Ever wonder why some food or food products are a little less expensive in the U.S. than in Canada?
For years, the U.S. has used lower taxes or tax deferrals for U.S. farmers during periods of low or no farm profit as a way to keep grain and other farm products less expensive than in other parts of the world. They also pay farmers not to plant crops in certain areas or in times of a surplus to different commodities. The U.S. buys surplus food products and delivers them to other countries as part of their “food aid” help to poorer countries. The U.S. often targets low grain prices as a way to provide less expensive ways to feed animals which lets those farmers sell their dairy, beef, pork, eggs, and other fowl for less than other countries. Some of these “non-subsidy” subsidies are partially paid from the $1.3 trillion U.S. farm bill. Many of the super highways in the U.S., and waterways like the Mississippi River system, are built and maintained under the national defence budget, with no charge to agriculture. The U.S. taxpayer is still paying indirectly, but not at the grocery checkout. This expense is paid by not giving citizens free Medicare and other somewhat invisible methods. All this allows the U.S. farmers to sell many foods and food ingredients for less than it costs to produce them.
Many years ago, McGill University funded a study that compared the cost of production (COP) of milk and dairy products produced in the U.S. to those produced in Canada. The results showed that dairy farms in Quebec operating within a supply management milk marketing system and similar-sized farms in New York and Vermont where milk was sold under the open market system all had identical COPs. Large dairy farms that were financed by investment firms using investments in farms to save taxes, were more efficient because of newer, more expensive technology in their facilities, economies of scale in purchasing feed and machinery, a more efficient use of labour, and a special deal in which, in many cases, the very large dairy farms got free shipping of their milk to the milk plant.
In some cases, large U.S. farms used more hormones and growth promotors, both in the barn and in the fields. In most cases, the U.S. farms didn’t follow the same code of practice or environmental regulations as is required in Canada. Some food items like milk are used as a “lost leader” to bring consumers into a store or gas station in the U.S. and several of the Canadian provinces. I have attended many annual general meetings of the Quebec milk board when this subject was “on the floor” for hours. Dairy farmers who farmed close to the Quebec borders in Ontario, New York, Vermont, etc., asked why we cannot we sell milk as a lost leader? The answer was always the same: it’s usually the large chain grocery stores and gas stations that want to sell milk for less than the COP, but it’s the small mom and pop corner stores that stay open later to serve the customers after hours that cannot afford to price match the price of milk with the big stores or gas stations. So, that’s why there is a minimum price in Quebec for selling milk.
With the tariff war now in full swing between the U.S. and Canada, and increasingly the rest of the world, the president of the U.S. is crying foul that the Canadian dairy system is ripping off American consumers by using the quota system. The huge tariff on dairy sold to Canada from the U.S.A. only occurs when the limits that were agreed by both the U.S. and Canada are surpassed. Neither country has ever surpassed these agreed upon amounts, and neither has ever paid one cent of that huge tariff that the U.S. president has been complaining about.
Many countries in the world use tariff rate quotas (TRQs) to stop other countries from dumping products into their country at prices below the costs of production in that country. If countries were allowed to dump any food into another country below the COP in that country, their farmers would quit, and then when that food stopped being dumped into their country, there would be no food.
Canada is now one of the only countries in the world to use the supply management system of marketing dairy products. Other countries such as New Zealand, Ireland, other European and the state of California that have used a similar system and then went back to an open market system have noticed a slight drop in consumer dairy prices for a few months. However, within the year, the consumer prices returned to, and even surpassed the prices that existed before the quota system was eliminated. So, then the consumer paid more. The farmers who didn’t quit received much less, and the processors and retailers suddenly made much larger profits. It is always the large food traders, meat packers, privately-owned milk processors, and huge retailers that lobby to have producer boards weakened.
The Canadian supply management system is regarded as the envy of the world for fairness, consumer food security, and the least food waste. But it does not allow billionaire food traders to make even greater profits at the cost of consumers and farmers. It is the only marketing system that includes the consumers, processors, retailers, and government in regularly reviewing all the costs calculated from a representative sample of dairy farms – big and small – before any change is made to the price of milk.
Something that has bothered me and many other farmers for a generation now is that the volume of grains and other foods sold has taken over from nutrient density and nutritional value of the food that we eat. Some grains or foods now have much less nutritional value than the same vegetable or other food had a generation ago. Ultra-processed food, made in a plant rather than grown on a plant, has taken too much space in our diet. When we ate like great grandma fed her family, drug stores were a lot smaller. The quality of our food is a crucial part of food security which, as Europe found out during World War II, is a must-have for every country.
Chris Judd is a farmer in Clarendon on land that has been in his family for generations.
