Business & Policy
All Things Considered: September 2006
Lions, Tigers and Bears, Oh My
By Jim Knisley
Lions, Tigers and Bears, Oh My. With the WTO talks seemingly over, there will be a temptation for
Canada’s supply managed industries to strike up a happy little ditty
reminiscent of Dorothy and friends in the Wizard of Oz.
With the WTO talks seemingly over, there will be a temptation for Canada’s supply managed industries to strike up a happy little ditty reminiscent of Dorothy and friends in the Wizard of Oz. You may recall it goes: “We’re out of the woods, we’re out of the woods” sung by a chorus of incredibly perky, cheerful voices.
But don’t get too carried away. The break in the trees may just be a pleasant glade or meadow and soon it could be back into the land of “Lions and tigers and bears, oh my!”
Some of these terrifying beasts will continue to come from outside Canada. Anyone who thinks the U.S. government and U.S. industry will stop criticizing supply management and trying to bring it to an end hasn’t spent near enough time talking to Americans. They truly believe that their domestic oligopoly is the finest form of free enterprise.
It can also be expected that Brazil, Australia, New Zeeland and a number of others will join in the U.S. corporate sing-a-long.
But that will be a trifling irritant, easily managed with earplugs, if Canada can keep its game together. That is less of a sure thing.
It seems that whenever there is a profound, direct international threat the federal government, the Canadian provinces and producers themselves pull together. However when that international threat is removed the squabbling begins. Most often the fighting is over quota allocation and the share of national production. Simply put, everyone wants more.
The reason is dead simple. The poultry and dairy industries are profitable and there are few agricultural enterprises that can make that claim. Not only are they profitable, they are profitable year after year after year and no other agricultural endeavor can match that record of performance.
Why would anyone threaten that? I don’t think that anyone is actually trying to do that. What they are trying to do is build what is in their view a fairer system. Unfortunately, fair for one is seen as foul for another.
In the past, these disputes have approached the brink and then everyone has backed off and a compromise was cobbled together. Often it was provincial governments that promoted the brinkmanship and the federal government that would quietly cajole a compromise.
While the marketing boards are creatures of the provinces, it is often forgotten, except during international crises, that it is the federal government that sets the tariffs that allows the system to work. To date the marketing boards have done a marvelous job of keeping federal politicians on their side.
However, the current federal government is different than others of recent memory. The backbenches of the current government are filled with avowed free enterprisers. Supply management does not fit their core economic philosophy. They were willing to follow their leadership, prior to the last election, and support a resolution supporting supply management. They were also willing to support their leadership – in a minority government – as it defended supply management at the WTO.
But if the threat from the WTO is removed and if inter-provincial rancor emerges, their ears could easily become open to the numerous Canadian critics of supply management.
A hint of where the backbenches might want to go can be seen in a private member’s bill to move to a form of dual marketing for wheat. Effectively this would end the Canadian Wheat Board’s monopoly on export wheat and barley sales.
Supporters of the board, and numerous thorough, detailed studies say this would bring about the end of the wheat board. They also say that such a change would require a plebiscite of producers to determine what producers actually want.
Those promoting the change say a vote is unnecessary and that the board and its supporters are over-reacting. They also argue that giving farmers freedom to choose where to market their grain would increase farmers’ returns. Numerous studies indicate that while a few farmers could increase their incomes, the overall, total returns from the international sale of wheat and barley would fall.
It is safe to say that prairie grain producers are divided over the merits of the wheat board and that those divisions threaten it.
To ensure their future, poultry producers must not allow their differences to become divisions. Supply management may have escaped the WTO’s claws, but it isn’t out of the woods and other beasts still lurk.