Phase out supply management? Tories’ debate a ‘healthy exercise,’ expert says

Click to play video: 'Pros & cons of Canada’s supply management system'
Pros & cons of Canada’s supply management system
WATCH ABOVE: While Ottawa is fully supportive of Canada's supply management system, others want to get rid of it. David Akin explains why – Apr 19, 2017

After years of backing Canada’s dairy supply management system, the federal Conservatives will discuss the possibility of embracing a more open-market system at their annual convention.

The Conservative Party of Canada and its leader, Andrew Scheer, are currently in favour of supply management, which sets production quotas and prices for domestic dairy products, while imposing hefty tariffs on imports.

However, party members are expected to discuss an about-face in their stance this weekend. The notion is near the bottom of a long list of proposed policy changes, and will not necessarily become part of the Conservative platform in 2019.

“I do believe it’s time to have a debate on the future of supply management, so it is a good exercise to have as a political party,” Sylvain Charlebois, dean of Dalhousie University’s faculty of management and agriculture and a professor in food distribution and policy, told Global News.

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However, Charlebois says there’s no chance the policy will be passed, or that it will have a direct impact on North American Free Trade Agreement (NAFTA) negotiations. He says there are too many entrenched interests in the current system, including strong support for it among voters in Ontario and Quebec.

“It’s healthy to have this debate, but I don’t think it’ll amount to much of anything,” he said.

Abolishing the system outright would be “too dangerous, since many of our farms aren’t competitive right now,” Charlebois said. He points out that Canada has a lot riding on the existing system, including multi-billion-dollar quotas and government loans that rely on dairy production as collateral.

“Canadians are in this as much as farmers, so I think we need to be careful what we wish for,” he said.

The Conservative policy proposal would encourage a gradual phase-out of supply management, rather than immediately abolishing it.

The protectionist policy is popular among farmers, particularly in Ontario and Quebec, where the Conservatives will need to win more seats in the next federal election.

It’s also become a lightning rod for criticism in international trade negotiations, particularly with U.S. President Donald Trump, who has tied it to renegotiating NAFTA over the last year.

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Conservative leader Andrew Scheer tours Peterborough Ex

The supply management shift is one of 76 proposed policy changes on the docket at the Conservative convention, as the party seeks to refine its stance on a range of issues ahead of the 2019 federal election.

“In order to lower the cost of food for Canadians, strengthen the agricultural sector and open more markets worldwide for Canadian exporters, a Conservative government will phase out supply management while smoothing the market adjustment for Canadian farmers,” reads the proposed change, which was put forward by a group of Conservatives from Alberta.

Party members will break up into groups to discuss the 76 proposed policy changes, then choose a maximum of 10 changes for wider discussion on Saturday.

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Charlebois credits former Conservative leadership candidate Maxime Bernier with opening the door for supply management discussion, although he was not the one who put it forward for the convention.

Bernier was booted from the party’s shadow cabinet in June, after releasing a chapter on abolishing supply management from his unpublished book.

“More people now know that supply management is a bad policy,” Bernier wrote in his chapter. “At some point, the arithmetic will force a change.”

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Maxime Bernier removed from Tory shadow cabinet

A senior party official told Global News at the time that Bernier was not kicked out for sharing his views on supply management, but for going back on a promise to Scheer that he would not publish or promote the book until his retirement.

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Canada’s dairy industry is largely supportive of the existing system. However, their solidarity took a hit in June when Saputo Inc., one of Canada’s largest dairy companies, criticized the system.

“You can’t hold onto your milk and supply-managed system and have a class of milk competing with world markets at the same time,” CEO Lino Saputo Jr. said at the time.

“The system is broken… The problem is everyone is putting their heads in the sand and no one really wants to find solutions until they’re forced,” he said.

Charlebois says the policy keeps consumer prices stable, although they tend to be more expensive.

The Liberal government has said it will defend supply management at the NAFTA negotiating table.

In June, Prime Minister Justin Trudeau said he’s told Trump many times: “We won’t touch our supply management system.”

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