From the Frontier Centre for Public Policy

By Sylvain Charlebois

Bill C-282 currently sits in the Canadian Senate and stands on the precipice of becoming law in a matter of weeks. Essentially, this bill seeks to bestow immunity upon supply management from any potential future trade negotiations without offering increased market access to potential trade partners.

In simpler terms, it risks holding all other economic sectors hostage solely to safeguard the interests of a small, privileged group of farmers. This is far from an optimal scenario, and the implications of this bill spell bad news for Canadians.

Supply management, which governs poultry, egg, and dairy production in Canada, has traditionally enabled us to fulfill our domestic needs. Under this system, farmers are allocated government-sanctioned quotas to produce food for the nation. At the same time, high tariffs are imposed on imports of items such as chicken, butter, yogurt, cheese, milk, and eggs. This model has been in place for over five decades, ostensibly to shield family farms from economic volatility.

However, despite the implementation of supply management, Canada has witnessed a comparable decline in the number of farms as the United States, where a national supply management scheme does not exist. Supply management has failed to preserve much of anything beyond enriching select agricultural sectors.

For instance, dairy farmers now possess quotas valued at over $25 billion while concurrently burdening dairy processors with the highest-priced industrial milk in the Western world. Recent data indicates a significant surge in prices at the grocery store, with yogurt prices alone soaring by over 30 percent since December 2023. This escalation is increasingly straining the budgets of many consumers.

It’s evident to those knowledgeable about the situation that the emergence of Bill C-282 should come as no surprise. Proponents of supply management exert considerable influence over politicians across party lines, compelling them to support this bill to safeguard the interests of less than one percent of our economy, much to the ignorance of most Canadians. In the last federal budget, the dairy industry alone received over $300 million in research funds, funds that arguably exceed their actual needs.

While Canada’s agricultural sector accounts for approximately seven percent of our GDP, supply-managed industries represent only a small fraction of that figure. Supply-managed farms represent about five percent of all farms in Canada. Forging trade agreements with key partners such as India, China, and the United Kingdom is imperative not only for sectors like automotive, pharmaceuticals, and biotechnology but for the vast majority of farms in livestock and grains to thrive and contribute to global welfare and prosperity. It is essential to recognize that Canada has much more to offer than merely self-sufficiency in food production.

Over time, the marketing boards overseeing quotas for farmers have amassed significant power and have proven themselves politically aggressive. They vehemently oppose any challenges to the existing system, targeting politicians, academics, and groups advocating for reform or abolition. Despite occasional resistance from MPs and Senators, no major political party has dared to question the disproportionate protection afforded to one sector over others. Strengthening our supply-managed sectors necessitates embracing competition, which can only serve to enhance their resilience and competitiveness.

A recent example of the consequences of protectionism is the United Kingdom’s decision to walk away from trade negotiations with Canada due to disagreements over access to our dairy market. Not only do many Canadians appreciate the quality of British cheese, but increased competition in the dairy section would also help drive prices down, a welcome relief given current economic challenges.

In the past decade, Canada has ratified trade agreements such as CUSMA, CETA, and CPTPP, all of which entailed breaches in our supply management regime. Despite initial concerns from farmers, particularly regarding the impact on poultry, eggs, and dairy, these sectors have fared well. A dairy farm in Ontario recently sold for a staggering $21.5 million in Oxford County. Claims of losses resulting from increased market access are often unfounded, as farmer boards simply adjust quotas when producers exit the industry.

In essence, Bill C-282 represents a misguided initiative driven by farmer boards capitalizing on the ignorance of urban residents and politicians regarding rural realities. Embracing further protectionism will not only harm consumers yearning for more competition at the grocery store but also impede the growth opportunities of various agricultural sectors striving to compete globally and stifle the expansion prospects of non-agricultural sectors seeking increased market access.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

General view of the ‘TD Canadian 4-H Dairy Classic Showmanship’ within the 101st edition of Royal Agricultural Winter Fair at Exhibition Place in Toronto, Ontario, on November 6, 2023. The Royal is the largest combined indoor agriculture fair and international equestrian competition in the world. Getty Images photo

From the Canadian Energy Centre

By Mario Toneguzzi

‘Agriculture requires fuel, and it requires lubricants. It requires heat and electricity. Modern agriculture can’t be done without energy’

Agriculture and oil and gas are two of Canada’s biggest businesses – and they are closely linked, industry leaders say.  

From nitrogen-based fertilizer to heating and equipment fuels, oil and gas are the backbone of Canada’s farms, providing food security for Canadians and exports to nearly 200 countries around the world.  

“Canada is a country that is rich in natural resources, and we are among the best, I would even characterize as the best, in terms of the production of sustainable energy and food, not only for Canadians but for the rest of the world,” said Don Smith, chief operating officer of the United Farmers of Alberta Co-operative.  

“The two are very closely linked together… Agriculture requires fuel, and it requires lubricants. It requires heat and electricity. Modern agriculture can’t be done without energy, and it is a significant portion of operating expenses on a farm.” 

The need for stable food sources is critical to a global economy whose population is set to reach 9.7 billion people by 2050. 

The main pillars of food security are availability and affordability, said Keith Currie, president of the Canadian Federation of Agriculture (CFA). 

“In Canada, availability is not so much an issue. We are a very productive country when it comes to agriculture products and food products. But food affordability has become an issue for a number of people,” said Currie, who is also on the advisory council for the advocacy group Energy for a Secure Future. 

The average price of food bought in stores increased by nearly 25 per cent over the last five years, according to Statistics Canada. 

Restricting access to oil and gas, or policies like carbon taxes that increase the cost for farmers to use these fuels, risk increasing food costs even more for Canadians and making Canadian food exports less attractive to global customers, CFA says. 

“Canada is an exporting nation when it comes to food. In order for us to be competitive we not only have to have the right trade deals in place, but we have to be competitive price wise too,” Currie said. 

Under an incredible Saskatchewan sky, a farmer walks toward his air seeder to begin the process of planting this year’s crop. Getty Images photo

Canada is the fifth-largest exporter of agri-food and seafood in the world, exporting approximately $93 billion of products in 2022, according to Agriculture Canada.  

Meanwhile, Canadians spent nearly $190 billion on food, beverage, tobacco and cannabis products in 2022, representing the third-largest household expenditure category after transportation and shelter. 

Currie said there are opportunities for renewable energy to help supplement oil and gas in agriculture, particularly in biofuels.  

“But we’re not at a point from a production standpoint or an overall infrastructure standpoint where it’s a go-to right away,” he said.  

“We need the infrastructure and we need probably a lot of incentives before we can even think about moving away from the oil and gas sector as a supplier of energy right now.” 

Worldwide demand for oil and gas in the agriculture sector continues to grow, according to CEC Research.  

Driven by Africa and Latin America, global oil use in agriculture increased to 118 million tonnes of oil equivalent (Mtoe) in 2022, up from 110 million tonnes in 1990.  

Demand for natural gas also increased — from 7.5 Mtoe in 1990 to 11 Mtoe in 2022.   

Sylvain Charlebois, senior director, in the Agri-Food Analytics Lab at Dalhousie University, said food security depends on three pillars – access, safety, and affordability.   

“Countries are food secure on different levels. Canada’s situation I think is envious to be honest. I think we’re doing very well compared to other countries, especially when it comes to safety and access,” said Charlebois. 

“If you have a food insecure population, civil unrest is more likely, tensions, and political instability in different regions become more of a possibility.” 

As a country, access to affordable energy is key as well, he said.  

“The food industry highly depends on energy sources and of course food is energy. More and more we’re seeing a convergence of the two worlds – food and energy… It forces the food sector to play a much larger role in the energy agenda of a country like Canada.”