Supply management fixation may finally be coming to an end

Not to be part of the deal would have been tragic for Canada’s agricultural economy

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INNSBRUCK, Austria Oct 7, 2015/ Troy Media/ – We shouldn’t kid ourselves, the Trans-Pacific partnership (TPP) trade deal was never really about Canada. It was, in fact, about the United States’ will to undermine China, increase its commercial footprint in the region, and connect with Japan.

But whatever the motivation for the deal, it is time to redefine what competitiveness really means to our new Canadian agricultural landscape.

While many Canadian agricultural sectors, mostly in supply management, are concerned, on a purely net basis not to be part of a signed deal would have been tragic for Canada’s agricultural economy. Some sectors, like processing, beef and pork will obviously gain from this deal, while others such as the dairy industry will face serious headwinds.

Supply management reached the end of its economic relevance years ago as many farmers affected by the coming changes have recognized, albeit quietly. Dairy, poultry, and egg producers alike will now have to look to their future and work on revamping their business model to become more competitive. A part of that process will have to be an acceptance that not all of them will survive in the new normal; eventually more farms will disappear. But let’s not lose sight of the fact that we have already lost thousands of farms working in the supply management paradigm.

A restructuring of the sector will only happen, however, with the right type of support from the provinces and the federal government. When Europe ended its quota system this year, several programs allowed a number of farmers to fully prepare for the open market. Unfortunately, some countries like France and the U.K. were clearly ill-prepared and did not make the proper adjustments. Canada cannot afford to make similar mistakes. We must be prepared to give the industry the time and resources to foster better streamlining during the transition.

Giving access to foreign produced commodities will also require standardization in food quality regulations between trading partners to ensure that Canadian consumer expectations of high quality are not compromised. The crucial issue of growth hormone usage in U.S. dairy, an illegal practice in Canada, is one of many examples of the need for international co-ordination.

These changes were inevitable, however, and reforming the supply management system – and our farmers’ dependence on marketing boards – was just a question of time. For many of them, marketing boards have proven to be powerful protectionist mechanisms over the decades. But marketing boards are also psychological traps as they, in many cases, suppress innovation and competition.

The Canadian Wheat Board provides a successful example of what can happen when a monopoly ends. Even though the policies and actions of the Board divided farmers in the West for decades, the end of its single desk model in 2012 to sell wheat and barley sparked a tsunami of positive growth out West. As a result, entrepreneurial farmers in the Prairies have blossomed and embraced trade, nurturing formidable partnerships with grain handlers, brokers and traders. The Prairies are also producing and processing more commodities like Pulses and Quinoa, something which would never have happened with the single desk policy. A similar paradigmatic shift could lift current supply managed sectors to new competitive heights.

But this initial TPP deal is just the beginning. Canada will likely give greater agricultural market access in the future so the industry needs to be prepared for the shift.

At heart, the TPP deal is nothing short of a major coup for Canada. The 12 member-state partnership includes over 800 million affluent consumers and more than 40 per cent of the world economy, even if Europe, India and China do not sign on. Canada would have been completely isolated if it hadn’t joined the group. And since agriculture is about feeding consumers, greater access to exponentially more consumers is clearly desirable.

For the first time since 1988, trade and agriculture are finally getting the attention they deserve during an election campaign. With what is likely to be a reformed supply management regime, this is certainly a great opportunity for Canadians to ask our leaders to shape what we have been missing for years: A real vision for Canadian agrifood.

It is time for farmers, some of whom have been very vocal in defending the current system, to realize that defending the current supply-oriented framework is strategically futile.

Dr. Sylvain Charlebois is Professor of Food Institute at the University of Guelph.

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