Butter politics show our supply management system is outdated

The nationwide shortage of butter proves that our system of quotas and tariffs on imports is obsolete

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GUELPH, Ont. Dec. 23, 2015/ Troy Media/ – Butter politics are making a case for dairy supply management reforms, to the ultimate benefit of Canadian consumers.

Canada is apparently experiencing a nationwide shortage of butter. Most consumers have not been directly affected yet — mainly bakeries, restaurants and other institutional purchasers have experienced supply shortages so far.

But sporadic reports have filtered out about retail stores running out of butter. That in itself is not completely unusual at this time of year, but taken in concert with the institutional shortages, it suggests a rising problem.

It has been suggested that allowing more unreported dairy proteins into Canada in recent months has created an imbalance in the system. In an unprecedented move, Ottawa has allowed 8.8 million pounds of butter to enter the Canadian market from New Zealand, Ireland, Belgium and Uruguay. And now other dairy processors, including Stirling, Alliston Creamery and Gay Lea Foods Co-operative Ltd., have made requests to import more cream.

Importing butter may be seen as a simple case of butter politics but there is more to it. Based on the fundamental principle that we produce what we need under supply management, most imported dairy products are subject to high tariffs. Tariffs on butter imports exceed 290 per cent in Canada.

But Ottawa’s recent exceptional measure allows importers to buy foreign butter without paying any tariffs. This increases pressure on the dairy sector to provide evidence that supply management actually serves the public, not just farmers. As food demand becomes more erratic and unpredictable, our system of quotas and tariffs on imports looks more obsolete.

Canada has experienced butter shortages in the past. And demand for butter has increased steadily over the last few years, at a rate of three to five per cent annually. The holiday season likely made things worse, as it does every year. But this year the story has gained media traction, which speaks to how sensitive the whole issue of supply management has become to the public.

The supply management regime is complex, and the socio-economic welfare of consumers is more than ever intertwined with policies affecting Canadian farmers. So discussions on supply management, while rarely seen in Canada, seem inevitable and butter is the current focal point.

Over the last few years, discussions on the Comprehensive Economic and Trade Agreement (CETA) with the European Union and on the Trans-Pacific Partnership (TPP) have opened up the debate on how we will produce dairy products in the future. As the true CEO of food supply chains, consumers have made agriculture everyone’s business, not just that of farmers. What happens on the Canadian farm matters to all of us, and that has made Canadian agriculture more accountable.

These trade deals will allow more foreign-based dairy products into our market, yet Canadian dairy farmers continue to resist changes to our dairy quota system. Since Europe lifted its quota system earlier this year, Canada is the only industrialized country in the world with a protectionist dairy policy.

Introducing desperate measures like decreasing prices at the farmgate and allowing more foreign products underscore how inflexible our supply management scheme is to market shifts. The dairy sector needs a more comprehensive and modern strategy to cope with consumer trends, domestically and abroad. The sector’s knee-jerk reaction to the current market conditions demonstrates the urgent need to roll out a refreshed supply management system.

In an era in which food democracy dictates how our supply systems operate, consumers will put up with dairy farmers’ wishes only as long as those wishes do not affect them in their kitchens.

However, the threat of not having butter for the holidays is a problem for Canadian consumers.

Other Canadian sectors — the food service, livestock and produce industries, for example — are changing to reflect consumer desires. The dairy industry, based on today’s butter politics, must follow suit.

Dr. Sylvain Charlebois is a Professor at the Food Institute at the University of Guelph. Sylvain is included in Troy Media’s Unlimited Access subscription plan.

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