Author Topic: Canadian tariffs  (Read 5128 times)

Cardboard

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2443
Canadian tariffs
« on: June 07, 2018, 07:01:25 PM »
Canada and U.S. trade is being held up by one thing: farming.

Time for Canadians to stand up and tell milk, egg and chicken producers to compete like anyone else.

Consumers should stop paying double the price for these products to only enrich large producers or allow unproductive farming.

Cardboard


StubbleJumper

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 944
Re: Canadian tariffs
« Reply #1 on: June 08, 2018, 07:35:51 AM »
Canada and U.S. trade is being held up by one thing: farming.

Time for Canadians to stand up and tell milk, egg and chicken producers to compete like anyone else.

Consumers should stop paying double the price for these products to only enrich large producers or allow unproductive farming.

Cardboard


I would agree that Canadians are being screwed by the dairy farmers and most are blissfully unaware that it's even happening.  The sad part of it is that higher dairy prices disproportionately hurt the poor and lower-middle class because they are the ones who have kids drinking milk.  It would be beneficial to 99% of Canadians to undertake domestic policy reform to eliminate supply management.

Now, turning to the question of trade agreements and the noise coming from the US dairy industry, I would issue my typical warning to Americans and Kiwis who lobby to open the Canadian industry:  At this point, Canada does not export a meaningful amount of dairy products because supply management is intended to balance supply and demand for Canada's domestic needs only.  Kiwis and Americans should be damned careful about what they ask for.  At the moment, the US and New Zealand are effectively the only real competitive players in world export market for dairy products.  They have that market sewn up, and with the speed at which demand from China is growing, it's a market with a pretty good future.  When the US and New Zealand industries ask that Canada dismantle supply management, they are shooting themselves in the foot.  Sure, they'll get access to a small-ish market of 35 million people, but they should think about the supply side.  Canada is a *huge* exporter of nearly every agri-food product that can be effectively produced in a cold climate.  If we take the hand-cuffs off our dairy industry, there is considerable potential for the establishment of large-scale, low cost-of-production dairy operations here and these operations would be free to export on the world market.  Production from Canada would likely *increase* after the elimination of supply management, which would actually be counter-productive for farmers in the US and New Zealand.  So, they should be careful what they ask for...

As a consumer, I'd love for that Stalinist system to be eliminated, but exporting countries are making a mistake if they assume it would be beneficial for them.


SJ

bizaro86

  • Hero Member
  • *****
  • Posts: 611
Re: Canadian tariffs
« Reply #2 on: June 08, 2018, 12:14:34 PM »
Yeah, right now Canadian dairy farmers can't expand without buying quota that costs up to millions of dollars. If you gave our well capitalized dairy farmers a big capital influx (govt quota buybacks) and let them expand as much as they wanted, you'll see huge supply increases. I think it's pretty likely they would be competitive in export markets, and that Canadian dairy prices would drop.


Cigarbutt

  • Hero Member
  • *****
  • Posts: 849
Re: Canadian tariffs
« Reply #3 on: June 08, 2018, 02:09:47 PM »
Ending supply management could be done. Australia did it (mixed results).
The last time I checked the value of dairy quotas was:   book value: 4-5 billion     market value: +/- 23 billion.
It is a tough political question and farmers can be efficient interest groups (think last Federal Conservative race for leadership).

I would say that, to make it an efficient win-win, you would need constructive discussions with our neighbors because it would be necessary to harmonize the subsidy aspect because this aspect is more "generous" south of the border. There seems to be also the question of (illegal?) immigrants working in the field earning unusually low wages. Finally some other rules would need to be harmonized. For instance, some US milk contains growth hormone whereas this is not allowed in Canada now.

SharperDingaan

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2725
Re: Canadian tariffs
« Reply #4 on: June 08, 2018, 04:52:06 PM »
Canada and U.S. trade is being held up by one thing: farming.

Time for Canadians to stand up and tell milk, egg and chicken producers to compete like anyone else.

Consumers should stop paying double the price for these products to only enrich large producers or allow unproductive farming.

Cardboard

The US would not expect to drop its subsidies in Agriculture (corn), or Europe to drop its subsidies in dairy.
So why should Canada?

If the US is so competitive, why are its agricultural subsidies so high relative to the price of the product produced?
Remove those subsidies and either US farmers bankrupt, or prices rise so high (to compensate for removal) that no one can afford to eat the product. Keep the subsidy, produce only what you consume, and everyone can eat for less. Everyone else gets it, the US .... not so much.

Food is not a 'normal' product.
Farmers are price takers, collectively producing as much as possible to maximize revenue received. Problem is that when EVERY farmer EVERYWHERE does that, the ocean of product isn't worth anything as supply greatly exceeds demand. Farmers bankrupt until there are only a few left, grain bins empty as supply dwindles, and a loaf of bread ends up costing whatever those remaining NOW HUGE farmers dictate.

We have subsidized prices, around the world, for a reason - it mitigates against civil unrest.
When food becomes out of reach, populations riot.

SD

« Last Edit: June 09, 2018, 05:37:15 AM by SharperDingaan »

Cigarbutt

  • Hero Member
  • *****
  • Posts: 849
Re: Canadian tariffs
« Reply #5 on: June 08, 2018, 05:14:17 PM »
"We have subsidized prices, around the world, for a reason - it mitigates against civil unrest.
When food becomes out of reach, populations riot."

I partially disagree with this.
Some people have described the development paradox.
What you describe obviously applies to developing countries.
The equation is much harder to apply to developed countries (the portion of expenses on food is relatively low, in comparison for instance to monthly cell phone bills or used car payments) and other explanations need to be sought.
Some people suggest that politicians (right and left and center) simply want to get elected.
http://people.duke.edu/~nwc8/Bellemare_Carnes.pdf
http://business.financialpost.com/news/economy/the-real-nafta-problem-is-canada-not-mexico-paul-ryan-says
https://farm.ewg.org/top_recips.php?fips=WI01&progcode=totalfarm&regionname=1stDistrictofWisconsin(Rep.PaulRyan)

doc75

  • Lifetime Member
  • Sr. Member
  • *****
  • Posts: 411
Re: Canadian tariffs
« Reply #6 on: June 08, 2018, 05:28:12 PM »
... (the portion of expenses on food is relatively low, in comparison for instance to monthly cell phone bills or used car payments) ...

For real?   This is absolutely false in my household.    As a monthly expenditure, food is beat only by mortgage, and not because of eating out.

Not quibbling, just surprised.

Cigarbutt

  • Hero Member
  • *****
  • Posts: 849
Re: Canadian tariffs
« Reply #7 on: June 08, 2018, 06:31:29 PM »
You're correct in the sense that, even if historically lower, it is still a significant expense.
https://www.theatlantic.com/business/archive/2012/04/how-america-spends-money-100-years-in-the-life-of-the-family-budget/255475/
For poor countries and the poorest quintile in "rich" countries, the % is between 40 to 50% of expenditures.
http://wsm.wsu.edu/researcher/WSMaug11_billions.pdf

rb

  • Hero Member
  • *****
  • Posts: 2290
Re: Canadian tariffs
« Reply #8 on: June 08, 2018, 07:24:16 PM »
... (the portion of expenses on food is relatively low, in comparison for instance to monthly cell phone bills or used car payments) ...

For real?   This is absolutely false in my household.    As a monthly expenditure, food is beat only by mortgage, and not because of eating out.

Not quibbling, just surprised.
You're surprised for a reason. That's because it's true. Food is not cheap.

It's hard to quantify my expenditure. But in my parents' case (and they're pretty thrifty ppl) they spend about $1,000 a month on food. That's 20% of their expenditure. In contrast to that, my mom's used Lexus is gonna end up coming in at $100 per month. It would be even lower if she'd hold it longer. My mom's cellphone bill comes in at $40 a month and my dad's at $25 (he doesn't use data). So yea food is a serious chunk.

Now you could make some argument around how much of that money goes to the food producers vs. transportation and retail. But food cost is far from a negligible expense.

Cigarbutt

  • Hero Member
  • *****
  • Posts: 849
Re: Canadian tariffs
« Reply #9 on: June 08, 2018, 08:55:36 PM »
"Food is not cheap." OK.

"Now you could make some argument around how much of that money goes to the food producers vs. transportation and retail. But food cost is far from a negligible expense."

You may want to include the processor in the list.
And to link with the thread, it seems there has been growing producer to retail gap also referred to the "marketing" gap.

I know Saputo (SAP.TO) very well and it is fair to assume that the processor and the retailer explain a large part of this gap.
I understand that, these days, out of every dollar of milk sold, about 12% goes to the producer.
Relevant for a tariff discussion?