Skip to main content

Supply management and household poverty in Canada

International Review of Economics volume 65, pages 231–240 (2018)Cite this article

Abstract

The regulation of the Canadian dairy and poultry industries through production quotas (also known as supply management) is widely believed to result in higher consumer prices that disproportionately impact poorer households. Using the most recent Survey of Labour and Income Dynamics (Statistics Canada 2013), we estimate the number of Canadians pushed below the poverty/low-income threshold as a result of this policy as ranging between 133,000 and 189,000 individuals.

This is a preview of subscription content, access via your institution.

Access options

Buy single article

Instant access to the full article PDF.

USD 39.95

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Notes

  1. For dairy products such as milk, there have been no increases in the quantity supplied since the 1970s.

  2. For this portion of our approach, we used the same year as Cardwell et al. (2015) in order to establish a base for comparison. Like them, we assumed that goods could have been imported from the USA and thus that Canadians would have been price takers. Because of geographic considerations (e.g., minimizing transport costs), we used Midwestern states as a basis of comparison as did Cardwell et al. (2015). We also used 2011 to assure comparability with their work.

  3. We could have used the market basket measure (MBM) created in the late 1990s after provincial governments expressed discontent with the LICO measure. The MBM is a compromise between measures of absolute and relative poverty, and they included more than mere necessities in order to capture the social exclusion aspect of poverty (Sarlo 2001: 16). We prefer the BNL to the MBM for that reason. With the BNL, we are capturing absolute privation.

  4. There are differences between the census-reported number of farms and the number of farms reported by Statistics Canada statistics on farm production. This is largely because the latter type includes farms above a certain revenue threshold. While there are some small farms with quotas that are excluded from the Statistics Canada data, the total number of farms in the census is greater than the number of farms with quotas.

References

Primary

  • Bureau of Labor Statistics (2016) Average retail food and energy prices, U.S. and Midwest Region. Bureau of Labor Statistics, Washington

    Google Scholar 

  • Health Canada (2011) Canada’s food guide, 2011th edn. Health Canada, Ottawa

    Google Scholar 

  • Statistics Canada (2007) Snapshot of Canadian agriculture. Statistics Canada, Ottawa. http://www.statcan.gc.ca/ca-ra2006/articles/snapshot-portrait-eng.htm. Accessed 5 Aug 2016

  • Statistics Canada (2013) Survey of labour and income dynamics (SLID)—request microdata. Statistics Canada, Ottawa

    Google Scholar 

  • Statistics Canada (2016a) CANSIM Table 326-0012: Average retail price for food and other selected items, monthly. Statistics Canada, Ottawa

    Google Scholar 

  • Statistics Canada (2016b) CANSIM Table 326–0021: Consumer Price Index, annual (2002 = 100). Statistics Canada, Ottawa

    Google Scholar 

  • Statistics Canada (2016c) CANSIM Table 326-0020: Balance Sheet of the Agricultural Sector, at December 31, and ratios. Statistics Canada, Ottawa

    Google Scholar 

  • Statistics Canada (2016d) CANSIM Table 002–0072: Farm Financial Survey, financial structure by farm type, average per farm. Statistics Canada, Ottawa

    Google Scholar 

Secondary

  • Agropur (2018) Analyse des Impacts Potentiels de la fin de la Gestion de l’Offre dans l’Industrie Laitière au Canada. Agropur and Boston Consulting Group, Montreal and Boston

    Google Scholar 

  • Benson B, Faminow MD (1986) Regulatory transfers in Canadian/American agriculture: the case of supply management. Cato J 6(1):271–294

    Google Scholar 

  • Boyer M, Charlebois S (2007) La gestion de l’offre des produits agricoles: un système coûteux pour les consommateurs. Montreal Economic Institute, Montréal

    Google Scholar 

  • Carter C, Mérel P (2016) Hidden costs of supply management in a small market. Can J Econ 49(2):555–588

    Article  Google Scholar 

  • Chernoff A (2015) Between a cap and a higher price: modelling the price of dairy quotas under price ceiling legislation. Can J Econ 48(4):1403–1429

    Article  Google Scholar 

  • Coalition for a Fair Farming Model, Supply Management (2015) Supply management: infographics. Coalition for a Fair Farming Model, Supply Management, Montreal

    Google Scholar 

  • Cardwell R, Lawley C, Xiang D (2015) Milked and feathered: the regressive welfare effects of Canada’s supply management regime. Can Public Policy 41(1):1–15

    Article  Google Scholar 

  • Grant M, Barichello R, Liew M, Gill V (2014) Reforming dairy supply management: the case for growth. Conference Board of Canada, Ottawa

    Google Scholar 

  • Hall Findlay M (2012) Supply management: problems, politics and possibilities. School of Public Policy at the University of Calgary, Calgary

    Google Scholar 

  • Heminthavong K (2015) In brief: Canada’s supply management system. Publication No. 2015-138-E. Parliamentary Information and Research Service. Library of Parliament, Ottawa. http://www.lop.parl.gc.ca/Content/LOP/ResearchPublications/2015-138-e.pdf. Accessed 5 Aug 2016

  • Lippert L (2001) The perfect food in a perfect mess: the cost of milk in Canada. Fraser Institute, Vancouver

    Google Scholar 

  • Sarlo C (1992) Poverty in Canada, 2nd edn. Fraser Institute, Vancouver

    Google Scholar 

  • Sarlo C (2001) Measuring poverty in Canada. Fraser Institute, Vancouver

    Google Scholar 

  • Sarlo C (2013) Poverty: where do we draw the line?. Fraser Institute, Vancouver

    Google Scholar 

  • Sarlo C, Martin L (2012) Milking the system: how agricultural supply management impedes trade opportunities and egregiously transfers income. Macdonald Laurier Institute, Ottawa

    Google Scholar 

  • Schmitz A (1983) Supply management in Canadian agriculture: an assessment of the economic effects. Can J Agric Econ 31(2):135–152

    Article  Google Scholar 

  • Schmitz A, Schmitz T (1994) Supply management: the past and the future. Can J Agric Econ 42(2):125–148

    Article  Google Scholar 

  • Singbo A, Larue B (2015) Scale economies, technical efficiency, and the sources of total factor productivity growth of Quebec dairy farms. Can J Agric Econ 64(2):339–363

    Article  Google Scholar 

  • Stanbury WT (2002) The politics of milk in Canada. Fraser Institute, Vancouver

    Google Scholar 

  • Trebilcock M (2014) Dealing with losers: the political economy of policy transitions. Oxford University Press, Oxford

    Book  Google Scholar 

  • Veeman M (1982) Social costs of supply-restricting marketing board. Can J Agric Econ 30(1):21–36

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. University of Toronto Mississauga, 3359 Mississauga Road, Davis Building, Room 3273, Mississauga, ON, L5L 1C6, Canada

    Pierre Desrochers

  2. Free Market Institute at Texas Tech University, Box 45059, Lubbock, TX, 79409-5059, USA

    Vincent Geloso

  3. Institut économique de Montréal, 910 Peel, Office 600, Montreal, QC, H3C 2H8, Canada

    Alexandre Moreau

Authors
  1. Pierre Desrochers
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Vincent Geloso
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Alexandre Moreau
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Vincent Geloso.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Desrochers, P., Geloso, V. & Moreau, A. Supply management and household poverty in Canada. Int Rev Econ 65, 231–240 (2018). https://doi.org/10.1007/s12232-018-0295-x

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s12232-018-0295-x

Keywords

  • Supply management
  • Agricultural production quotas
  • Canadian household expenses
  • Inequality
  • Poverty

JEL Classification

  • Q13
  • I32