by David J. Climenhaga
Prime Minister Stephen Harper, that old ideological market fundamentalist, must be cackling and rubbing his hands with glee at the way the business media is covering Canada’s desire to take part in the Trans-Pacific Partnership talks.
According to the Globe and Mail, for example, the TPP negotiations are so big that Canada really has no choice but to get involved. And (to summarize) while our fine prime minister will do what he can to save Canada’s beloved chicken, egg and dairy producers, if the supply-management system that’s made their agricultural sector hugely profitable for as long as anyone can remember has to go over the side for the benefit of the commonweal, well, so be it.
Que sera, sera, guys – better sell the farm while there’s still some value in it.
In other words, this is what Mark Twain might have called “a stretcher” – that is, a yarn that has some appeal but that lacks a certain relationship to the truth.
Indeed, thanks to Mr. Harper and this week’s TPP news coverage, there’s a strong case to be made that all farms in the supply management sector have already precipitously declined in value, as of right now.
For example, if you’re a dairy farmer who last week paid $1 million for the “quota” to sell the milk from 40 dairy cows, it seems likely that today your investment is in effect worth not much more than zero.
Others who know the field better than this city boy will explain to you a million and one reasons why this isn’t so. But, really people, if supply management of dairy, eggs and poultry through marketing boards is on the table in the TPP talks, who would pay a dime for quota that may have some residual value at the moment, but will be worthless as soon as a deal is signed?
Now, this is complicated, people, and I apologize for that. I’m not sure anybody but the people directly involved really understands how it works. But what quota boils down to is the permission to sell your product to a marketing board – which in turn is the only entity that is legally permitted to sell it into the market.
In other words, if you or I buy a dairy cow for $2,000, we’re not allowed to sell the milk she produces unless we have “quota” to sell it to a marketing board. Since quota like everything else gets traded in our capitalist economy, it’s gotten pretty expensive. Expect to have to pay about $25,000 to be allowed to sell Bossy’s milk.
Anyone who is not a hard-line market fundamentalist has to look at the whole supply management with a certain degree of ambivalence. On one hand, it’s made family farms economically viable throughout Canada while they collapsed in the United States, guaranteed good quality and safe products on our tables and didn’t require direct government subsidies.
On the other hand, it’s been a pretty sweet deal for the farmers involved because, like the name implies, it limits supply and, as even Marxist economists admit, tight supply means high prices. Consumer prices for dairy products, eggs and poultry are not only high because the supply is limited but because the cost of quota has to be factored in. Arguably, supply management is a key reason why dairy products are so expensive in this country compared to the United States.
Until yesterday, anyway, farmers were willing to pay big money for quota because having quota guaranteed big profits. It made supply managed farmers one of the country’s most powerful and effective lobby groups. This is especially true in Quebec.
Historically, this was part of the reason that while they demanded free markets for the rest of us, especially labour, Mr. Harper’s Conservatives were prepared to shield farmers from the harm free markets inevitably do in return for the farm community’s consistent habit of voting for Conservative MPs throughout Ontario and the rural west.
This led at times to some pretty tortured reasoning, like then Agriculture Minister Chuck Strahl’s unintentionally hilarious 2008 explanation of why free markets are bad for chicken farmers but good for barley farmers. “This New Government has and will continue to strongly support Canada’s supply management system,” he explained. “However, Western Canadian wheat and barley producers need a change – the change to marketing choice.”
Guess what, people. They delivered on the Wheat Board, but it looks as if the supply management promise was all kisses and no commitment.
In the short term, look for the Conservatives to promise compensation for quota (paid for by urban taxpayers who have never really benefited from this system) and to hint that they can cut a deal that will save supply management.
That’ll be a good pitch, but unlikely to match reality. Given how obvious that is, it will be interesting to see if the farmers who will inevitably lose from this will continue to mindlessly vote Conservative before they have to move to the city and take jobs like the rest of us.
Entry into the TPP talks provides the Harperites with the opportunity to deliver the second punch in the one-two combination that will finish the family farm in Canada and hand food production over to the so-called agri-food industry.
When Prime Minister Harper is done, the only part of the Canadian agricultural industry in which independent operations will still be viable will be marijuana farms in British Columbia.