Now that Carney has “caved” -or not- on the Digital Services Tax (DST) attention has turned to the next potential victim of Trump trade bullying, supply management. 

Most people, including me, knew little or nothing about the DST. It was a recent initiative, scheduled to come into effect this month in an effort to extract some revenue from Big Tech. In contrast, supply management has been around for more than 50 years. And unlike the DST, by controlling how much milk, eggs and poultry farmers can produce and at what price, supply management affects everyday lives. So with any challenge to supply management, the stakes are much higher than they were for the proposed tax on big tech.

The supply management system has been controversial, strongly supported by some but attacked from within Canada and beyond long before it became another potential piñata for the amusement of the White House sociopath and his minions. I’m neither an expert on nor an advocate of supply management, but my years in the news business put me in contact with the issue on a couple of occasions, the circumstances of which provide some context for the current discussion. 

Nowadays supply management is sometimes characterized by opponents and skeptics as a scheme to protect farmers from competition in return for their political support – mainly in Quebec. It may have evolved into that but supply management came about as a peace treaty in what was known as “the chicken-and-egg-war” of 1970-71— a battle between Quebec and several other provinces involving inter-provincial trade in eggs and broiler chickens.

In an attempt to protect its farmers from dumping resulting from over-production in other provinces, the Quebec marketing board banned sales of out-of-province eggs. Ontario and Manitoba were the provinces most affected by the ban, and the latter responded with a clever manoeuvre. Manitoba brought in legislation to ban the sale of eggs from other provinces with the express purpose of having the law declared unconstitutional by the courts. 

As the Canadian Press reporter on the Manitoba provincial politics beat I covered that novel part of the story – it’s not every day that a provincial legislature passes a law it hopes will be declared invalid. But the rest of the story played out in Ottawa where the Supreme Court of Canada did indeed find the Manitoba legislation illegal. That decision encouraged the provinces and the federal government to come up with the Farm Products Marketing Agencies Act, passed by Parliament in 1972 to implement supply management of eggs, poultry and, more significantly, dairy products.    

According to some scholars, there was more at stake at that time than orderly production and marketing of food. As argued here, with separatism on the rise in Quebec achieving supply management showed governments could work together in a crisis. That’s a virtue that needs to be emulated in the current Trump-induced crisis – especially when it can be tied in with the self-sufficiency and price stability that supply management has produced. Eggs, poultry, dairy and national harmony – brought to you by  supply management.

Media over-reaction

Although supply management was off my radar for some 20 years, implementation of the program received attention from economists and media commentators, especially with the rise in the 1980s of Reaganomics and free market fundamentalism that questioned regulation in all its forms. And aside from ideological bias there are several other frequently heard complaints:

  • although much more stable, prices for supply-managed products are on average higher than in the U.S.;
  • tariffs and restrictions on the import of eggs, poultry and dairy products to protect supply management may encourage other countries to block imports of other Canadian agricultural products;
  • Supply management mainly helps Quebec and the eastern part of the country while damaging export prospects for products mainly from the west.   

So supply management clearly has some detractors, but the weight of the negative media coverage building up in the 1980s prompted a call from an industry public relations flack to Media File, a CBC program I was working on at the time. On his suggestion we did an item on media coverage of supply management, canvassing both sides as was the standard practice. 

I was reminded of the inspiration for that segment recently when supply management was the topic du jour for two Globe and Mail columnists whose reflections revealed how, at least among the pundit class, those long-ago complaints from the industry spokesman remain valid.

In a July 6 opinion piece that started off saying Trump’s threats are doing Canada some good by forcing us to rethink “bad ideas,” the Globe veteran Marcus Gee described supply management as a “Sovietstyle scheme” that remains in place only because of the strength of the agricultural lobby, especially in Quebec. Fellow columnist, Konrad Yakabuski, metaphorically suggested brainwashing of Quebeckers on the subject of supply management. He described the lulling effect of dairy industry advertising on Quebec consumers “who do not seem to care that the province’s heavily protected dairy sector means they pay more for their milk, cheese yogurt and ice cream.” 

These two scribes were following in the footsteps of Globe colleague and ubiquitous pundit Andrew Coyne, who has made criticizing supply management a big part of his career over many years. Showing he has lost none of his passion or conviction he recently described supply management as “the single craziest, most indefensible economic policy since the building of the pyramids.” (The Egyptian Ministry of Tourism may disagree?)

Politicians weigh in

Several politicians have joined the free market fundamentalist economists and their journalistic followers by highlighting their opposition to supply management. The most notable is Maxime Bernier, leader of the People’s Party and a former Harper government minister. As political legend has it, in 2017 Bernier narrowly missed becoming the Conservatives’ first post-Harper leader because a bunch of Quebec dairy farmers joined the party just to keep him out by voting for Andrew Scheer as leader. As Andrew Coyne has written:

 “…Scheer’s narrow victory was directly attributable to the votes of thousands of Quebec dairy farmers, who took out party memberships for the sole purpose of ensuring Bernier’s defeat. It is even possible the Scheer campaign encouraged them in this endeavour.”

That event from 2017 has contributed to the mystique surrounding the political influence of the supply management lobby, as has the recent whirlwind passage of Bill C-202. Introduced by the Bloc Québécois, the legislation prevents the Minister of Foreign Affairs from watering down import quotas and tariff rates for dairy, eggs and poultry. It passed through the House of Commons in a single day (June 5) with the support of all parties.  

In “the chamber of sober second thought” it received just that – but only for a while. The Senate, it turns out, had spent time in recent months considering its own legislation on the topic. It held hearings during which all sides of the argument were put forward. Some senators, including Alberta’s Paula Simons, were not totally sold on supply management. But that has changed for her, thanks to Trump and his kooky Health secretary, Robert F. Kennedy Jr. 

As Senator Simons said in explaining her decision to support supply management, warts and all, any possibility that concessions could be useful as a bargaining chip has been cancelled out by Trump’s trade policy “a mixture of malice and caprice, with tariffs coming and going and changing with every whim and perceived slight.”

And Kennedy’s “relaxation of rules around food inspection and public health should give us all pause,” said Simons. “If we can no longer trust American food exports to be safe, the government has a greater responsibility than ever to protect Canadian consumers from food-borne diseases.”

Bill C-202 passed the Senate June 17 “on division” and received Royal Assent the following week. So despite its many detractors, supply management, introduced over 50 years ago to resolve an interprovincial trade dispute, gets a vote of confidence half a century later in response to an international one. 

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