Thursday, June 26, 2008

Something To Moo About

Today's Globe had a great article on why supply management in Canadian agriculture, particularly dairy, has been a miserable failure.

As pointed out by the author, not only does it prevent Canadians from reaping lower prices on dairy goods by virtue of competition amongst dairy farmers or cheaper imports - Canada levies, for example, a 299% tariff on butter - but the quota system stops ambitious Canadian farmers from developing export markets.

Of course, given the dysfunctional role of Quebec within the confederation - and since Quebec farmers reap the majority of the rents accruing from supply management - the benefits from free trade aren't going to show up in Canada anytime soon.

Supply management prevents lower prices, prevents productivity increases, prevents economic growth. The system should have never been implemented, should now be torn up as soon as possible, but don't count on either happening.

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