Bills from private members, especially those from the Bloc Quebecois, rarely make it through the parliamentary process. But after passing the House of Representatives with strong support from MPs from all parties, the bill by Yves Perron, who represents the bloc in agriculture, easily passed a second vote in the unelected Senate on Tuesday.
And perhaps even more surprising, the paper deals with a controversial issue: Canada's supply management system, which controls production and sets minimum prices for dairy products, poultry products and eggs.
Many free market economists and politicians see supply management as a legalized price cartel that increases Canadians' grocery bills. And supply management systems have emerged as one of the final hurdles in negotiating Canada's major trade agreements in recent decades.
[Read from 2016: Safe for Now, Canadian Dairy Farmers Fret Over E.U. Trade Deal]
If Mr. Perron's bill clears several remaining legislative hurdles and becomes law, it would prohibit Canadian trade negotiators from proposing supply management changes in future trade negotiations.
Under the system, farmers are assigned production quotas (effectively licenses to produce milk, chicken, turkey, and eggs) that cannot be exceeded to avoid price-destroying oversupply. Until recently, imports were effectively banned due to eye-wateringly high import duties.
Dairy products are the largest and most controversial area. Recent trade agreements allow limited amounts of dairy products to be imported into Canada duty-free or at low tariffs. However, imports above these levels could be subject to tariffs of much more than 200%.
Despite passing Parliament, the bill was divisive between Conservatives and Canadian farmers.
In the recent uproar over food price hikes, supply management has received less attention than grocery store profits. Perhaps that's because supply management makes it difficult to know exactly how much more Canadians are paying for milk compared to grocery buyers in other countries.
No one disputes that Canadians generally pay more. In eastern Canada, where dairy farming is a major hub, the average milk price between 1997 and 2011 was C$63.05 per 100 liters, according to a 2021 paper by agricultural economists at the University of Guelph and Dalhousie University. In New York and New Jersey, the price for comparable quantities during the same period was equivalent to C$44.31.
But the paper's authors also noted that opening the market to U.S. imports does not guarantee lower prices for Canadian milk buyers.
“Given the distribution costs to cover the Canadian market, there is a good chance that Canadians will pay more for dairy products once supply management ends, depending on where the product comes from.” is writing.
But economists were clear about the impact of open markets on Canadian dairy farmers.
“If trade were liberalized tomorrow, American milk would likely flood the Canadian market,” they wrote. “Canadian farmers will no longer be able to compete with the price of American milk, and the entire Canadian dairy industry will eventually become dependent on imported milk.”
All of this is happening at the same time that Canadians, like most people outside of Asia, continue to consume less milk each year.
Under supply management, farmers receive the stability and higher prices afforded by the system in exchange for not being able to export their products. However, most types of agriculture in Canada are not subject to supply management and are highly dependent on exports.
The Canadian Agri-Food Trade Alliance, which is made up of farmers, food processors and related businesses, said the bill in Parliament would “significantly improve Canada's ability to negotiate free trade agreements that are optimal for all sectors of the Canadian economy, agricultural and non-agricultural.” It is a constraint.” ”
When the House of Commons passed the bill last June, Conservatives were roughly evenly divided, with 56 votes in favor. Most, if not all, of these members are from constituencies that include supply-managed farms. In contrast, only one Liberal MP in central Toronto left the party and voted against the bill.
The proposed restrictions on trade negotiators are likely not theoretical. The United States-Mexico-Canada Agreement, a revised version of NAFTA, is scheduled to be reviewed in 2026. Given that the United States has already challenged Canada's dairy regulations twice through the USMCA dispute process, it is certain that it will seek the United States-Mexico-Canada Agreement again. Regardless of Congress's decision, changes in supply management will take place within two years.
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Originally from Windsor, Ontario, Ian Austin was educated in Toronto, lives in Ottawa, and has reported on Canada for the New York Times for 20 years. Follow him on Bluesky. @ianausten.bsky.social.
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