An Often Overlooked Reason for Higher Grocery Prices, and It Is Unrelated to Transport Costs: Supply Management
In the end, it benefits almost no one, including most dairy farmers
Understandably, many people are upset about “sky-rocketing” grocery prices over the last little while, and a lot of these frustrations have been directed at large grocery retailers, especially Loblaw Companies Ltd. and its President Galen Weston Jr. Other arguments include the rising costs of transporting food due to rising gasoline prices and carbon taxes. However, much too little blame is being directed at federal and provincial governments in Canada who legally require higher prices for dairy, eggs, and poultry (DEP), via the enforcement of “supply management”: a system designed to create and enforce a legal cartel to the detriment of not only consumers, but also non-DEP farmers, restaurants, and even many participants in the DEP industries.
Even worse, there is no real political opposition to the system since all major parties endorse it, despite their performative complaints about rising food prices — the only one to come out officially against supply management is the People’s Party of Canada under Maxime Bernier, but it is hardly worth mentioning. These politicians talk a good game about wanting lower grocery prices, but that is clearly the only thing they are willing to do… oh yeah, and in the process blame everything and everyone but themselves for increasing food costs.
In fact, on November 23, 2005, a motion supporting the supply management system was unanimously passed in the House of Commons. This unanimity is remarkable considering how political parties tend to disagree with each other just for the sake of disagreement. It even reminds us of the following classic Adam Smith quote from The Wealth of Nations, which applies to cartel members and politicians who support it:
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices…. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary.
It is therefore the purpose of this issue of Ride On to explain the system of supply management and why it is so bad for so many people, as well as why it appears to be so politically risky to oppose it. We will also cite similar historical examples of protectionism — specifically the dairy industries in Australia and New Zealand, and Canadian wines — to show how deregulation can actually benefit everyone (producers and consumers) if only our political leaders have the courage to stand for all of their voters rather than just the special interests.
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