Mature Discussion Needed
The debate over supply management has become stale generating bursts of heat, but shedding little light, according to a recently released discussion paper.
The debate over supply management has become stale generating bursts of heat, but shedding little light, according to a recently released discussion paper.
Al Mussell, senior research associate at the George Morris Centre, says in a paper released late in 2010 (which focuses on the dairy industry) that a more mature discussion is needed.
“The economic and political significance of what is at stake, combined with challenges and implications of managing a regulated system – both in a diverse dairy product market, and in international trade discussions – make it a critical issue in Canadian agriculture. It deserves to be engaged with a more mature discussion, appropriate to its significance. The dialogue could be greatly improved by toning down the emotion and economic ideology, recognizing the supply management system’s benefits and faults, and getting to work on a more pragmatic discussion of how milk supply management can be improved and allowed to evolve,” the report says.
In the introduction to the paper Mussell says most of the base information presented by supply management’s critics “is essentially correct. However, the difficulty is that the arguments are simplistic and lack critical context, and, as a consequence, contribute little in moving any discussion forward.”
In response “supply management agencies have, in turn, issued defensive and similarly simplistic rebuttals to critics. Thus, discussions on supply management have been mired in a static debate that is unlikely to further the interests of any of the parties involved or allow this critical element of Canadian agriculture to evolve. It is unfortunate that in such an important discussion, the dialogue has been allowed to become so heavily weighted toward clashing ideologies, at the expense of pragmatic solutions that would encourage an innovative sector.”
To move the discussion forward Mussell proposes that some basic facts or concepts be acknowledged. The first is that there will be marketing boards as long as producers want marketing boards.
“The idea that government will unilaterally lead a process to remove marketing boards is not practical,” he writes. Whether farmers have marketing boards organized to market on their behalf is of little significance to most Canadians, but of great significance to farmers. “Thus, the politics of an initiative to remove marketing boards will not pencil out, unless dairy farmers suddenly turn against them.”
The second point is: “There will be supply management as long as the producers want supply management.”
“The political calculus of unilaterally dismantling the supply management system does not add up. It is of huge significance to dairy farmers and, in principle, of little significance to the Canadian population,” the report says.
Mussell observes that supply management was initiated to discipline markets in terms of market access and market power and “it is unclear that the latent market access and market power concerns of the past are gone.”
However, if a multinational trade agreement is reached Canada will be a signatory. Despite the strong opposition of supply managed industries “the reality is that the broader Canadian interest overwhelmingly favours liberalized trade, so Canada will ultimately be a signatory to an eventual agreement. Even without factoring in Canada’s trade interest in manufacturing, services, natural resources, intellectual property, etc., with almost 80% of Canadian farm cash receipts coming from products that are not supply managed and thus interested in liberalized trade, the ultimate Canadian interest is clear – in favour of liberalized international trade,” the report says.
The dynamics of maintaining marketing boards and supply management and signing on to new trade agreements requires moving beyond “the simplistic analysis that is the subject of much of the current dialogue.”
“If the reality is that we will have marketing boards and supply management, then the practical problem is how to improve the workings and faults of the system, not simply how to build a better case to eliminate the system. This puts the responsibility on the critics to deal with the relevant questions of how to make supply management more market-oriented and flexible, and better prepare it for reductions in trade protection under new trade agreements.”
Supply-managed industries must also recognize that if Canada becomes part of an eventual trade deal its aggressive stance puts it in a precarious position. “As it stands, if trade agreements are reached, Canada’s ability to participate will have been limited by supply management’s strong stance, Canada will sign a deal they had little role in crafting, and the result in terms of whatever protection remains for supply management will simply have to be accepted.
By taking a more liberal, engaged stance, the dairy industry could have more input into the ultimate provisions enabling supply management.”
The current approach assumes that the dairy and poultry industries have sufficient political clout to prevent Canada from entering trade agreements, or simply that there will be no major trade agreements concluded for other reasons, the report says.
To read the full George Morris Centre report, Click here.
Al Mussell, senior research associate at the George Morris Centre, says in a paper released late in 2010 (which focuses on the dairy industry) that a more mature discussion is needed.
“The economic and political significance of what is at stake, combined with challenges and implications of managing a regulated system – both in a diverse dairy product market, and in international trade discussions – make it a critical issue in Canadian agriculture. It deserves to be engaged with a more mature discussion, appropriate to its significance. The dialogue could be greatly improved by toning down the emotion and economic ideology, recognizing the supply management system’s benefits and faults, and getting to work on a more pragmatic discussion of how milk supply management can be improved and allowed to evolve,” the report says.
In the introduction to the paper Mussell says most of the base information presented by supply management’s critics “is essentially correct. However, the difficulty is that the arguments are simplistic and lack critical context, and, as a consequence, contribute little in moving any discussion forward.”
In response “supply management agencies have, in turn, issued defensive and similarly simplistic rebuttals to critics. Thus, discussions on supply management have been mired in a static debate that is unlikely to further the interests of any of the parties involved or allow this critical element of Canadian agriculture to evolve. It is unfortunate that in such an important discussion, the dialogue has been allowed to become so heavily weighted toward clashing ideologies, at the expense of pragmatic solutions that would encourage an innovative sector.”
To move the discussion forward Mussell proposes that some basic facts or concepts be acknowledged. The first is that there will be marketing boards as long as producers want marketing boards.
“The idea that government will unilaterally lead a process to remove marketing boards is not practical,” he writes. Whether farmers have marketing boards organized to market on their behalf is of little significance to most Canadians, but of great significance to farmers. “Thus, the politics of an initiative to remove marketing boards will not pencil out, unless dairy farmers suddenly turn against them.”
The second point is: “There will be supply management as long as the producers want supply management.”
“The political calculus of unilaterally dismantling the supply management system does not add up. It is of huge significance to dairy farmers and, in principle, of little significance to the Canadian population,” the report says.
Mussell observes that supply management was initiated to discipline markets in terms of market access and market power and “it is unclear that the latent market access and market power concerns of the past are gone.”
However, if a multinational trade agreement is reached Canada will be a signatory. Despite the strong opposition of supply managed industries “the reality is that the broader Canadian interest overwhelmingly favours liberalized trade, so Canada will ultimately be a signatory to an eventual agreement. Even without factoring in Canada’s trade interest in manufacturing, services, natural resources, intellectual property, etc., with almost 80% of Canadian farm cash receipts coming from products that are not supply managed and thus interested in liberalized trade, the ultimate Canadian interest is clear – in favour of liberalized international trade,” the report says.
The dynamics of maintaining marketing boards and supply management and signing on to new trade agreements requires moving beyond “the simplistic analysis that is the subject of much of the current dialogue.”
“If the reality is that we will have marketing boards and supply management, then the practical problem is how to improve the workings and faults of the system, not simply how to build a better case to eliminate the system. This puts the responsibility on the critics to deal with the relevant questions of how to make supply management more market-oriented and flexible, and better prepare it for reductions in trade protection under new trade agreements.”
Supply-managed industries must also recognize that if Canada becomes part of an eventual trade deal its aggressive stance puts it in a precarious position. “As it stands, if trade agreements are reached, Canada’s ability to participate will have been limited by supply management’s strong stance, Canada will sign a deal they had little role in crafting, and the result in terms of whatever protection remains for supply management will simply have to be accepted.
By taking a more liberal, engaged stance, the dairy industry could have more input into the ultimate provisions enabling supply management.”
The current approach assumes that the dairy and poultry industries have sufficient political clout to prevent Canada from entering trade agreements, or simply that there will be no major trade agreements concluded for other reasons, the report says.
To read the full George Morris Centre report, Click here.