BUSINESS

A fowl play

Canada tries to preserve supply management

JOHN DALY December 9 1991
BUSINESS

A fowl play

Canada tries to preserve supply management

JOHN DALY December 9 1991

A fowl play

Canada tries to preserve supply management

Carol Myers is clearly worried about the growing international momentum towards more liberalized trade in farm products. She and her husband, Gordon, keep 600 hens on their 100-acre property 55 km west of Charlottetown. Like 37,000 other Canadian egg, dairy, chicken and turkey farmers, the Myerses benefit from an agricultural supply-management system—a web of provincial quotas, fixed prices and import restrictions that insulates them from foreign competition and practically guarantees them a captive market. But even with that protection, the Myerses say, they earned only $13,000 after expenses last year. And now it appears that U.S. and European negotiators at the 108nation General Agreement on Tariffs and Trade (GATT) talks in Geneva are preparing to force Canada to scrap supply management—a move that Carol Myers says will open Canada to a flood of low-priced food imports. “We won’t be able to make any profit at all on our eggs,” she says. “We won’t be able to keep going.”

Until recently, it seemed that the Myerses

had nothing to worry about. The current fiveyear-old round of GATT talks seemed hopelessly paralysed, and Canada’s supply-management system appeared an unlikely target. Although U.S. negotiators had pushed hard for the elimination of all farm-support programs and import quotas, including Canada’s supply-management system, both the 12-nation European Community and Japan had consistently stymied any reform proposals. But in recent weeks, in an effort to prevent the talks from breaking down, U.S. and EC negotiators have moved close to an agreement on a compromise proposal that would require all GATT member countries to replace their import restrictions and subsidy programs with protective tariffs, which they would later have to reduce. Now, apart from Canada, the only major trading countries that support import quotas are Japan and South Korea, both of which are fighting to protect rice farmers. But if the three countries want to remain part of the GATT system, they may be forced to back down and adopt the tariff scheme.

Last week, federal Trade Minister Michael

Wilson and Agriculture Minister William McKnight abruptly left trade talks in Mexico City to travel to Geneva in an apparently unsuccessful attempt to convince GATT delegates to allow Canada to retain its supplymanagement system. After a day of informal meetings with delegates from several of the world’s major trading nations, Wilson told reporters that he and McKnight had “not been overwhelmed by the support that we have received.”

At first glance, Canada’s stubborn defence of supply management appears inconsistent with its long-standing support of U.S. efforts to eliminate international grain subsidies—and with the Mulroney government’s outspoken commitment to free-market economic policies. But last week’s Wilson-McKnight mission may have had more to do with politics than economics. Although the total number of Canadian egg, dairy and poultry farmers is small, the farm vote in Quebec alone is large enough to determine the outcome of elections in 25 of the province’s 75 federal ridings. During the 19861988 Canada-U.S. free trade talks, Canadian officials convinced their U.S. counterparts to exempt supply-managed commodities from the agreement. They agreed to deal with the issue at the GATT negotiations instead.

Even within Canada, there are few supporters of the provinces’ priceand quota-setting marketing boards, apart from farmers themselves. Because the marketing boards limit the supply of eggs, milk and poultry to ensure that

producers receive profitable prices for their output, Canadians pay substantially higher prices for those items than shoppers in the United States. Last week, supermarkets in Wichita, Kan., for one, charged an average of $1.03 for a dozen eggs, 68 cents for a litre of

milk and 62 cents a pound for a whole frying chicken. At supermarkets in Winnipeg, by contrast, eggs cost an average of $1.44 a dozen, milk sold for $1 a litre and chicken cost $1.19 a pound. In addition, Canadian food processors and grocery retailers complain that the supply-manage-

ment system sometimes causes food shortages.

But the Ottawa-based lobby groups that represent farmers maintain that supply-management guarantees shoppers a steady supply of food products while protecting the livelihood of Canadian producers. Scrapping the system and replacing it with tariffs, which would gradually be eliminated, would expose Canadian farmers to unfair international competition, they say. Timothy Finkle, a spokesman for the Dairy Farmers of Canada, for one, notes that U.S. dairy farmers receive milk-price support payments directly from Washington. As well, he says that U.S. producers realize substantial cost savings from federal programs designed to lower the cost of feed grain, irrigation and rural electricity. Canadian negotiators say that the proposed GATT reforms would leave those programs untouched. And farm spokesmen say they doubt that Ottawa would introduce similar measures in this country to assist farmers.

But with virtually all of the world’s major trading nations now lined up against supply management, even the farmers’ considerable political clout appears insufficient to save the system. Carol Myers says that none of her four children, aged 23 to 31, has expressed any interest in taking over the family farm. She and her husband—and thousands of other Canadian farmers—may eventually have little choice but to toss in the shovel themselves.

JOHN DALY

GLEN ALLEN

JULIE CAZZIN