by SUSAN MANN
New Canadians present a growing market opportunity for agri-business, provided businesses can adapt to changes in food preferences and can quickly roll out their products, says Farm Credit Canada’s chief economist.
But a Western University economist says he doubts shifts in the domestic market present enough of a growth opportunity for companies to meet Ontario Premier and Agriculture Minister Kathleen Wynne’s challenge of doubling the province’s agri-food sector growth by 2020.
“When you’re talking about adding billions of dollars of extra food processing and sales of primary agricultural products, you’re not going to do that in Canada,” says David Sparling, chair of agri-food innovation and regulation at the university’s Ivey School of Business. “Our market isn’t big enough.”
The industry therefore must also focus on increasing exports and adding more value to products, such as establishing local food systems, or manufacturing more value added products, he says.
Jean-Phillippe Gervais, chief agricultural economist with Farm Credit Canada, highlighted the market opportunity presented by new Canadians on Tuesday in a company news release. The release notes that by 2020, “immigration will account for 2.2 million new Canadians and two-thirds of Canada’s population growth.” FCC predicts that the growth could mean an additional $27 billion in Canadian food spending over the next seven years.
In 2011, the largest share of Canada’s immigration population — 45 per cent — came from Asia; Statistics Canada has estimated 55 per cent of new Canadians will come from Asia by 2031, the news release says.
It adds that Agriculture and Agri-Food Canada has projected that demand will grow for foods such as poultry and chickpeas.
Last year Ontario imported $19.8 billion worth of agri-food products, and Wynne noted meeting consumers’ changing tastes presents one way agri-business can meet the challenge she issued Monday at the Premier’s Summit on Agri-Food Innovation at Queen’s Park.
Supplying niche markets, such as organic, health and artisan foods, specialty goods, and biochemical or composite materials as well as competing more aggressively to capture a growing share of existing and emerging international markets presented other opportunities, she says.
Wynne’s challenge has garnered both support and criticism.
The Canadian Federation of Independent Business was encouraged the premier is focusing on the potential of the province’s agricultural sector says Mandy D’Autremont, the organization’s policy analyst. But for the sector to grow, “it will be important for the government of Ontario to provide the environment that will address the sector’s competitive challenges,” such as government red tape, she notes.
Ontario Progressive Conservative agriculture critic Ernie Hardeman predictably found fault with the challenge, noting it lacked details of how Wynne expects the industry to achieve the goal. BF
Comments
Jean-Phillippe Gervais, the chief ag economist at Farm Credit Canada, is being somewhat slippery with the truth in that his salary is dependent on the continued heavy lending by FCC to the supply managed sector, and, as such, he will do almost anything to avoid the inconvenient truth that exports, rather than a juggling of domestic consumption, are where the opportunities lie for Canadian farmers.
Gervais, therefore, like every supply management supporter, is studiously trying to arrange the deck chairs on his/her particular "Titanic" in what is an ever increasingly-futile attempt to deny that we're going behind, not forward, because of supply management, and its focus on domestic markets only.
The Ivey School's David Sparling is completely correct to note that our domestic market isn't enough, and Ontario Pork was entirely correct to vote 68 to 13 at its 2013 annual general meeting to urge government to place trade ahead of protectionism - Gervais is partially right, but ignores the bigger truth.
Stephen Thompson, Clinton ON
The double standard is having a professor preaching to others about global marketing. Preaching to farmers to sell at global prices while producing at domestic input costs.
If Mr. Sparling truly believes that the global market place is the way to go, he should also suggest lowering domestic costs.
But the true double standard is having a Professor at UWO earning a domestic wage, thanks to tax payers, that exceeds most household levels by far. His wage is protected by our domestic market.
I guess you can call it supply management when it comes to tenure with a protected income.
You can view his 2011 salary at
http://www.fin.gov.on.ca/en/publications/salarydisclosure/2012/univer12j...
Tenure isn't supply management - it is meritocracy which can only be earned, and neither bought, nor sold, and it's definitely not something which, like quota, can be inherited.
In addition, Sparling has, for lack of a better terminology, marketable job skills which can be used in either the US, or Canada, as well as in both the private and public sectors in Canada. Therefore, Sparling's wage is absolutely NOT "protected by our domestic market", in exactly the same way that my brother's tenure at Texas A&M is not protected by the US domestic market.
There is, and always has been, a very-open cross-border market for University faculty, and to imply that Sparling's salary is somehow inflated, and/or isolated from the market which similarly-qualified individuals face in the US, is mis-leading, and complete nonsense.
If anything, whatever he makes at UWO, as salary, plus whatever he makes from consulting, is probably, and typically is for academics in professional faculties, well-less than what he could make in the private sector.
The true double standard in the above posting is one which farmers use all-too-often, and that is to "shoot the messenger" rather than listen to the message.
Stephen Thompson, Clinton ON
Bottom line is Sparling has a protected wage funded by taxpayers.
If a Cuban professor, with the same earned skills, was to teach at UWO he would get the protected domestic wage. He would not be earning a Cuban wage in Ontario.
Cartel. His wage is a subsidy in the true meaning.
You are completely ignoring that MBA students at the University of Western Ontario pay a huge tuition fee for the privelege of attending what is arguably not just the best MBA program in Canada, but also one of the best in the world.
If you've got the best program anywhere, you have to pay the best to make it happen - therefore, while taxpayers do fund a portion of a lot of education, tuition, at least where Sparling teaches, is what it's really all about.
Besides all that, you're doing the "knuckle-dragger" farmer thing because you're still far-more intent on shooting the messenger than heeding the message - that's what it's all about, not the salary of the person delivering it.
Stephen Thompson, Clinton ON
It is managed by supply. The school limits the amount of tenure. The education system limits the amount of teachers through contracts.
Teachers are 100% subsidized by taxpayers.
Supply management.
If it looks like a duck, walks like a duck and quacks like a duck, its probably a duck. Admit it.
Your theories are nuts - the job, any job, goes to be best qualified person, not the person who has the most money to bribe somebody (acquire quota) to get it.
Besides all that, Sparling's salary, at just over $191,000, isn't a lot of money for someone with his qualifications, and that's what Universities, on both sides of the Canada/US border, have to pay to lure people like Sparling away from the private sector - in addition, $191,000 isn't a lot of money considering that I have tax clients who are skilled tradespeople with only a high-school education making over $140,000, just for carrying a lunchpail.
And, as I pointed out before, there is no tariff barrier to prohibit US academics from getting jobs at Canadian Universitities, nor are there, under NAFTA, any tariff barriers restricting these type of well-educated professionals from obtaining employment on either side of the Canada/US border in either the private, or public, sector. 200% tariff barriers exist only for dairy and poultry products, and nothing else.
Furthermore, you are still trying to ignore Sparling's message which is that our domestic market isn't big enough to provide our agricultural economy with the growth we seem to believe we need, and want - that type of growth depends on exports, yet supply management, with its focus on domestic markets only, serves as a huge impediment, not just to them (Chobani), but also to what we, as an industry, want to achieve.
Stephen Thompson, Clinton ON
So your saying a cuban professor will not be qualified?
What I am saying is that if a Cuban professor wants to teach in Ontario he will get Ontario wage rates, not cuban wage rates.
The wage rates are not only protected but are also a 100% subsidy from tax payers.
Aren't you the one that preaches against tax payer subsidies going to select sectors?
You endorse protectionism for some but not others.
You state that dairy poultry has a 200% tariff and nothing else?
Look up the USA tariff tables and you will find a 300% tariff rate on a Canadian agricultural product.
Are you just selective with the information you spew?
What product
He cant make the same money in other universitys in other countries say in the us he makes what the market pays not what he tells the market to pay
If said professor paid the university money (a bribe ) to make sure he has a job and that salary I dont how you can compare him to sm
Wynne's brave challenge is nothing more than an afternoon breeze/wind.
Mr. Thompson is correct...if we were all in SM the growth Wynne speaks of would be zero...just ask Chobani.
Ernie Hardeman still supports the same old protectionist nonsense that Gervais espouses, and as, such, his approach is really no different than that of Ms. Wynne - both politicians, and their parties, studiously ignore the point made by Ontario Pork, and people like Sparling which is that, in effect, we either export, or die a slow death, inflicted on us by companies like Chobani, at home.
Stephen Thompson, Clinton ON
Me thinkith NO me knowith that there is soo much more to agriculture than SM .
Yes SM needs some changes . We all know that . This rant is really getting boring !
In the supply management dictionary, "rant" is defined as un-palatable truth which keeps being inconveniently repeated - this means that, in the fairy-tale, and aristocratic, world of supply management, a "rant" is when people regularly point out that supply management:
(A) is net-negative for jobs and economic activity
(B) adversely affects consumers
(C) pits farmers against one another
Stephen Thompson, Clinton ON
When i look at the US shutdown and acknowledge much of both the overspending and the stalemate of negotiations are the result of the mindset of economists I wonder how long it might be before there will be a bounty to trade two (or more) hypothetical economist for one accurate accountant with common sense.
Anonymous comment modified by editor
We get bad economic policy because politicians typically ignore economists - for example, Eugene Whelan used to boast that he never listened to economists, and the result was that we now have policies that enshrine a farm aristocracy, and pit farmers against one another.
What's worse is that anytime an economist criticized Whelan's policies, Whelan responded by mounting a scurrilous personal attack on anyone who dared issue a criticism. History has proven Whelan to be the worst, and most-divisive Ag Minister, at least in the last half of the last century, and the pitting of farmer against other farmers, was definitely NOT because of economists.
Stephen Thompson, Clinton ON
Some would say he was this Country's best known Minister of Agriculture (12 years) because he DIDN'T listen to the economists.
l'm am sure Mr.Whelan and his long-standing Political career have been disrespected by far better people than yourself.The truth is Non-Supply Management agr-sectors have only themselves to blame for the downward spiral they have been in the last 7 or 8 years.When you put the health of your industry in the hands of another Country (USA!) you are in for a rocky ride...Maybe a good economist could have foreseen that!
Eugene Whelan was a bully, and there's no way a bully could ever have been a good Ag Minister. He bullied economists, and he shamlessly bullied Beryl Plumptre, the Chair of the Food Prices Review Board. History has proven both Plumptre and the economists to have been right, and that Whelan was not just wrong, but maliciously, and dangerously, wrong.
Only farmers could be such collective imbeciles to still support someone whose bullying tactics, and whose regressive economic policies, created such a complete, and bitter, division in the farm community, and which now force consumers to pay almost 38% more for milk than US consumers.
Stephen Thompson, Clinton ON
The only fault
Anonymous comment deleted by editor
I know several people who, in their capacity as ag economists, were active in the Food Price Review Board hearings, and related debates, during the mid 1970s - to a person they admired Beryl Plumptre, and loathed Eugene Whelan, not just because he was a bumpkin, and not just because he detested economists and made scathing personal comments about any economist who dared criticize his policies, but also because of the shameless way he pandered to the worst in farmers by publicly bullying Plumptre at every possible opportunity.
Plumptre was an honourable person who had to endure the wrath of a scoundrel and a bully. We, as farmers, are doing ourselves a disgrace by denigrating her, and praising Whelan instead.
Stephen Thompson, Clinton ON
Today, Ontario has the largest chicken meat market share in Canada. For the OECD nations, Canada is in last place out of 7 nations for their kg. of exported chicken meat.
When Canadians are charged 300% higher chicken prices as compared to US prices, giving us some of the most expensive chicken in the world, it's easy to understand why nobody else in the world wants to buy our chicken. Canadians only buy it because we are forced to do so.
If Canada resolves the insanity of its current Supply Management system, we could gain up to 50% of the OECD export chicken meat market (ie. go from last place to first place). With 50% of OECD market for chicken, Canada would have to produce 5 times more chicken than what we produce today. If Ontario gets its fair share of that export market, Ontario would have a market for all its grain production, more jobs, and a huge increase in GDP.
People only need to buy a new car or big screen TV every few years, or 10 years. The have to eat every day. There is good profits in food production, as good or better than Ontario's decimated manufacturing sector.
Theres alot of 'ifs' in your argument.
Food costs 8% of your earnings. 42% of your earnings go to some sort of taxation.
I guess you like to pay high taxes because you arent complaining about that.
And no one is forcing you to buy expensive chicken. I would love to eat Italian White Alba Truffle, but it costs $48,608.00 a pound. I think I will buy celery instead.
Who says we would get that fair share of export market ? We would be bottom man on the Totem pole, trying to get into markets that already have a traditional pecking order and at the same time taken the chance of losing our own domestic market.
Ontario Pork voted 68 to 13 to urge government to at least give them that chance - if they believe they can do it, why should supply management be allowed to stand in their way?
Stephen Thompson, Clinton ON
If pork producers want to export more pork they have every right to do so . They just have to be the lowest cost producer to get the bigger cheaper markets . Simple .
There are places in the world that pay much higher prices than North America. China for example pays a much higher price for certain parts of the pig than you can get in North America, of course you have to be Paylean free and you have to have access to these markets. So it's not simple at all.
David Sparling is right about one thing, we don't have the extra food processing needed.That's because for years the Non-supply management sectors have depended on the USA to do the majority for us and then we of course we bring it back at a higher cost,never made a whole lot of sence to me.
l don't agree with the Premier in the growth of the "niche" markets,especially when it apply's to new immigrants,unless they are extremely wealthy ones!
Potential immigrants to North America have to choose between either the gun lobby of the USA, or the supply management lobby of Canada. Both are equally absurd, and are often noted for influencing the public and politicians with nonsensical rhetoric and verbal diahrea. Raube Beuerman
Wow!
Potential immigrants "have to choose between either the gun lobby of the USA, or the supply management lobby of Canada".
I personally know a former immigration judge, and somehow I don't recall a form that makes immigrants check off one choice or the other.
Can you post the check off form for all us to see? I must have missed it!
You said the UWO is 'arguably not just the best MBA program in Canada, but also one of the best in the world"
Strong statement.
Let's see:
Harvard is ranked #1
U of T is ranked #46
York is ranked #52
UWO-Ivey is ranked #78
I'm not shooting the messenger. The messenger is doing a good job shooting himself.
Check your facts next time.
That's funny...when I googled it I found Harvard ranked #3 and UWO-Ivey tied for first in Canadian Universities. I guess you should check your facts...maybe?
Thompson claimed the Ivey school ranked top in Canada and the world in the MBA program. UWO might rank overall very high in Canada but the MBA program was the basis of his claim.
While I quoted from a 2011 ranking, the link is more current. Harvard slipped a notch and Ivey climbed a little but the MBA ranking is still not tops in Canada.
http://rankings.ft.com/businessschoolrankings/global-mba-rankings-2012
I stated that the Ivey school was "arguably" the best in Canada, and one of the best in the world - "arguably" does NOT mean "absolutely", and those who wish to pillory me, rather than accept Professor Sparling's message that our domestic food market isn't enough to allow our agricultural economy to reach the sort of growth expectations we, our politicians, and the FCC economist who is merely "singing for his supper", expect, are simply, as noted in the above heading -"throwing the baby out with the bath water" as well as "shooting the messenger" in the process.
What is it about the unpalatable truth that supply management (ie. the Chobani disaster) is a millstone, rather than a blessing, which so-many farmers refuse to accept? Why is it that so many farmers will research all sorts of trivia in an attempt to blame the bearer of unpalatable truth, rather than research the basic premises of that truth itself?
What is it about the rather-obvious truth that anyone who gets accepted into any MBA program in Canada, already knows that supply management, and the protectionist mantra underpinning it, is bad economic and public policy, that farmers simply refuse to understand?
I mean, come on already, why are farmers so hammer-headed about supporting things which simply cannot be supported, and, as a result, go to illogical extremes to shoot any messenger of even the most-basic truth?
Stephen Thompson, Clinton ON
The question we need to ask is, what do MBA programs teach their students to come to your conclusions?
Are those students given ALL the information about our supply managed laws to arrive at at proper solution?
I don't it.
Anyone with the desire, and/or capability, to be accepted into an MBA program, anywhere, knows that protectionism, in this case supply management, does nothing but make a bad situation even worse.
Therefore, since, by definition, and by practice, supply management is net-negative, and always will be, it simply doesn't need to be discussed, and, in my case, wasn't. Or to look at it another way, any defense of supply management in an MBA program would be exactly like a defense of the "flat-earth" philosophy, and therefore, a complete waste of time, and tuition. Or, even another approach is to note that someone can be an MBA student, or a supply management supporter, but definitely NOT both.
It's mind-boggling that so many farmers so-firmly believe that supply management has anything good going for it, other than its ability to transfer large amounts of wealth from poor consumers to rich farmers.
Sorry, but the only conclusion is that supply management is a mill-stone standing in the way of the ability of the rest of agriculture, and even the supply managed sector itself, to grow, and to achieve economies of scale through exports, in order to grow to be where we want to be.
I mean, Good Heavens, already, supply management, in the case of Chobani, can't even increase domestic consumption, why should this type of mentality be a cancer affecting the rest of us?
Stephen Thompson, Clinton ON
Yes and we still have the flat earth society trying to tell us that we agriculture are the problem . Yet we still have cities putting sewage into our fresh water , wanting carbon credits to allow polluters to carry on as always , and thinking that greed enenrgy is going to save us . Our earth has been here how many years and has gone through an ice age and how many other changes ? Get with it people !!
Then we have some who claim SM is the problem of economics for agriculture . It seems that many are not aware of how hard it is for SM equivalent farmers south of the border and are struggling to make a living and people wish that to happen here . If 8 % of income is used for food and 42 to taxes . Raise the cost of food and you will see the economy grow . The taxes might be lower but will not be needed as more pesons will be better off rather than gov spending money foolishly to line the pockets of their friends .
Raising the cost of food doesn't make economies grow - it makes economies contract because consumers, especially poor ones, have less to spend after buying food. Your "logic" is, therefore, dead outright wrong, and would result in an automatic failure on any economics course I have ever taken, or taught.
I mean, come on already, this is, to economics, so basic that it isn't open to debate, or even discussion.
Stephen Thompson, Clinton ON
Well thenn Mr. Smartie Pants why then does every time the price of corn drops that pork and beef prices paid to the farmer goes down but never at grocery store ?
Your loosing the debate and much more !
Do you have a point, any point, or is shooting the messenger the only thing supply management supporters know how to do?
In addition, I seem to recall that the futures prices of corn and hogs have been, of late, going in different directions - isn't that the way it is supposed to happen?
Stephen Thompson, Clinton ON
We all know that the futures of Hogs or corn is what the US of A tell us they will be!That will always be the problem with the Pork industry in this Country, we rely on the States to tell us when we make a profit and when we lose money on every Hog! ..but they shouldn't be telling us what to charge in the grocery stores!
Would you prefer we had a different neighbour to the south? Most of the time we have an advantage since our dollar is normally lower, and basis adjusted, most of the time, feed is cheaper here also. Raube Beuerman
"every time the price of corn drops that pork and beef prices paid to the farmer goes down but never at grocery store"
This makes no sense to me! The price of corn has been high the last few years...the price of beef and pork...lower.
The over supply of corn is forcing the price down and the previously high price of corn/feed has contracted supply of beef and pork.
That makes the meat price rise, on the farm and in the store.
That reality is the exact opposite to what you are saying.
Are you the same one that said hog farmers deserved to suffer the ethanol fueled high price of feed and now you are looking desperately for more users of the corn? Looks like the tide has turned on that one!
Was not me that said that .
All fail to realize that the end product does not go through the cycles of the producer price . You can't keep beating down the price of the producer and expect to have product to sell in the end . All costs have to rise at some piont . Even if you are only taking land taxes in to a COP they continue to rise . Some one has to cover that cost . Nice to see that an economist does not know the basics . You can't argue that SM does pay the whole chain what it costs to produce . Trouble is that most only think that when prices are low you need to produce more to make more money . Stores have meat on sale not because they have too much meat , because they are wanting to make the customer feel good and think they are getting a deal . They are not stupid enough to sell at a loss . Only an economist would do that .
Farmers continue to delude themselves into believing they have to be paid their cost of production, and that's nonsense. If you can't produce something for what the market is willing to pay, don't do it, but don't turn around and whine about somebody being able to do it cheaper, or better.
Furthermore, the notion that buyers "beat down the price" and thereby cause misery, is no different than farmers shopping for inputs and "beating down the price" on them. Farmers, as usual, and as always, adhere to a double standard - it's OK for farmers to beat everybody down on price, but not OK for anyone to do it to a farmer.
In addition, it would appear you don't understand much, if anything, about retailing, especially food retailing. Basic items are often sold as a "loss-leader" in order to increase the volume of sales (and higher margins) of other products.
Therefore, the comment about retailers not selling at a loss, is incorrect, because that's what the concept of "loss-leader" is all about.
Stephen Thompson, Clinton ON
While you are correct in that the market doesn't care about COP at..... least temporarily, you fail to state that the market will eventually have to come to terms that the marketplace supply will eventually be curtailed and the pendulum will swing back to a COP based price or higher. Also, Ontario has been the low cost feed source for several years now meaning livestock farmers have a distinct COP advantage over their U.S. competitors. Furthermore, livestock farmers have been drawing funds from NISA- AgriInvest, Livestock RMP, plus AgriStability , all program $$$$ which aren't available to their U.S. competitors. The market place may not care about both the cheaper feed COP and subsidy windfall, however, I wouldn't blame the U.S. livestock farmers for being a tad ticked at the double whammy of Ontario cheaper feed COP advantage plus subsidy windfall $$$$ advantage!
Except if you look at any of the graphs supplied by John Bancroft (OMAF) you will see the US producer almost always has a higher profit margin per hog. Kind of suggests the exact opposite to what you claim.
You also missed the payments received by any hog farmer growing feed...which includes most in the Midwest.
Who's cherry picking now?
If Ontario livestock farmers had a distinct COP advantage over our US competitors, there wouldn't be even one pig born in Canada, and then fed to market weight in the US, the way it is now - it's always all about incremental cash flow, and never about cost of production, but Canadian farmers refuse to accept that truth.
Stephen Thompson, Clinton ON
Obviously, the fact that export weaners receive subsidies in the form of NISA-AgriInvest, Livestock RMP, plus AgiStability, would suggest the U.S. is effectively getting "Dumped on".
Yet again you show how you do not understand agriculture . If a store puts on sale a loss-leader they have other products that they are making their margins on and many time the store itself is not the one to set the price on the loss-leader product but the franchise tells them how many they have to take and sell at that price . They also have other products to sell at gouge prices .
Tell a hog or beef farmer to grow his feed corn below his cop for corn , put it through his livestock and then sell his hogs or cattle at a loss . You should be able to offer contracts for this . Let us know back how many takers you get .
I've read your posting forwards, and backwards, and it makes just as much sense in either direction - zero. The biggest thing you don't seem to understand is that the market price of anything (except in the fairy-tale world of supply management) has absolutely nothing to do with what it costs to produce, nor should it.
In addition, nobody forces anybody to produce anything - farmers willingly produce corn and market it through livestock, earning them about $2.00 per bushel, all the time. So what? - that's their decision to do so.
Unfortunately, your posting demonstrates the tremendous extent to which farmers believe that anyone cares about what anything costs - they don't, nor should they. If farmers are dumb enough to grow it, or produce it, the price they get for it, and/or whatever profit/loss they realize on it, is nobody else's doing but theirs.
Finally, you obviously don't understand retailing, because if you did, you'd know that no food retailer gouges anyone, because if they did, some other store would simply sell it for less.
In fact, the only people in the food chain who gouge anybody, are Canadian dairy and poultry farmers, and hopefully, that won't be for long.
Stephen Thompson, Clinton ON
Just because somebody calls themselves an economists doesn't mean they are good at it. A wise man once told me "somebody always graduates at the bottom of the class"
Do you have a point, any point, or is shooting the messenger the only thing supply management supporters know how to do?
That's the point.
The flat earth society.
There was a time that the people in power claimed the earth was flat. Even though there was irrefutable evidence that the earth was not flat, the people in power conjured up a vision to keep the people in fear. Fear is a mechanism for control.
If someone tried to publicly bring forward the evidence contrary to the "powers" wisdom, heads rolled literally.
The people in power did not have a mechanism to claim all the riches beyond their boundaries so limited information was passed along to keep society under control.
That is what you do to some extent.
Supply management was a tool for people in power. No one cares about farmers. It was never about the farmer.
But then our provincial government got greedy. They capitalized quota because they saw a new source of revenue. The government received BILLIONS in revenue because of capitalized quota. You, Mr. Thompson and the rest of the public, received decades of benefits because of quota.
But the government has a new problem. How does it wipe BILLIONS of capital off of farmers financial statements? How does the government escape the negative affects of $45 BILLION of capital losses?
You never once talk about the $45 billion in quota capital. You hold back vital information that the public needs to know. You are selective in your information while ignoring bigger truths.
Flat earth.
Well, the first thing I asked myself after reading the 2 flat earth comments( and most anonymous comments) was do they have internet access in mental institutions? The government did not capitalize quota, the farmers did. The government did cap dairy quota, so now set profits are capitalized into land and other assets. Whatever the sale value of quota today is not representative, because some have inherited quota, while others have only paid a small portion of the value today. And finally, quota is not a revenue source, it is money taken from consumers, hoarded by SM farmers, that would have otherwise been spent elsewhere in the economy. Raube Beuerman
You are absolutely wrong about quota capitalization.
A division on the provincial ministry of Finance placed an assessed value on quota around 1961 against the expressed concerns of farmers.
The affected farmers paid an annual tax rate as a result.
Then the federal government came along in the early 1970's and every farmer had to declare their capital values. As quota was deemed capital by the province of Ontario, it was included on the valuation date.
The Province of Ontario did indeed receive billions of dollars as a result and continues receive financial benefits. The bottom line is the farmers have a recorded amount of quota capital on their financial statements. Those assets will have to be addressed sooner or later.
It appears you know very little about the correct history of agricultural quota history.
joann vergeer
First of all, while I was not alive at the time, I don't think I am wrong in stating that quota did not exist in 1961, 1966 was the first year, (doesn't matter anyway). What does matter is that while quota was never intended to have value, once farmers realized that another farmer would pay money for the right to produce, a value was soon attatched. In addition, the value of quota is a reflection of 200-300% tariffs, government/farmer set profit margins and the fact that anyone who attempts to produce dairy or poultry products will be breaking the law. Are you not caught in a logic trap to claim that quota having value is a financial benefit for the province, yet at the same time it is now capped for dairy? And finally, if tariffs were to fall to zero, and if it was not illegal to produce dairy and poultry, quota values would quickly fall to $0.00 Raube Beuerman
Agricultural marketing quotas have been regulated and legislated in the 1500's in recent recorded history. Although the history of marketing laws is much much older.
Agricultural marketing laws with quotas in 1725 in the British Colonies of North America read like recent legislation under OFPMC. Our marketing laws stem from older existing laws, its as simple as that.
The first permanent agricultural marketing quotas in Ontario were "gifted" to qualifying farmers in 1928, the same year as the LCBO appeared.
Under the constitution, it states that marketing licenses (quota is a licence with a quantitative value) were to be "granted" under certain circumstances "without fee or reward" to qualifying "persons".
A grant is a "gift".
A 'gift' is the transference of a thing from one person to another voluntarily and without any valuable consideration.
Hence the clause "without fee or reward". If there were valuable considerations attached, then it is simply not a 'gift'.
It was a division of the Ministry of Finance that placed an assessed value on marketing licences against the farmers concerns. Those licences were taxed each year.
The Province capitalized quota. Once capitalized, the game was on. Don't blame the farmers. They did not legislate taxation on quota.
Simply stated, the Province of Ontario has been the single largest beneficiary of quota valuations the past 6 decades. by far. The province continues of benefit.
This is where the real issue is. The public received billions in financial benefits because the government taxed agricultural licences.
The government set a valuation date to determine the value of quota also. Farmers collectively declare approx. $50 billion worth of quota on their financial statements.
If the government wants to rid of marketing boards and quotas, they will have to address the $50 billions of agricultural financial assets.
If quota falls to $0 as you suggest, how will the province cope with $50B capital loss on farmers' financial statements in a single fiscal period?
It is not a logic trap, its a financial trap the province created and now the province will have to address. It received decades of benefits and now must face the financial obligations of a massive agricultural capital loss.
The Province didn't listen to farmers then. They don't listen to farmers today.
I can't speak on dairy quotas as I am not well versed in it but to say that the quota model was well in place before the current dairy model was developed.
joann vergeer
The public has never received one iota of benefit because of quota - the public has been forced to pay more than they need to pay because of quota.
Secondly, there will be no negative effects of quota going to zero - 12,000 dairy farmers are going to have to join the real world, but over 30 million consumers will enjoy a continuing windfall gain because they will no longer have to drive to the US to pay market-driven prices for dairy and poultry products.
Thirdly, government won't suffer at all if quota goes to zero, nor will those farmers who acquired quota for nothing - the only people who will suffer will be those greedy fools who "bet the farm" that quota would never decline in value, and nobody is going to care about them in the least, especially hog farmers, and younger, non-supply managed farmers.
And, with no respect whatsoever, farmers capitalized quota, not the Province - there's only one person who keeps coming up with this complete, and utter, "funny-money" nonsense - it's wrong, wrong, wrong, and just-plain loopy.
Stephen Thompson, Clinton ON
Is there any possible way you might be mistaken in your assessment Mr. Thompson?
That supply management is regressive, and serves no interests except the wallets of quota owners, isn't open to debate, or even discussion. We've gone through this stuff with Ms. Vergeer about 10,000 times already, but she keeps doing the "whack-a-mole" thing, and keeps citing obscure, irrelevant, and outright loopy, precedents set by people like King Dimwit III, and/or Queen Dingbat II, and so on, and so forth. I've even tried to point out to her, obviously to no avail, that if precedent meant anything, the Biblical precedent Jesus set by overturning the tables of the money changers in the temple, serves to point out that it is always right to take privelege away from the favoured few.
The Province gets nothing from the existence of quota except possibly for some annual income tax revenue coming from quota owners, and possibly some capital gains tax levied when quota is sold. However, by the first principles of economics, any extra tax revenue the Province earns from supply managed farmers, is more than offset by the income tax revenues foregone because consumers have less money to buy other things and thereby increase the earnings, and taxes payable, by the producers and sellers of other products.
This type of net-negative multiplier effect caused by any sort of protectionist regime, is exactly why supply management, and quota, generates less revenue for the Province, than the Province would receive if supply management was to be abolished.
Therefore, not only is Ms. Vergeer wrong to claim that supply management has been of benefit to the Province and to consumers, she is dangerously wrong, and, what's worse is that she refuses to accept either the basic principles of economics, or the basic principles of common sense when making her outrageous, and outlandish, claims.
Unfortunately, economics is the only discipline which must endure the out-pourings of the uninformed, the conspiracy theorists, the "funny money" crowd, and/or the just-plain loopy, and Ms. Vergeer's assessment of how supply management, and/or quota, benefits the Province of Ontario is the most-outrageous, far-fetched, and completely-preposterous thing I've ever seen - it's like time-travel, alchemy, and flat-earth, have been all rolled into one vast undertaking, with basic economic principles serving as the victim.
Stephen Thompson, Clinton ON
I think you misunderstood the question.
Is there any chance you might be mistaken in regards that farmers with marketing licenses were "taxed annually" and therefore subsidized the Province?
Name me one farmer who pays any sort of annual tax on his/her quota to any government - you can't, because, except in your mind, it doesn't happen, and hasn't happened, at least not since King Dimwit and Queen Dingbat were on the throne.
Stephen Thompson, Clinton ON
Are you saying that quota is treated the same as other capital upon disposition?
quota is considered to be a capital asset for farmers, but it is called cumulative eligible capital and has its own rules - people can claim a certain (rather small) amount each year as a sort of capital cost allowance, but since anything they claim has to be added back to income (re-captured) when quota is sold, there is, for some people, little reason to expense a portion of it yearly.
But, yes, as I understand it, if somebody buys quota for $200,000, doesn't take any annual allowance on it, and sells it for $500,000, there is a $300,000 capital gain which is eligible to be included in the $750,000 lifetime capital gains exemption.
I also understand it to be the case that if somebody buys quota for $200,000, and the value of that quota goes to zero, there will be a $200,000 terminal loss which, if nothing else, can be carried forward to offset any capital gains accruing from any sale of farm land.
This terminal loss provision is a good part of the reason why I don't support any sort of quota buyout - a buyout simply offsets, dollar for dollar, the ability to utilize the terminal loss provision, and it should be used first, rather than tap into public money to offset what was nothing but greed by farmers when buying this quota.
Stephen Thompson, Clinton ON
I digress, Mr. Thompson.
It would appear you are just a tab bit touchy when it comes to receiving financial benefits from agricultural marketing licences.
First it is important to understand an ancient law saying "it is the rule of every law that every plant belongs to the soil where it is planted" (ask Monsanto)
What that means is that every plant a/o that is dependent of the soil, belongs to that piece of soil. This is the basis of Ontario's production rights.
But it is hard to control production with Mother Nature as a constant companion. So, marketing licences attached to production became a standard centuries ago.
When the permanent marketing licences were granted in Ontario in 1928, it naturally was attached to qualifying lands.
But the Province had a Mill Rate system when assessing municipal taxes. So when marketing licences became attached to specified land, the province saw it as an opportunity to generate more taxes, much like a new building attached to the land.
According to the diary of a former marketing board director, the Assessment Office (around 1961. Don't have information readily available) heavily assessed the marketing rights, giving it a separate value.
The farmers howled. The licences were "granted" and had no value they said. The Province did not listen.
It is at this point the province capitalized quota. The province placed an assessed value on the marketing rights and farmers were required to pay municipal taxes on those values.
Thousands of farmers paid a disproportionate amount of taxes which in effect subsidized provincial responsibilities.
It was never about economics. It was about generating new tax revenues to offset Provincial obligations.
A number of years later, the province dictated the removal of the marketing rights off the land and made them mobile around the same time the Valuation Date occurred.
Quota became a special kind of "capital" and taxed at point of sale.
A visit to MPAC's archives will bear out the facts.
Some old farm magazines have municipal revenue charts.
Or simply ask Mr. Mark Wales. He is a wealth of information and should remember the taxation issues of farmers.
Did the province have the constitutional authority to receive benefits from marketing licences?
I don't know. I don't believe it was ever legally challenged.
joann vergeer
I know we've been through this about 10,000 times, and every time, you still don't uderstand the basic principle of "that was then, this is now" - for the 10,001st time, NOBODY who owns quota pays once cent of additional taxes to anybody in 2013, and that's all that matters, period.
If your theories ever did apply, it was only to tobacco quota at the time it was affixed to the land, but it certainly doesn't apply now to any quota of any kind now.
Now, with as little respect as I can muster, please join this century
Stephen Thompson, Clinton ON
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