Thursday, October 27, 2011

Kill the Canadian dairy cartel

The wheat monopoly is as good as gone. Now the dairy cartel needs to be put down.
William Watson responds to a column by Wally Smith, head of the Dairy Farmers of Canada:
... [US vs Cdn prices per 4 liters] Three and two-thirds bucks compared to more than six bucks. Anybody feeling milked? If not hosed?

... Why we pay more for dairy products couldn’t be simpler: Our dairy cartel artificially restricts supply.
... To make the legalized price gouging work, of course, it’s necessary to keep cheaper alternatives out of the market. Which is why, in addition to police protection against excessive production in Canada, we have enforcement at the border via outrageously high tariffs: 241% to 295.5%, including 277% for ice cream. Imagine! A country that puts punitive taxes on ice cream!
... Mr. Smith’s main justification for output restriction is that before it came along, dairy prices would fluctuate. ... (Note that one of OPEC’s official aims is “the stabilization of prices in international oil markets with a view to eliminating harmful and unnecessary fluctuations.” All cartels believe devoutly in “stabilization".)
The dairy cartel should go the way of the Wheat Board. But it'll be a tougher nut to crack given that it's a shared federal/provincial jurisdiction.


The Rat said...

I'm all for getting rid of quota systems that artificially inflate the price of goods but I think we have to remember there are major differences between the CWB and these other systems. A farmer who wants to raise chickens or eggs has to buy quota and that represents a significant investment. If we decide to abolish that system we must, morally and probably legally, compensate farmers for the lost value of their quota. As long as we don't turn into Liberals and confiscate "property" I'm all for it.

Fred from BC said...

Absolutely agree. Get rid of it.

Do they still practice 'dumping', I wonder? Destroying perfectly good product just to keep the price higher was an appalling waste. How was that even legal in the first place?

Alain said...

I concur with the Rat. Abolish all these government marketing boards and return the money to the farmers who were forced to purchase quotas. If groups of farmers wish to form their own co-operative leaving others to opt out, that would be fine.

Anonymous said...

I had heard some time ago, I live in BC that farmers in the Fraser valley could not add milk cows to their quota as that was taken up by Quebec.
Seems far fetched to me perhaps some one out there with more knowledge could explain where the milk and dairy products like cheese come from in canada.
Cheers Bubba

JR said...

I agree. Farmers ought to be compensated for any losses due to an investment forced on them by government.

rabbit said...

The CWB is relatively easy to get rid of since many wheat farmers oppose it.

But current dairy producers likely love their government-mandated monopoly. It's every body else who pays the price.

Anonymous said...

People like yourself should educate themselves about the Dairy marketing system and the reason for price differentials before offering simplistic points of view which clearly show your lack of knowledge.

JR said...

I and most of the other commenters here are philosophically inclined to favour free markets and oppose cartels' coercive supply restrictions and price fixing. So we tend to agree with the analysis provided by William Watson.

Mr. Watson is a highly qualified professor of economics who I'm confident fully understands how the Canadian dairy cartel operates. It is suggested that you first read his column and only then posit your (specific) objections to it. Otherwise your comments are just empty ad hominems.

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