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HuffPost Québec: 9 Myths About Supply Management Published by the Montréal Economic Institute

Recently, the Montréal Economic Institute (MEI) made several false allegations about supply management in the article “Neuf choses à savoir sur la gestion de l’offre” (in French only). However, these nine “things you should know” are actually nine MYTHS about supply management. So we decided to dispel these myths once and for all.

  1. Supply management is expensive for everyone – FALSE: Supply management does not determine retail prices

The MEI is confusing retail prices with farmgate prices. Retail prices are set by stores and restaurants based on a wide variety of factors, such as the target market and product positioning. In addition, there are several steps between the farmer and the retailer: the processors, further processors, distributors, truckers, marketers and retailers, who all have to meet their margins.

  1. Supply management makes the poor poorer – FALSE: Supply management is not a tax on the poor

Supply management helps avoid the price volatility that comes from over- and under-supplying the market, thus enabling consumers to have a reliable supply of local, fresh, high-quality food that remains at a stable retail price.

Meanwhile, farmers only receive $1.56 per kg—which mainly covers the cost of feed and chicks. This $1.56 per kg is what we call the live price, and, since 2012, it has declined by 7%, whereas the retail price has increased by 7.3%. With consumers paying more and chicken farmers getting less, it’s clear that there’s no connection.

  1. Most farmers are not under supply management – SO? Supply management does not benefit only a small minority of farmers

The supply management system used by poultry, egg and dairy farmers is the result of their own desire to better administer supply at the national level. They decided, jointly and democratically, to adopt production disciplines that would allow them to meet domestic market demand without producing a surplus that would have to be sold at a loss or discarded. In other sectors, farmers rejected the idea of limiting production and chose to seek out growth opportunities in export markets. Both approaches are legitimate and reasonable.

What impact does supply management have on other agricultural sectors? None. Supply management only affects the sectors that use it.

  1. Supply management hurts new farmers – FALSE: Supply management benefits new farmers

The last census of agriculture showed that some of the youngest farmers in agriculture overall are found in supply management.

Due to its stability and growth, the poultry industry attracts quite a few new farmers and we are developing programs to help them. Approximately 4% of our producers are young farmers between the ages of 18 to 29.

  1. Supply management also hurts established farmers – FALSE: Supply management benefits farmers who are already established

If supply management hurt farmers, they wouldn’t support it! Supply management uses a cost of production calculation that drives efficiency, while ensuring farmers receive a fair return from the market. As a result, our farmers are willing to invest back into their businesses and communities. Thanks to this stability, farmers under supply management do not need assistance programs or government subsidies.

  1. Supply management prevents growth in the dairy industry – FALSE: Supply management promotes innovation and productivity

As outlined in our Sustainability Report, the development and implementation of our strict food safety and animal care programs is one example of innovation. Another example of innovation is the continuous upgrading of barns. In fact, 74% of Canadian chicken farmers have made, or are planning to make, improvements to their operation regarding environmental issues, such as improving electricity usage, heating efficiency, ventilation, manure storage and water treatment.

  1. Supply management hurts the economy as a whole – FALSE: Supply management benefits the Canadian economy

Supply management is a driving force in the Canadian economy. The 2,800 chicken farmers and 191 processors contribute $6.8 billion to Canada’s gross domestic product, pay $2.2 billion in taxes and employ 87,200 workers.

  1. Supply management hampers the survival of family farms – FALSE: Supply management helps family farms survive

More than 90% of supply managed farms are family farms. The stability created by supply management allows them to invest in their farms in order to expand and grow their business. In 1985, Canada had 2,241 chicken farmers; in 2015, that number reached 2,803, and most of them were on family farms that were expanding.

  1. Farmers will be compensated – FALSE: Dismantling supply management will not benefit farmers or consumers

Farmers don’t want to be compensated; they want to continue earning their income from the market. Dismantling supply management would not mean that consumers would see a reduction in the price of dairy, poultry and egg products—in fact, the opposite may be true. New Zealand dismantled its supply management system in 2001, and consumers have yet to see the price of milk go down.