Lunch and Learn: Supply Management

Lunch and Learn: Supply Management

The goal of Supply Management is to provide efficient producers with fair returns and to provide Canadian consumers with an adequate supply of the product at reasonable prices.

They do this with three mechanisms:

Price Controls (Regulated prices)
Production Controls (Production quota system)
Import Controls (Tariff rate quotas)

Reviewing last weeks’ post, Supply Management boards:

Organize and finance research and promotional projects aimed at stimulating demand for the particular agricultural product.
They are delegated the authority to negotiate prices with processors through negotiated agreements or arbitration.
They also establish prices after an evaluation of market conditions and consultation with buyers.
Additionally, production is regulated with marketing quotas in order to ensure a balance between supply and demand.

This means that Supply Managed dairy:

Allots production and marketing quotas to producers.
Buys all milk sold off the farm (except contracted export milk) and sells it to dairies and processing plants.
Sets prices for fluid and industrial milk based on the target return established by the Canadian Dairy Commission and the provisions of the P6 agreement.
Has an agreement with five eastern provinces to pool returns from fluid and industrial milk sales.
Negotiates the price of farm-separated cream with processors.
Participates in a national program for industrial milk through the Canadian Milk Supply Management Committee.

Farmer-level explanation of Dairy Supply Management:

In Canada, the broiler hatching egg, chicken, dairy, egg, and turkey industries operate under national supply management systems. National marketing plans establish the framework for the operation of the systems. These systems are controlled by national bodies and by provincial commodity marketing boards that have been delegated powers by federal and provincial governments.
Supply Management Systems OMAFRA FactSheet