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Canada’s dairy and poultry pricing hurts the poor

Milked and feathered

September 29, 2014 — 

Canada’s system of supply management for dairy and poultry industries increases the cost of living as a percent of income for poor households much more than for their richer counterparts, a new study reports.

The findings are reported in “Milked and Feathered: The Regressive Welfare Effects of Canada’s Supply Management Regime”, a forthcoming paper to be published in the journal Canadian Public Policy.

Authors Ryan Cardwell, Chad Lawley and Di Xiang, economists at the University of Manitoba, examined consumer food choices to assess the validity of a criticism of supply management: that high prices for dairy and poultry products impose regressive distributional effects on Canadian consumers.

They do.

“It is notable that all three national political parties staunchly support a system that impedes access to healthy foods, particularly for poor consumers,” Cardwell says. “Such a policy counteracts poverty-reduction measures and healthy-eating initiatives that are undertaken by various levels of government.”

The production and trade of dairy and poultry products in Canada are controlled by a system of supply management.  Output is regulated with production quotas, and imports are restricted through a system of tariff rate quotas.

Canada’s supply management system is earning more public attention since many of Canada’s trading partners, such as the European Union, are seeking better access to Canadian dairy and poultry markets in negotiations over proposed preferential trade agreements.  These pressures have renewed debate about the future of supply management in Canada.

The authors used data from the Statistics Canada Food Expenditure Survey to estimate consumer responses to price changes for dairy and poultry products.  These estimates were used to calculate the burden that supply management imposes on consumers at different income levels.  Canada’s supply management policies are highly regressive, imposing a burden of approximately 2.3% of income ($339) per year on the poorest households, which is almost five times as large as the 0.5% ($554) burden imposed on the richest households.  The burden is larger for households with children.

 

For more information contact Sean Moore, Marketing Communications Office, University of Manitoba, 204-474-7963.

 

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One comment on “Canada’s dairy and poultry pricing hurts the poor

  1. Carla Roppel

    Dear Editor;

    This is a narrowly defined and somewhat narrow-minded analysis that reeks of scientific reductionism. It is convenient to focus only on a portion of the food system toward which these researchers appear to demonstrate a negative bias. I would challenge them to consider the relative effects on poor vs rich families for questions such as:

    Did these researchers analyze the Statistics Canada Food Expenditure Survey to estimate consumer responses to price changes for (for example) beef and pork, or fresh fruit and vegetables?

    Did they use those estimates to calculate the burden that unregulated supply imposes on consumers at different income levels?

    What did they concludes about the regressivity and imposition of annual financial burdens of pricing changes in those food groups on the poorest households?

    How much larger is the resulting financial burden on the poorest rather than the richest households?

    How do the economic burdens between poor and rich families compare, whether with children or not?

    Finally, responsible readers must consider whether consumer prices for various food products track the prices paid to farmers For example, it is likely that beer prices will rise this because supplies of malting barley are low and therefore selling at high prices. At the same time, however, wheat prices are at an all-time low. Will we see lower bread prices as a result?

    An economic model that allows one farm sector to recover production costs and earn a decent income does not make that system problematic. Instead, it should illuminate the real problem. Our food system operates on an economic model that has effectively decoupled the prices paid to farmers from the prices that consumers pay. The effects are relentless; consumer prices rise, producer prices decline and corporations skim profits at every added step along the way.

    Please put research in its whole context. It serves no one to cherry pick pieces of a system that give you the answers you (or your financial masters) prefer.

    CJ Roppel

    Reply

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