Be careful what you wish for

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Sometimes unintended consequences are hard to see in a controversial, emotional issue, and that sure goes for the future of supply management (SM). Much has been said about the possible demise of SM as a trade-off for increased access to offshore markets. That appears to be the unmentionable mantra of the Canadian Agri-Food Trade Alliance, a lobby group of mainly free trade commodity organizations. The free trade theory is that the elimination of SM will see vast new profitable tariff-free offshore markets opened up that would offset the economic loss of eliminating SM.

Well, be careful what you wish for, particularly if you support that theory and happened to be a beef or pork producer.

Norman Storch, a prominent Hanna-area rancher and a founding father of the Alberta Hatching Eggs Marketing Board, put forth the observation that livestock producers in Canada may have much more to lose than gain with the elimination of supply management. He suggests that eliminating SM could see cheap American chicken and turkey products flood into Canada. Such a flood would in all likelihood put pressure on not only beef and pork prices, but also reduce their consumption for a long time. That’s a real threat considering the fickle nature of consumers who tend to vote with their wallets. For most consumers $4/kg chicken would look a lot more attractive than $20/kg beef or pork.

Sure there is the temptation for retailers to capture more profits from the importation of cheap tariff-free poultry products. But in the food-marketing battle, market share is as important as margin. Retailers and fast-food joints could well mount a campaign to increase their share of total meat consumption with an onslaught of cheap U.S. chicken. That would be hard for the beef and pork industry to withstand except with their own lower prices. We all know who will pay for that marketing situation. Sure robust high-paying export markets for beef and pork could offset a domestic decline in prices and consumption — but there is no guarantee that will happen.

Time will tell, but it would be ironic that the demise of poultry supply management would see a decline in beef and pork economics and consumption. Sometimes leaving well enough alone is a more prudent policy.

 

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