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January 18, 2022

Are Canadian dairy quotas fair to consumers?

Thanks to a decades-old combination of tariffs, quotas and simply price fixing, Canadians pay higher prices for eggs, dairy, and poultry than most other countries.

And according to the OECD - the organization representing the world's developed economies - we pay nearly double the world price for milk, cream and butter, for instance, and two-thirds more than the American price.

The culprit is the quota system, which limits what leaves farms’ gates, thus stifling  -- along with large tariffs that block the entry into the country of similar goods -- the natural selection process that governs most businesses.

While the supply management system has worked well for farmers, and does provides both price stability and food safety, consumers are starting to think they've been coming up with the short straw -- which is what critics like Danielle Goldfarb have been saying for years

The subsidy amounts to a transfer to dairy producers of $72 per Canadian per year, that report says.

So the real winners from supply management are the dairy farmers -- about half of whom live in Quebec -- that received the initial quotas years ago. Click here for a good overview of a complex subject. 

So how can we reduce dairy prices without ruining present-day dairy farmers who bought their quotas in good faith? One option -- as described in this CD Howe proposal -- would be to gradualy increase the number of quotas, so that they gradually lose their value and can be subsequently abolished.

Are dairy quotas fair to cumsumers? Would you support leglislation thast would open our border in this area/?

By Gordon Powers, MSN Money





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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...