Ag minister promises compensation if supply management weakens

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The legal question was asked, does this Government have the right to sign trade deals during an election campaign when Parliament has been dissolved ?

Or is it simply a campaign ploy by the Conservatives to try and hold onto their stronghold in the prairies,knowing they have already lost Quebec and much of Ontario.

If we are going to be bringing foreign foods into Canada to compete with our farmers what is being done to level the playing field? Are the countries sending food here going to be required to produce under the same high health conditions that we do? Will they be able to use chemicals or drugs like BST that are banned here? What about subsidies? Will this be yet case where Canadian farmers have to compete with the treasuries of foreign governments?

Cabinet Ministers choose their words carefully, and Gerry Ritz has had almost a decade to practise.

Therefore, when he says "If there is a loss on your farm, you will be compensated", there are semantics at play.

What he really means is that supply managed farmers would likely be compensated on what they owe on their quota which, in most cases, would be calculated as the book value of their quota for income tax purposes. Therefore, a farmer who acquired his/her quota for nothing would get nothing because he/she would be losing nothing. A farmer who bought $300,000 worth of quota five years ago and who now has it on his books at somewhere around $200,000, and who would probably owe about the same amount ($200,000) on it, would get $200,000.

The bottom line is that there's no way anyone could interpret Ritz to mean that farmers would be compensated based on current quota values because an unrealized opportunity to sell at today's price isn't a loss.

As for ongoing losses, we can expect any government to engage in the same sort of dodgy economics supply management has always used to defend itself from criticism. Government will likely claim (with the help of "studies" produced, in part, by people who've jumped ship from from supply managed organizations to go to work for government) that with increased domestic consumption and exports, along with increased efficiencies, there will be no operating losses at the farm level and that, therefore, no ongoing compensation will need to be paid. Supply managed farmers will scream blue murder, but nobody will much care because supply management used the same dodgy tactics with no shame or remorse for four decades.

The above opinion is of one ag economist who has spent probably far-too-long analyzing "what they say versus what they really mean" when it comes from government.

Stephen Thompson, Clinton ON

Stephen if your interpretation of Ritz's words aren't very close to the intended meaning, they SHOULD be.

When it comes to deception and outrageous claims, government and supply management are well-matched.

One one hand, supply management's constant boasting that supply management doesn't increase consumer prices, is as ludicrous as trying to claim that OPEC never did and/or does not now artificially increase the retail price of gasoline.

On the other hand, I well remember the ludicrously-bizarre contortions both senior levels of government exhibited when trying to defend the accounting lunacy of the P2/P2 inventory valuation process in the first OWFRP/AIDA program, only to see the P2/P2 policy quietly scuttled, and quite-rightly so, seven years later.

Therefore, whatever preposterous claims dairy and poultry farmers try to make to defend supply management, especially during the compensation part of any downward adjustment process, will be well-more than matched by equally-preposterous claims by government that any losses being claimed by supply managed farmers are fictitious and even if not fictitioius, vastly-overstated.

As with the ongoing neonicotinoid process, government will prevail because it is the government and, as well, government will have public opinion on its side.

Stephen Thompson, Clinton ON

Seems you forgot your disclaimer !

You better check some of CBC's coverage on this issue and you will see public opinion is solidly behind this Country's Dairy farmers.

(1) As every business school marketing student learns, market research is all about asking the right questions.

Therefore, asking a man-on-the-street - "Do you support Canadian dairy farmers?" is likely to get a "Yes" response. However, asking the question - "If you knew that, thanks to supply management, a family of four pays more than $1,000 per year extra to buy dairy and poultry products, would you still support Canadian dairy farmers?" is likely to produce a far-different response.

(2) As for presenting the right optics, any business school marketing student would note that when farmers recently dumped milk near the Parliament Buildings, many voters would see the optics that dairy farmers are so rich that they can afford to throw milk away, and, as a result, public opinion has good reason to become entrenched against supply management.

No disclaimer is needed because the above comments are basic business school lessons not open to either debate or discussion.

Stephen Thompson, Clinton ON

This was no CBC questionnaire or study, it was simply an overwhelming majority of nearly 4,000 comments on the TTP issue,telling the present Government "hands off" our supply managed dairy industry.We will not be a dumping ground for the overproducing US dairy Mongols.

A few years ago, dairy interests were alleged to have spammed a MacLeans magazine poll in an attempt to skew the results of a similar "feed-back" survey - if I recall correctly, the first few days of comments were almost universally-opposed to supply management, yet the "comments" received in a single overnight timeslot skewed things the other way.

That's exactly why, for example, this site requires the use of a "CAPTCHA" filter to prevent the sort of "robo-spam" that destroyed the credibility of and/or objectivity of, the MacLeans survey.

More to the point, when considering "Would supply management play this dirty?" one needs to realize that when supply management claims consumers don't pay more because of supply management, they're already playing dirty and have no shame or remorse for doing so.

And, of course, the above anonymous poster ignores the truth that we won't be a dumping ground for anything because our farmers can, and will, compete with anyone once the albatross of quota has disapperared. We're not a dumping ground for hogs, cattle or grain and to claim we'll be a dumping ground for dairy products, is simple-minded fearmongering at its worst.

As always, my opinion may not be shared by people and/or organizations devoid of an understanding of public relations, economics or even common sense.

Stephen Thompson, Clinton ON

When the above anonymous poster referred to "US dairy Mongols", it indicated an attempt to be pretentious, yet failed because the term chosen has two different meanings, one of which ridicules and skewers supply management.

Wikipedia refers to Mongols in the context of the Mongol conquests as "a savage assault by backward and barbaric people.....", yet that could easily describe supply management's savage assault on the wallets of consumers by people too backward to understand basic economics.

As for barbaric, even a first year economics student can see that making the claim that supply management doesn't increase costs for consumers, is barbaric in its audacity and in its incorrectness.

Perhaps, on the other hand, the anonymous poster meant to use the word "mogul" which describes either a powerful person or a bump on a ski-hill. Yet, the powerful person meaning of "mogul" aptly describes the monopolistic nature of supply management, and, the "bump on a ski-hill" meaning aptly describes what supply management is to pretty-much everything.

While it's always a delight to skewer anonymous and pretentious fools who don't understand and/or don't want to understand basic economics, it's always an even-greater delight to skewer anonymous and pretentious fools who don't understand how to use language effectively.

The dairy farmers in Canada do not get it ,This deal will open markets around world! Canada has to be part of the Negotiations ,it is in every Canadians interest! The supply management sector has to get past the point of blackmailing Governments, move on and grow up! This deal will give all farmers ,processors access to the worlds biggest markets! That is good for young farmers that want to start farming ,in those protected sectors. Finally Canada can get back into the export business, Grow our domestic markets and International ones ,We can compete ,once we get rid of quota values and base the price of milk off US farm gate. Farmers here will come to realize how much on farm income can be made ,instead of seeing our countries farmer filling our market ,and other countries! A little lesson ,the only way a country can export into Canada is threw a importer ,they cannot just dump product in at what ever prices. Do you not understand that Canadian milk would be in high demand south of the border and around the world because of our dollar value! Also the fact that most trade is done in US dollars ,that is a 30 cent advantage on price over a US producer! Just think of having access to 360 million people next door and over a billion plus people in this trade agreement if reached! Wake up ,plus the Government can introduce support programs that are green to assist the movement to no quota value, in the years a head and beyond. Dairy farmers should be thanking the Harper government for giving them access to these new markets ,instead of threatening the Government! This deal is good for all farmers in Canada, let's hope they get it done! Yes the Harper government has the right to Negotiate trade agreements during an election ,our trading partners are not going to wait for Canada! This agreement will stop all the products and milk coming in by processors for Re export and allow our farmers to not only export large volumes but fill our own domestic markets! What the hell is wrong with you people? One thing ,GREED!

The Globe and Mail and government sources have said there is no reciprocal dairy access to US in this deal. Not even an increase. Anyone who thinks this will open markets around the world should think again. US dairy access will remain at about 3 per cent - the lowest in the world.

It's hard to feel any sympathy for quota owners who, even this week, are issuing press releases claiming supply management doesn't raise prices for consumers.

It's exactly this sort of egregiously-absurd claim that makes people, especially non-supply managed farmers, really angry.

Many people can't wait until government uses exactly this sort of absurd claim against supply managed farmers when determining what amount of compensation they'll receive.

A few organizations with which I am affiliated may actually buy into the nonsense that supply management doesn't raise prices for consumers, but oodles of people, including cross-border shoppers, don't.

Stephen Thompson, Clinton ON

What are you smoking ?
Why should the price be based on the US farm gate price ? Their farm gate price does not include what they get in other support . Why can't the price be set in Canada for the world price where we have strict standards that Gov implies on us for all farm products but expects the rest of us to compete on a world market .

The rest of agriculture here in Canada should be expecting transfer catch up payments from our Gov since we can't compete with our own SM farmers and farm bill support payments that farmers get in other countries . SM has been price fixing for years while the rest of us are on a global price .
Has SM ever sold their product below their COP or with out a profit ? I think not !

Let me get this straight,New Zealand would get access to the US market, the US would get access to the Canadian market and Canadian dairy farmers, who would still be viewed as under Supply Management would get access to.........

..that's what l thought! .. no wonder all the secrecy.

Canadian dairy farmers would, after a 40+ year hiatus, get access to the real world, for the betterment of:

(A) Canadian consumers
(B) non-supply Canadian farmers

who would, after a 40+ year hiatus, be finally getting access to a level playing field in grocery stores for (A) and in the farming community for (B).

Stephen Thompson, Clinton ON

Here we go again. Supply management is a 'tax' of the poorest of the poor. It may or may not be his opinion or the opinion he may or may not represent.

Ever wonder where the word 'farmer' got started in our language?

Look up 1385, Websters Edition, first definition. Farmer: one who undertakes the collection of taxes.

Thompson was trying to tell us all this time that farmers had the right to supply management because the price of milk was a tax and farmers can collect taxes.
Give Thompson a Chair at the TPP talks.

Supply management is, by definition, a consumption tax disproportionately paid by the poor, thereby making supply management what is known as a regressive tax system.

Secondly, when I Googled - "1385, Websters Edition, first definition. Farmer:", taxes weren't mentioned at all but there was mention of "farmers tilling the soil from sunup to sunset" - therefore, once again, demonstrating that anonymous posters are so bereft of any clue about what's going on in the present that they try to evoke a history that seems to have never happened.

Thirdly, the above poster seems to have a vivid imagination (don't they all?) because I never said or implied any of the things the poster claimed in his/her paragraph - more to the point, the convoluted logic demonstrated by the above poster is all-too typical of protectionist thinking rather than sound thinking.

However, based on last night's TV news, it may be either moot or all over today anyway.

I suspect any organization with which I am affiliated would agree with my dislike of the sort of convoluted logic demonstrated by the above poster.

Stephen Thompson, Clinton ON

We were at rather small farm group discussing farm issues. A friend had a rather large 2 volume dictionary with rather small print. There it was on page 964.

Google does not have answers to everything.

This "rather small" farm group would appear to win the all-time "pedantic irrelevancy" award for focusing on things that just don't matter and about which nobody cares - in other words, a typical NFU meeting.

While Google may "not have answers to everything", this farm group would appear to have answers to, and/or relevancy to, nothing.

Stephen Thompson, Clinton ON

It would have taken less electron spaces and less hurtful if:

Editor: Comment will be published if resubmitted abd sigend.

Small changes in Market access, however with $4.3 B in taxpayer compensation!!!

HAHAHAHA. You really think the $4.3B compensation is for farmers?

Farm Credit, a Crown Agency, holds BILLIONS of loans to farmers. That compensation package is to protect financial institutions. The banking system would crash if the government didn't announcement some kind to support.

The banks have 10 years to clean up their financial acts where farmers are concerned.

Clarification, the 4.3B is only available to SM Farmers, not the other 95% of Canadian Farmers who also hold FCC loans.

You missed the point.
FCC and banks loaned $B to farmers. A lot of those loans went to SM farmers and used quota as collateral. Quota values will be $0 in 15 years.

FCC drove up the price of land because everyone and their dog could get a farm loan. Heck, RBC uses reverse mortgage loans for farmers. Farmers in the whole owe big to the financial system.

This announce is going freeze and then lower land prices. Can we say "1987"?

The $4.3B will go to the banking system as land prices crumble. The banks/FCC (government) have 10 years to recoup their loans. The transition money will be taxable (government gain again) Farmers are left with lower capital values.

Retiring farmers, that haven't sold yet, just caught a glimpse of the retirement collapsing.

The aggregate market value of quota (before 9AM today) was reptuted to have been between $30 and $35 billion - total support announced in the amount of $4.3 billion for both income assistance and quota value support is a fraction of that amount.

However, at the end of the day, the current government should be congratulated for "shaking hands with the devil" and finally forcing supply managed farmers to face the facts that supply management truly is not just trade-distorting, but also costly to consumers

In addition, and I may have missed it, there doesn't appear to be anything past 2025 to support quota values except supply and demand among farmers, whatever that may be at the time.

The bulk of the support for supply managed farmers for the next ten years would appear to still be coming from consumers or, in other words, a modified Australian model.

Stephen Thompson, Clinton ON

Anyone have any idea of the value of quota that is financed and not paid for or given to those who inherited it?

Farm credit should

I've been told between $4 and $5 billion. Should have just paid it out and been done with it but I think this is a kinder gentler means to the same end?

Gross farm receipts per year (dairy) $6 b. Over 10 years $60b. Take 3.25% of this. Income protection provided under TPP over 10 (plus parts of 5) years to adjust to the shrink is $2.4b. This is the correct math. This part is not related to quota values at all.

Firstly, the Canadian-produced share of the Canadian dairy market will likely shrink my more than 3.25% because of the ratchet effect that a smaller domestic production system will generate as a result of the increased imports allowed by TPP (in addition to the ongoing ratchet effect caused by the almost $1 billion in annual duty-free imports of milk protein concentrates).

Secondly, in spite of his/her boasting, the above poster didn't use the correct math at all because he/she mistakenly used gross farm receipts one side of his/her equation to come up with $60 billion, but used the net income figure $2.4 billion for compensation figures. - this, I presume, is just another example of "supply management arithmetic" because milk not produced incurs no costs, yet the above poster falls into the trap of assuming it does and, therefore, ends up with an "apples and oranges" comparison.

Thirdly, the above anonymous poster also ignores the fact that supply managed dairy farmers will be able to continue to gouge consumers on 96.75% of their milk purchases (subject to adjustments because of the ratchet effect) for ten years, and on a diminished basis for the next five.

Being able to screw consumers for almost 15 more years on 96.75% (before the ratchet effect lowers production) of the market, plus be able to add $2.4 billion from the government directly to their net income on top of that is, by anyone's math, a pretty-good deal and far-better than what dairy farmers arguably deserved.

Stephen Thompson, Clinton ON

Interesting. It seems Harper has found a way to give SM pretty well what they wanted, and at the same time the "compensation package"/subsidy should pretty well ensure that the public finally understand just how much SM is costing them and eliminate any future public support for SM.

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