In Canada, layer hen, broiler chicken, hatching egg, turkey, and dairy producers participate in the quota system, also known as supply management. The system’s framework provides security for stakeholders from farm gate to dinner plate.
At the first link of the food supply chain, the quota system benefits Canadian farmers, said Geneve Newcombe, a ninth-generation farmer in New Brunswick who raises laying hens, broiler chickens, and dairy cattle.
Newcomb is well versed in supply management, and the system is a significant factor in her daily life. As a farmer, she firmly supports the quota systems in place today.
Quota is as “a fixed amount of a product that a farm is allowed to produce,” Newcomb explained. This amount is adjusted based on Canadian consumption, trade agreements, population, and market trends.
Prior to supply management in dairy production, large price fluctuations occurred in the Canadian marketplace as a result of changes in supply and demand. Insufficient milk supplies led to higher milk prices. Conversely, milk surpluses resulted in lower prices. Often as a solution to this problem, farmers dumped excess milk, a National Farmers Union (NFU) article said.
On first glance, milk surpluses appear great for Canadian consumers, but these production fluctuations were consequential and led to market problems.
Dairy farmers were unable to keep their operations running when milk prices decreased, and they relied on government subsidies to keep their businesses afloat. Other supply-managed commodities also faced this reality.
To address issues that led to milk shortages, over-production and income volatility, dairy farmers took political action in the 1960s, an NFU article said. In 1969, this collaborative effort resulted in the Ontario and Quebec governments introducing supply management in the dairy industry. The remaining provinces followed suit soon after this agreement.
Subsequently, all Canadian chicken and egg producers began using the supply management structure in 1971 under the Farm Products Marketing Agencies Act, the NFU article said. Two years later, the turkey sector entered the quota system.
For supply management to function optimally, the system must adhere to three interdependent pillars. These foundational pieces include production planning, import control, and producer pricing.
Production planning assesses the needs of Canadian consumers for each supply managed commodity. For each sector, national marketing boards evaluate appropriate production amounts annually based on the previous year’s consumption trends.
Import control determines the amount of each commodity allowed into the country based on quota numbers calculated from production planning.
Producer pricing assesses the product prices that enable farmers to make a living and that are fair for consumers.
This approach ensures that products will be fresh for consumers. National bodies and provincial commodity marketing boards, such as Canadian Hatching Egg Producers, Chicken Farmers of Canada, and Turkey Farmers of Canada, administer national quota systems for their respective sectors.
Supply management facilitates all of Canada’s international trade agreements and determines importation amounts from other countries. This control is accomplished through “Tariff Rate Quotas” (TRQs) that allow a limited amount of imports into Canada at low or zero tariff rates, the NFU article said. Any products Canada imports above the TRQ threshold bear high tariffs. Such trade regulations are approved by the World Trade Organization.
In addition to providing liveable wages for farmers, supply management also supports young farmers in continuing family businesses. Families with supply managed commodities can provide opportunities for the next generation to take over the farm; removing barriers that young people face when trying to enter the ag industry.
Through supply management, “stable price and production are met.” Newcome said. Farmers with quota may be more willing to invest in their operations because they are likely to see returns on those investments.
Overall, food security is top of mind for many Canadians and COVID-19 has highlighted how important it is for Canadians to understand and trust Canada’s food supply chain. And Canadians want to support our own economy and local farmers, Newcombe said.
Quota provides Canadians with a domestically sufficient system. Consumers can confidently purchase Canadian products without facing price fluctuations. Stable prices and consistent quality are especially important during the COVID-19 pandemic.
Farmwork to Feed Canada (F2FC) is a national volunteer not-for-profit initiative by Canadian communication professionals, students, and recent graduates in communications. F2FC collaborates with farmers, and agri-businesses amid COVID-19 pandemic-related challenges to Canada’s food supply and food security, to engage Canadians, pro bono, with compelling stories about their food system and build support for Canada’s farmers, food producers, and their essential skilled workers.