Supply managed farmers across Canada continue to fight the same old misconceptions when it comes to consumer prices. Farmers do not set retail prices and farm gate prices are small fraction of retail prices.
Recently in the news you might have heard that supply management imposes large costs per family through higher prices than if it was dismantled. According to certain sources, the high prices set by supply management places a financial burden on the poorer households.
Let’s get one thing straight: supply management doesn’t increase consumer prices. Chicken farmers do not set retail prices. Retailers set retail prices, accounting for factors like brand positioning and logistics. None of these factors are related in any way to the share the farmer receives – which typically only represents a tiny fraction of the final price.
For example, chicken farmers only receive about $1.58 per kg, as the flock leaves the farm. It’s called the “live price”, most of which goes toward covering the cost of feed and chicks. This is the only price chicken farmers get to negotiate. $1.58 – that’s not much. In fact, in the past years the live price of chicken has been declining. From 2011 to 2015, the price farmers receive for their chickens has declined by 2.4% while retail prices have increased by 5% over the same period. If farmers were influencing retail prices, we would have seen a decrease. Farmers often get the blame for the rising prices we pay at the grocery store. With consumers paying more and chicken farmers getting less, it’s clear that there’s no connection.
Supply management serves a number of critical purposes in Canada: By using this system, consumers are assured a reliable supply of fresh, high-quality food at a reasonable price. By ensuring stability and that the farmer receives a fair return for their work, supply management also eliminates the need for subsidies or relying on taxpayer dollars: it allows for a healthy, sustainable industry where farmers can reinvest with confidence in their communities and business. Countries that have eliminated similar systems have not fared as well as some allege. In Australia, consumer prices have risen, while farm revenues have plummeted. As recently as August 23, 2016, the United States Department of Agriculture had to buy US$ 18 million worth of dark chicken meat to help their chicken farmers survive and balance the market fluctuation*. This is not the first time the US had to subsidize their farmers due to overproduction and unbalanced markets.
Supply management has worked well for both Canadian farmers and consumers for over 40 years. Let’s keep it that way.