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Supply management and household poverty in Canada

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.

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Notes

  1. 1.

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

  2. 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. 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. 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.

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Correspondence to Vincent Geloso.

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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

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Keywords

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

JEL Classification

  • Q13
  • I32