for farmers’ costs of production but not so rich as to stifle innovation. The result is sector stability, but at prices typically higher than they might be otherwise.
The Canadian Dairy Commission quibbled with the study’s methodology and its conclusions, pointing out that surplus milk is sometimes used to support food banks or fed to livestock.
But it doesn’t deny that, for various reasons, milk sometimes gets dumped.
No one wants to see good food wasted — in any sector. It’s fair to pressure the industry to do everything possible to reduce waste.
By the way, milk also gets dumped in the U.S., which doesn’t manage supply but uses subsidies and school milk programs to support its dairy farmers. Dumping in the U.S. system is common enough that extension services have fact sheets extolling its virtues as fertilizer.
In short, ending supply management won’t be the end of spilled milk.
Still, certain editorial writers have pounced on this study as one more reason why Canada should dump the system that they say allows farmers to profit at consumers’ expense. “Supply management’s state-enforced manipulation of the farmgate price for milk (as well as for eggs and poultry) is effectively a regressive tax on consumers that also serves to shield some farmers from the vagaries of competition and high inflation,” writes the Globe and Mail.
The same editorial then decries the plight of non-supply-managed farmers as “victims of oligopolies that Canada has allowed to prosper, and which raise their costs while lowering the prices they get for their produce and livestock.”
It calls on Canada’s Competition Bureau to use its powers to address the “power imbalance” driving small farmers and processors out of business while keeping consumer prices high.
Statistics Canada reports that Canadian dairy farmers retained on average 21.7 cents of every dollar of revenue earned in 2022. Canada has 275 federally inspected dairy processing plants spread out across the country. Add in smaller regional processors and the number jumps to around 450.
By comparison, beef farmers kept four cents. Two companies operating three facilities control 99 per cent of the beef processing in this country.
So, we should blame the too-powerful dairy farmers for driving up consumers’ cost of dairy products but the low margins the powerless cattle farmers receive from the so-called open market haven’t made beef any cheaper.
Consumers pay either way. The difference lies in who captures the value.
Do we look to regulation and retroactive enforcement, which is expensive, to police fairness into the system? Fines won’t bring back lost farmers or processors.
Or do we continue to refine an economic model that balances market power on the front end while supporting Canadian processors?
I’ll put my money on a system that ensures farmers extract a fair share from the value chain.
Laura Rance is executive editor, production content lead for Glacier FarmMedia. She can be reached at [email protected]
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Credit: Opinion: Farmers deserve a system that offers a fair share
