Would supply management’s demise be good for Alberta?

Tough competition Mega-operations could take over, but they might be in another province — or country


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Urban media pundits and self-styled experts are once again expounding on the evils of supply management and why it needs to be terminated. They have been emboldened by the Canadian government’s alleged decision to put supply management on the table as the price of joining the Trans Pacific Partnership trade group.

As expected, export-oriented commodity proponents, mainly in crops and livestock, applauded the intent as a wise move to increase agricultural trade. From a federal political perspective, sacrificing supply management has few negative consequences — there are relatively few people involved with that sector and besides, farmers tend to vote Conservative (except in Quebec) no matter how much they are abused by their government.

In Alberta over the years, supply management has been treated with ambivalence by the provincial government. Philosophically, the PC government supports a free market in agriculture. In general, that has worked very well and this province enjoys one of the largest and most robust agricultural economies in the country.

That philosophy does not have much sympathy for restricted marketing concepts like supply-managed quota boards, which are seen to stifle opportunity and expansion. The Alberta government’s early opposition to the Canadian Wheat Board tends to reflect that approach. And it’s something the existing quota boards are extremely aware of, hence their ongoing and intense lobbying of the government to maintain the status quo. It has been a successful lobby as the government does indicate it supports supply management, but that support seems to be lukewarm and one senses the hearts of government politicians are not really in it. I expect that causes quota boards some anxiety.

I would suggest that the only reason the Alberta government ever allowed supply management to exist in this province was because staying out would have seen a flood of dairy and poultry products from outside the province decimate local producers. Without being part of a national quota scheme, Alberta producers would have had no protection and would not have been able to export those products to other provinces.

There has always been an assumption within the bureaucratic braintrust of Alberta Agriculture that if there was no supply management, our entrepreneurial producers would be able to expand into mega-scale intensive dairy, egg, and poultry operations similar to what exists in the U.S., Europe, and parts of Asia. There are many successful examples of such operations in those areas that feature 5,000- to 10,000-head dairy farms, and million-head broiler, turkey and egg-laying facilities. None of such scale exist in Canada and many find that a positive situation as it spreads the economic activity around the country and maintains the ideal of the family farm.

I expect that marketing philosophers have given the situation much thought and concluded that with the experience from present intensive agriculture, including feedlots and irrigation, that Alberta is in a prime position to expand into mega dairy, poultry and egg production. All it would take is the demise of supply management. But that also presumes that competition from more production-favoured areas would not fill the gap opened up by a new free market. That’s particularly relevant to chicken and turkey production and here’s why.

U.S. a threat

Alberta is not a large market from a North American perspective and anyone who has toured chicken operations in the southeast U.S. would know that it wouldn’t take a lot of extra effort for that production area to supply the entire Prairie market. That U.S. production area already supplies countless thousands of chicken wings to Alberta. Such a scenario would mean that the entire chicken industry in this province, if not the Prairies, from production to processing could be decimated by a flood of cheap imports.

The counter argument is that our producers and processors would build mega facilities to compete. No doubt that will happen in time — but economies of scale would indicate that all such future mega-production and processing would need to be concentrated in only one area. That could just as easily be all located in southern Manitoba rather than Alberta. In fact, it’s more likely considering that province’s long history in intensive agriculture, particularly hog production, which is larger than Alberta’s. A similar massive relocation of egg production to another province could also occur. Heck, we get eggs from Manitoba already, it wouldn’t take a lot to ramp that up.

My point is: Be careful what you wish for.

We may be a privileged province, but we are not isolated from market and production realities. Consumers and urban media experts may not care where dairy and poultry products come from, as long as they are cheap. But I would suggest that the end of supply management may well see a massive realignment of production and processing on the Prairies. To assume that will all occur in favour of Alberta may be wishful thinking.

Next time — Part two: Bite the bullet and end supply management.

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