TPP Talks Ruffle Feathers

With the announcement that Canada has joined the Trans-Pacific Partnership (TPP) trade talks have come the usual onslaught of opinion pieces editorializing that the end of supply management is just around the corner.

These writers make the assumption that Canada has to agree to give up supply management in order to be part of the club, because it appeared other countries involved – namely Australia, New Zealand and the United States – paid this price for entry.

But did they really? As I write this column, no one knows the specifics of what’s being discussed in the TPP talks, as they are a very well-guarded secret. And agriculture is but one part of these discussions; natural resources, energy and technology will also play significant roles. But as Jim Knisley writes in his column this month (see page 122), the “Asian three” (China, Japan and South Korea) are the key players for Canada. They are unlikely to export dairy or poultry, and we can benefit from their investment in manufacturing. Australia and the U.S. also need deals with the Asian three, many of which will not involve agriculture.

The Prime Minister made it quite clear in his Speech from the Throne that the federal government will protect supply management, and federal agriculture minister Gerry Ritz has echoed that sentiment on numerous occasions, particularly to those who wonder whether or not supply management was the price of entry for the TPP talks.  

It would be foolish to dismantle a system that, apart from research investment (which dried up in the latest federal budget), the government pays nothing to maintain. There are few other agricultural industries in Canada for whom this holds true.

The pundits want consumers to believe that supply management raises the price of dairy, poultry and eggs, and that low-income households are paying to keep farmers wealthy. They compare our prices to those of the U.S., but they always neglect to mention that farmers in the U.S. are subsidized. Thus, their argument is weak: reforming the dairy and poultry industries is certainly not going to cure poverty.

Another popular argument is that the price of quota is a barrier to those wanting to enter supply management. While quota levels are indeed high, getting started in any type of farming nowadays is costly, so let’s make the argument a fair one. Agricultural land values have risen astronomically in recent years, due in large part to increased grain prices. As is evident in the recently released 2011 Census of Agriculture, the number of farms in this country continued to shrink, yet farms are getting larger, because farmers who already own land are better able to leverage credit than outsiders. They also need more land to produce more to afford the increased costs of inputs and thus be more profitable.

For the first time, the number of farmers in the age group of 55 or older now represents the largest group of farmers in Canada. This is very telling, as it speaks to the ability of young people to enter, or continue with, the business of farming. This is certainly not limited to supply management.  

I don’t understand the fierce opposition to a system that provides consumers with what they want and that works for farmers and government. Despite the failure of Doha, and prior to the TPP discussions, Canada has made multiple bilateral trade deals for other farming sectors (namely pork, beef and grain) with countries in Asia and South America and has a free trade agreement with the U.S., all achieved without being “hindered” by supply management.

Despite what the pundits want us to believe, there is no reason to panic just yet. They will likely tire of regurgitating one another’s arguments and move on to another target.