Frequently Asked Questions

Does supply management make products more expensive?

No. Consumers receive high quality poultry, egg, and dairy products at reasonable prices. The retail price evolution of these products is in line with that of other food products in Canada. At the same time, dairy, poultry and egg farmers receive their income from the sale of their product, not from government subsidies or taxpayer dollars.

Would consumers get cheaper products without supply management?

Deregulation (removal of regulated management systems) of the chicken industry in UK, Australia and New Zealand has resulted in lower producer prices, but consumer prices have increased with inflation. A similar scenario happened when prices for beef animals dropped due to BSE: farmers suffered, but retail prices remained pretty much the same,. The intermediaries simply increased their own margin after deregulation. Neither producer nor consumer benefit from deregulation.

How does supply management work for the chicken industry?

By balancing chicken production from all Canadian farms with domestic consumption of chicken products, Canada’s supply management system avoids surplus production that creates volatility that leaves farmers vulnerable. Stability allows efficient farms to be more prosperous.

Does the Canadian chicken industry’s way of pricing products encourage overproduction?

Unlike price support in other countries, supply management in Canada ensures that total production responds to the Canadian demand for poultry, egg and dairy products. Each producer fills a part of the demand (quota) without producing more than what is needed in Canada. There are regulations in place to penalize producers should overproduction occur.

Do Canadian chicken farmers export surplus production?

Because overproduction is discouraged with supply management, very little poultry, egg and dairy products are exported outside of Canada. Export subsidies, used mainly by Europe and the United States, are the biggest culprits when it comes to dumping products. This is of significant concern to the developing nations whose subsistence farmers cannot compete against the artificially low-priced products dumped into their markets. The negotiations at the World Trade Organization propose to eliminate export subsidies by 2013.

Does supply management block imports?

No. Canada gives more access to imported products than many other countries give in any sector! Canada currently imports over 7.5% of the market for poultry products and more than 6% for dairy. In contrast, the United States gives only 2.75% access to their market for dairy products and Europe offers a mere 0.5% for poultry.

What would happen without supply determination?

Canada’s chicken producers operate under a quota system, where each producer undertakes to supply a small share of the Canadian market. If a surplus results, it is the producers who support the costs. Countries without production management export surpluses. These surpluses trigger lower prices worldwide, forcing many governments to step in to compensate their farmers for the artificially low prices farmers must shoulder for their production – a move that encourages other countries to do the same. Fortunately, Canada’s system avoids this vicious circle.

What would happen without price determination?

When farmers do not have the ability to influence or negotiate a fair price for their products, big players in the marketplace decide the price farmers receive. When the chicken industry deregulated in Australia and in the UK, the farm price dropped – but the retail price did not.

What would happen without import controls?

To efficiently plan Canadian production that ensures Canadian demand is met – and large surpluses are avoided – it is essential to know the level of imports in advance. Many producers in Africa and other developing countries do not have the ability to maintain predictable imports and, as a result, surplus subsidized products are dumped into their markets at a price lower than what is sustainable for them to make a fair living.

Supply Management operates under a quota unit system.  Quota provides producers the right to produce a share of the required market.  Quota holders have the privilege, granted by their Board or Commission, to engage in the production and marketing of the regulated product.

Is supply management a barrier to Canada signing free-trade agreements?

No. Supply management has never stood in the way of Canada successfully negotiating any trade agreements with other countries. In fact, the Canadian government has successfully negotiated the WTO Uruguay Round and nine other trade agreements since 1994, which have all opened up markets while preserving supply management.

What about the TPP (Trans-Pacific Partnership)?

It is only under the TPP that New Zealand and the Canadian media have indicated that Canada will have to look at changing supply management (in dairy) in order to be allowed to enter the TPP negotiations. This is because New Zealand, through a state-run marketing collective, controls over 80% of the world’s dairy market. No trade observers believe supply management is the only reason, but also suspect that issues around patent protection, cultural content provision, and foreign ownership limitations are much more important to explain the reluctance expressed in the media about Canada’s admission in the TPP.

If you have further questions about supply management please This e-mail address is being protected from spambots. You need JavaScript enabled to view it or visit the Alberta Supply Management website http://albertasupplymanagement.ca/