Supply Management

MYTHBUSTING 101: Supply management and imports

Written by Bernadette Cox

If you’ve heard that supply management blocks imports, someone is either misinformed or trying to dupe you. Yet, we hear this myth all the time. We put our mythbusting team to work to explain how supply management encourages predictable trade.

Supply management is completely consistent with trade as Canada’s international obligations provides access for imports of chicken, dairy, turkey and eggs. All of the supply management sectors in Canada, including the chicken sector, have part of their domestic market supplied by imports. For chicken, this amount is set at 7.5% of the previous year’s production, so it grows as domestic production grows. In 2016, this amounted to 83.3 million kilograms of imports- this is a huge amount! In fact, it makes Canada the 13th largest importer of chicken in the world.

The major countries exporting chicken into Canada are the United States, Brazil, Thailand and Hungary, and they must meet Canada’s science-based domestic food safety measures. Most of this imported chicken is further processed and found in products like frozen dinners, chicken entrees or chicken pot pies. Additional chicken may also come into Canada if the final product contains 87% or less chicken; this includes items like TV dinners, egg rolls or soups.

Controlling the volume of imports, without banning or blocking them, is necessary for the effective management of chicken supplies. With supply management, farmers plan their production to provide a consistent supply of high-quality food that accurately reflects Canadian consumers’ demand. Without knowing the level of imports, it would be impossible to know how much to grow in Canada to meet demand efficiently and without waste.

In the absence of import controls, domestic markets can be flooded by imports, causing Canadian farmers to subsequently cut back production. But at some point, those import volumes will decline, leading to shortfalls in supplies and skyrocketing prices. Between 2013 and 2017, this price-supply instability resulted in increases of 32.2% and 13.6% in the prices of beef and pork, both non-supply-managed commodities, while chicken prices rose only 3.5%. The ability to plan production is critical to supply management and avoids the sort of boom-and-bust cycles that make government subsidies necessary in other commodity sectors. Supply management, together with the necessary import controls, allows farmers to receive fair compensation for their products, processors to receive a reliable supply of chicken, and Canada to enjoy a stable choice of high quality, safe and nutritious food. We do all of this without blocking imports!

The term “free market” alludes to a situation where all countries are competing fairly. Unfortunately, this doesn’t happen. Some countries effectively ban chicken imports by requiring that imported poultry be cooked for unrealistic lengths of time at high temperatures. For instance, Australia requires that chicken meat imports be heated to a minimum core temperature of 70 °C for at least one minute. This goes well beyond any reasonable or scientifically-based food safety standard and is designed to render the product inedible.

Third-party research indicates that a majority of Canadian consumers want to be supplied only with Canadian chicken. As much as Canadian chicken farmers would like to do just that, the international trade rules agreed to by Canada must allow opportunities for imports.

LET’S REVIEW THE FACTS

  • Import access to Canada’s supply management markets is guaranteed by trade agreements.
  • The amount of chicken imported into Canada is about equal to 7.5% of what we produce.
  • Canada is the 13th largest importer of chicken in the world.

Far from banning or blocking imports, supply management establishes a way of providing predictable market access to its trading partners.

Want us to bust some other supply management myths? Send us your questions via twitter using the hashtag #IHeartChickenFarmers – stay tuned to see if your myth gets busted!