Ending supply management would mean huge job loses: report

January 19, 2018, Montreal, Que. – According to La Coop fédérée, the Canadian supply management system should not be used as a bargaining chip for the eventual renewal of the North American Free Trade Agreement (NAFTA).

Doing so would have serious economic and social impacts for many regions of the country in the long-term. Many Canadians, producers and consumers, would feel the negative impacts.

A recent PWC Canadareport, commissioned by La Coop fédérée, Exceldor coopérative, Burnbrae Farms and Nutrigroupe, in collaboration with the Fédération des producteurs d’œufs du Québec, Les Éleveurs de volailles du Québec and the Producteurs d’œufs d’incubation du Québec, indicates that between 58,000 and 80,000 jobs are threatened in Canada in the event that the supply management system disappears.

A difficult future
According to the results of the study, the primary consequence of abandoning the system will be that the cost of U.S. imports into Canada will likely become the reference price for the combined U.S. and Canadian markets.

In concrete terms, this means that far fewer products from local producers will be available to consumers.

The PwC Canada report estimates that a dismantling of supply management may result in a market share loss of 80% to 90% of Canadian egg production, which will leave them with 10% to 20% of the current market. Moreover, the market share for chicken production may decrease by 40% to 70%.

Another consequence is that the vast majority of the Canadian turkey industry may disappear.

From an economic perspective, these market share losses would translate into a decrease in Canadian GDP ranging from $4.6 to $6.3 billion.

No gain for the Canadian consumer
Will abandoning the system benefit Canadian consumers in terms of lower prices? According to the report, the price declines will likely be moderate.

In addition, in terms of social impacts, the decline in the number of family farms could undermine social cohesion in rural areas.

The findings of the report therefore do not predict anything positive for the Canadian agri-food sector. In fact, the authors note that:

In the event that the supply management system is dismantled, it is reasonable to expect that in the absence of a long transition period and major restructuring, U.S. companies will fill a large portion of the markets for eggs and chicken in Canada:

• Significant negative threats to biosecurity and the environment will likely emerge as a result of the system being dismantled;
• Governments’ attempts to mitigate these impacts would require massive government support and a long transition process;
• Some areas with large numbers of small egg and chicken producers may have disproportionately negative effects, and provinces without major processing companies will likely lose most of their production;
• Employees who lose their jobs will probably find it difficult to find a new job because the average level of education for these employees is well below the national average;
• Canada will increase its dependence on imports for staple foods, which will increase the risk of food-related shocks;
• An open market regime could lead to a decline in the quality of the food supply and a decrease in consumer choice.

“The Canadian model enables us to collectively take advantage of an agriculture that was built and has evolved according to our values, that takes into account our collective concerns in terms of the economy, geography, the environment, food security, and innovation, and one that has so far delivered results that speak for themselves, said the president of La Coop fédérée, Ghislain Gervais during a media event. The system works.

“In the name of what must we therefore accept the imposition of an American-style of agriculture, that is to say a highly concentrated and industrialized form of agriculture that does not respond to the characteristics of our country or our values?”

“By its very nature, the Canadian agricultural model must be protected. And to do this, I think it is legitimate to claim, in its name, a measure of protection. On behalf of its members, its partners, its clients, its consumers and our collective values, La Coop fédérée is, today, asking for just this,” concluded Gervais.

To read a summary of the report: web.lacoop.coop/en/publication