Laval prof challenges former MP's supply management report
Wednesday, July 4, 2012
by BETTER FARMING STAFF
Former Liberal MP Martha Hall Findlay made a rookie mistake in her widely touted report that is critical of supply management, says a Laval University economist.
In a letter released to the media Thursday, provocatively titled “Stop lying to Canadians about supply management,” Maurice Doyon, professor at the department of agricultural economics and consumer science, refers to Hall Findlay’s June 21 report entitled Supply Management, Problems Politics and Possibilities as “misguided and not fact based."
She made the rookie “mistake of multiplying the price of a 1 litre of milk and multiplying it by four to get her prices,” Doyon writes.
In her report, Findlay Hall, who is an executive fellow at the School of Public Policy, University of Calgary, wrote that a four litre bag of whole milk cost $9.80 in Canada while the price for a U.S. gallon of whole milk, with the dollar at par, was US$3.68. Her conclusion was that every Canadian family pays $300 more than it should for milk annually because of supply management.
Her cry for the dismantling of supply management for dairy and poultry products was immediately taken up by newspaper columnists, commentators and editorial writers across English speaking Canada.
Not so fast, says Doyon, who quotes from a “government of Canada” table on the price of milk sold four litres at a time: an average of $5.87in Quebec City 2011, and $4.59 for that year in Calgary.
“I was able to reproduce (Hall Findlay’s) table,” Doyon says. Milk is considerably more expensive when purchased in a single litre carton than in a larger volume and he says Findlay multiplied the single litre retail price for whole milk to get that $9.80 figure. He compares Hall Findlay’s methodology to buying a $5 glass of beer in a pub and “multiplying it by 24 to get the price of a case of beer. In this case, $120 is quite an outrageous price isn’t it? ”
On top of that, he notes that whole milk represents less than 15 per cent of the fluid milk drunk in Canada, whereas two per cent fat milk is drunk by 50 per cent of Canadians “and it is priced differently in Canada than in the United States.”
The milk price misrepresentation” “does not help in terms of the credibility of the report,” Doyon writes. “One wonders where MHF buys her milk.” Doyon allows there is a 20 per cent difference between the price of milk in Canada and the United States.
Doyon says the price of milk varies widely across Canada “and that’s not because of supply management.” He blames concentration in food retailing in Canada. He says Loblaws, Sobeys and Metro “accounted for roughly 70 per cent of food sales in Canada in 2010.”
“Beside the major price mistake,” Doyon writes, “MHN failed to address the real issues such as: what would happen if we were to dismantle supply management? What should we replace it with?”
“Deregulation does not always bring benefits, especially in the long run . . . as an illustration, the deregulation of the banking system in the U.S. is at the root of the most recent financial crisis, as opposed to the heavily regulated one in Canada, that is now our pride.”
The dairy system in New Zealand, which Hall Findlay praises, is not the product of a free market, Doyon asserts and she doesn’t recognize its “non-competitive nature.” He notes that the American dairy system was exempted from a U.S. trade deal with Australia, and asserts that the same might be possible with supply management when the Trans Pacific Partnership trade agreement is negotiated. “Canada is rich with natural resources, politically stable and economically fit. We certainly have a lot to gain from the TPP, but we also have a lot to offer.”
Doyon says it is a mystery why Hall Findlay’s report has not been picked up by the media in Quebec, where supply management in dairy is most important. BF