What is it with dairy farmers on both sides of the border ignoring the laws of supply and demand? I’m not sure how to read this one as it doesn’t make sense to me. The entire premise of the article boils down to this:
Ontario farmers, frustrated with the arrangement, last April dramatically cut the prices on Canadian ultrafiltered milk. Other provinces plan to follow suit, posing a dire threat to U.S. farms.
This statement proves four things:
1. Canadian milk producers have a lot of play in the price of milk
2. The dairy producers baleful wailing on the need of the cartel are hollow.
3. American producers also benefit from artificially inflated Canadian prices.
4. Consumers are getting shafted.
My confusion with the article is my question, “If Canada relaxes the dairy cartel, there will be more milk producers. It will further enlarge the glut in the milk market. This would help American dairy farmers how?”
Damn WaPo paywall.
Just turn off cookies, Warren.
I can’t read the article. But when in doubt, stick with number 4. That’s it in a nutshell.
Cartel inflates prices.
High prices encourage expansion and over supply.
Canadians cut prices to secure sales.
Marginal producers suffer and are eliminated.
Profit ?
All I know about milk is that I bought a gallon of 3.25 milk in Michigan for 99 cents! yesterday.
Canadian consumers subsidize Canadian Milk producers heavily. The border price of milk, before tariffs, is very low compared to what Canadians pay for milk on the shelf. The tariffs were set at the time NAFTA was negotiated. UF Milk did not exist at that time and therefore has not been taxed heavily at the Canadian Border when cheese producers import it to make cheese in Canada.
From this article it appears that the UF Milk market is relatively free. That would explain why Wisconsin has dominated it until recently. The Ontario milk lobby probably senses an opportunity to leverage extending protection from competition that they enjoy from most milk products to the UF milk portion of the industry as there will be Provincial election in the next year. They believe that the federal Liberal government (spawned by the Ontario Liberal government) will be keen to support their Ontario provincial parent. They want the UF loophole closed otherwise this could be the hole in the Supply Management dyke that brings the whole protection racket down.
The Canadian consumer will be best protected in this dispute by the media clearly pointing out the subsidy that Canadians pay to our milk producers.
Doubt that will happen.
Milk is a ‘fresh’ product with a short shelf life because (unlike most other beverages) it spoils fairly quickly. So, milk is never transported for sale very far from its source …just a few hundred miles at most. But “ultra-filtered” milk stays fresh for about a month, so it can be transported a couple of thousand miles and still taste fresh for 3+ weeks. Ultra-filtered milk from Canada can now get to the U.S. market and sell for those big fat 1.30 U.S. dollars (instead of skinny little 75 cent Canadian ‘dollarettes’).
So, the deal here is that ‘ordinary’ milk wouldn’t have enough shelf life to make it worth shipping to the U.S., but ultra-filtered milk tastes the very same AND has a long shelf-life and brings the Canadian suppliers U.S. dollar revenue. Sounds like a good deal for all concerned.
2 problems with your post.
1) The US dairy farmers are not “ignoring the laws of supply and demand”.
They were taking advantage of the until-recent inflated price for Canadian ultrafiltered milk which made it profitable to export their milk to Canada. As the article states, this type of milk was developed post-NAFTA. “But ultrafiltered milk hit the market after NAFTA’s 1994 enactment. As a result, it could enter Canada without facing big tariffs.”
The problem is the government tariffs on imported milk and production quotas that have screwed up the entire market. The Canadian cheese manufacturers are simply looking for the lowest price for their raw materials and the Ontario daily farmers are happy to help.
2) “This would help American dairy farmers how?”
Why should any government policy end up benefiting American OR Canadian dairy farmers?
Their policies are designed to buy votes and benefit the dairy farmers in the short-term, at the expense of every consumer on both sides of the border. The long-term results are even more trade restrictions and higher prices on ALL milk related products.
To list 2 examples that come to mind…
Chobani no longer on Canadian shelves
http://www.canadiangrocer.com/top-stories/chobani-no-longer-on-canadian-shelves-24540
USA Cheese Stockpile
http://www.ibtimes.com/too-much-cheese-us-sees-largest-stockpile-dairy-products-30-years-amid-russian-2361700
To paraphrase Thatcher: The problem with quotas and tariffs is that at some point you run out of loopholes to close.
President Trump in Kenosha WI “We’re going to call Canada, what happened?”
NAFTA happened and he knows it.
Trust the Washington Post? The price of Milk in Ontario went from $9.99 to $10.31 during that April to June period. Up makes sense of the story, down makes no sense.
How can Americans exporting to Canada and getting the same low price Canadians are getting be an issue that should concern us. It would be nice if we could order our customers to pay us more. Just get governments out of agricultural regulation and subsidies. If we cannot sell our wheat to Germany, we won’t buy Mercedes and Porsches. Why do trade deals seem to concern manufacturing when Canada doesn’t make anything?
Under the current system, milk farmers have to pay the government for a quota to sell milk. They can farm as much as they wish. They are guaranteed a price and sale. the farmers have adjusted and become accustomed to this system and do not want change from a comfortable position in a legal yet criminal system to rip of the population at large.
But the money (AKA capital) that they use to buy the quota is not available to them to improve their business.
You can tell I’m voting Bernier.
Not true. Milk can be transported thousands of miles if necessary.
You are completely wrong. Milk quota was granted to producers there is no price paid to the government
And farmers are limited to selling only what quota they have.
Dairy farmers set the price of quota according to the profitability of producing milk. They’re making a lot of money.
Gentlemen (Robert, Gord, etc.) no one is completely wrong. Everyone seems to get the gist of things, but this system has been trucking along since the late 1960s and has morphed into a monster of terrible proportions. The farmers of the late 60s were given production quota to roughly match their production of the day. However, as breeding/feeding/husbandry efficiencies evolved and improved over time, per-cow productivity increased. Because quotas are intended to limit production, an improving farm must then cull cows or buy quota from a domestic competitor. If domestic demand increases, government (dairy commission) will gift more quota. If demand decreases, central command will take quota away. If cost of production rises (fertilizers, tractors, property taxes, etc.) quotas are cut to limit product (milk) availability and force price upward in order to ensure “sufficient profit” for a typical farm. Since profit is thus perennially guaranteed, production quota has seen strong inter-farm trade demand, and has become extremely expensive to acquire (or lucrative to sell). In fact, for a start-up producer of average size, the cost for quota (ie. the “right” to produce) would roughly equal all other capital investments combined (land, livestock, barns, equipment, etc.). Think of it as the “ante-in” cost of the poker game.
It’s simply price fixing here in Canada and the consumer gets screwed.
hores is spelled whores. Are you that commie nutbar from SK that hates his food suppliers? Do you know people will die without food?
Anytime that a marketing board is involved with the distribution of a product the victim is always the consumer. It always ends up with government bureaucrats making the decisions and the operational objectives. Most of these clowns couldn t manage their way into a brothel with an arm load of $100 dollar bills, So as always the consumer gets the shaft with no lubricant.
The Canadian Dairy cartel is a racket, pure and simple.
Not even close to a free market.
Then again, so is almost every other major sector in Canada, but the dairy sector is one of the worse.
Don’t believe me? Try to buy a Holstein as a pet.
Gee, not much different than the phone, tv, and internet providers…oh, and healthcare, insurance, etc.
The people wanted a king and leaders who lead from behind…they got it good and hard.
There are much tastier pets than Holsteins.
Phone and TV are free, you just have to pay for an internet connection.
As for insurance, mortages, etc, well, if people insist on being part of a debt-based society, well, they deserve what’s coming to them.
Not too many that you could milk and sell milk to your neighbours, though.
Horrible, evil raw milk!
I’m not into pulling that type of tit. If I was, I would develop a taste for goat milk … I’ve never tried it … but how wrong could millions of Muslims be wrong about anything?
I like curried goat.
Max has pledged to kill supply management. Sounds good to me.
…if people insist on being part of a debt-based society, well, they deserve what’s coming to them.
All money is created through debt…so unless you’re digging up gold somewhere, you’re part of it.
Couple of thoughts on this.
– Trump has a habit of knowing his opponents strengths and weaknesses.
-Trump also knows what his audience wants to hear as well as what his opponents audience doesn’t want to hear.
-Trump believes with good reason that the DNC and the liberal party (both provincial and federal) are fellow traveller’s and have parallel agendas.
-Trump knows the most likely reaction from his opponents when he makes a statement on any subject.
-For Trump the goal is to get the job done efficiently and expeditiously (his strength), for his opponents their goal is to show they are the loved by all (their weakness).
-When Trump talks about NAFTA or in this case dairy products, he frames the discussion around the price at the checkout (the consumer). His opponents talk about market protection (corporations).
So this is what I believe based on those points is the most likely outcome. Trump is going to get what he wants because juthtin will be faced with the choice of siding with urban MTV voters that want milk the same price as what US consumers are paying vs siding with the corporate interests to protect his daddies legacy of supply management.
“Poof you’re frozen”
A few weeks ago I spent a bit of time on line comparing prices for supply managed products in Walmart Ottawa to the same product in Walmart Plattsburgh. I used the Walmart generic Great Value products to make it an apples-to-apples comparison….but Canada doesn’t carry Great Value milk, so I used the cheapest: Neilson. All adjustments have been made for US/CDN dollar exchange and metric/US weights and volumes.
1 dozen Great Value large eggs
Ottawa: $1.47 US Plattsburgh: $0.98 US 50 percent difference
4 litres 2% milk (Ottawa Neilson / Plattsburgh Great Value)
Ottawa: $3.19 US Plattsburgh: $2.29 US 39 percent difference
Great Value boneless/skinless chicken breast $ per lb
Ottawa: $7.47 US Plattsburgh: $2.82 US 165 percent difference
The Cdn dairy farms being protected are often not family farms in the way most people would think of them. They are more often very large family controlled corporations.
Nothing wrong with capitalism but it doesn’t get my sympathy crying about the poor family farm when the biggest beneficiaries are nothing of the kind.
The dairy farms that are what you would think of as a family farm (which are an endangered species) struggle to compete against these bigger competitors that use the system to expand and squeeze.
Good research Jamie, but I suspect that it still underestimates the degree to which Canadians are being screwed by supply management. For instance, Canadian retailers long ago coined the term “lost litre” to refer to selling a 4L unit of milk at a loss in order to attract customers into the store. I think accurate answers might be found by analyzing the tariff levels that Canada has in place to prevent competitive imports. They might be found here (http://www.international.gc.ca/controls-controles/prod/index.aspx?lang=eng) but I’m too impatient to sift through this miasmatic government website. They’ll no doubt vary by final product (butter, yogurt, cheeses, sour cream, fluid milk, chicken breasts vs whole chicken, etc), but roughly speaking, I believe that tariffs for products of supply managed sectors of Canadian agriculture have typically been set in the 200 to 300 percent range.
It has been a few years. When I looked at the Canadian dairy industry I found that my home province of BC is not even white milk (drinking milk) self sufficient. The upper end of the dairy market (cheese, yogurt etc) is dominated by the east, particularly Quebec). Another promise that Reform and later CPC made was to fix this BUT nothing happened. I could care less what happens to Quebec and Ontario dairy producers.
Another example of how the West is screwed in this country. The inequity is not simply defined by Equalization. It permeates the entire economy. Eastern Canadian finance did not invest in the Alberta oil industry. That came from the USA. Once the industry was producing easterners could not wait to fight their way to the trough. Turdeau senior showed the way and it has NEVER stopped.
Good research is right. No doubt you would find the same differences in the cheese prices.
“the dairy market (cheese, yogurt etc) is dominated by the east, particularly Quebec)”
http://www.dairyinfo.gc.ca/index_e.php?s1=dff-fcil&s2=farm-ferme&s3=nb
Funny how that works; 50% of Canada’s dairy farms are based in Quebec.
Government teat and Quebec go hand in hand.
“4. Consumers are getting shafted.”
That’s why I’m switching to almond milk…
Curious. Word press won’t allow a link that shows that 50% of a certain Canadian industry is based in a province that begins with the letter ‘Q”.
Once the supply management system collapses are taxpayers going to get stuck buying back quota from dairy farmers?
Yup, Max is the only Conservative candidate that seems to understand this. One more reason he will get my vote.