The 48 cent increase in the cost of a 2 Litre of milk has left a sour taste in the mouths of many people in the province.
The DairyFarmers Association is blaming the grocery stores for the sharp increase. The increased cost of feed and gasoline is the culprit, or is it?
For decades Canadians have paid much more for milk, poultry and eggs than Americans and Europeans. Newfoundlanders and Labradorians have paid even more.
The Canadian Dairy market is not an open market. It is governed by a supply-management system. The original intent of the system was to reduce surplus and ensure farmers received a fair return on their investment.
For all intensive purposes the producers have a monopoly within their provincial jurisdictions. They control how much milk is produced, who produces it, How much it costs to buy new quotas, what the milk is used for and they set the wholesale price.
Three key sets of organizations are involved in formulating and implementing Canadian dairy policy. These are the Canadian Dairy Commission (CDC), the Canadian Milk Supply Management Committee (CMSMC), and the provincial milk marketing authorities.
The Dairy Farmers Association manages the quota, the prices and border controls. They have a captive market. Who sits on the Dairy Association, mostly dairy farmers of course!
It is time for a major reform of this broken supply-management system, which is not in the best interest of consumers.
A Conference Board of Canada study showed that Canadians pay 60 cents more for a one litre carton of whole milk than Americans and $1.50 more for a one-pound package of butter than Australians, which has a deregulated dairy system
Reform of the supply-management system in Australia and New Zealand created more competition in those countries allowing farmers and producers to export where they have captured over half of the world’s dairy markets.
The Canadian Restaurant Association claims that dairy products are being kept artificially high. Canadians, they say, are paying as much as double the international market price for dairy products.
The current system prevents innovation, stifles competition and stiffs consumers.
Check out these links:
- The Poor Still Pay More – Institute for Competitiveness and Prosperity
- Making Milk – Conference Board of Canada
- The Perfect Food in a Perfect Mess: The Cost of Milk in Canada – Fraser Institute (PDF)
- Dairy production: The cost of supply management in Canada – Montreal Economic Institute (PDF)
- The Milk Marketing Scheme