I'd like to thank you for the opportunity to appear before your very important committee.
Before starting, I want to provide a disclosure statement concerning my own personal interests. I think every witness should in fact make such a disclosure statement.
First, I do not consult for any organization—government, union, non-profit, or business—directly or indirectly, anywhere in the world.
Second, I do not have any investments of any kind, except for my personal house in Ottawa and my share of the Carleton University pension plan. You could say that I'm just a poor professor.
Third, unlike non-profit organizations, I receive no donations or gifts of any kind from any person or any body.
Fourth, due to the first three disclosures, I appear before this committee with no conflicts of interest whatsoever.
Fifth, because I will be speaking very critically about supply management, I must disclose that I did grow up on a farm in eastern Ontario, in Lanark Country, Beckwith Township, in the pre-supply-management days of the 1960s. I know what it was like to be on a farm in those days.
Sixth, I volunteered to be a speaker with Carleton University's speakers bureau in 1988 and again in 1991, I think it was, during the FTA and NAFTA debates, in support of the free trade agreements. On several occasions I found myself debating the Council of Canadians.
Seventh, I am a tenured professor. That means that I can say what I wish without threat of being fired by anybody. I teach strategic management and international business.
Eighth, I have taught on every continent on the planet Earth, with the key and only exception of Africa, and not because I don't want to teach there but because I was turned down on several occasions when I applied. I've taught in pretty well every country in central and eastern Europe and in almost all the former communist countries. I've taught eight times in Iran and the Middle East, and I've been teaching once per year in China since 1997.
Finally, because of my travels to countries that have practised protectionism, and because of my research and teaching of international business, which includes comparative advantage and the advantages of trade, I strongly support liberalizing, expanding, and extending free trade agreements with both the European Union and the Trans-Pacific Partnership, and indeed with any country anywhere that wants free trade or trade with us.
I will now address two serious and significant barriers to an EU-Canada or CETA trade deal and possibly to a future TPP deal. I'm going to deal mostly with supply management practices, but I will touch at the end on intellectual property rights.
As background material for what I'm going to say on supply management, I refer you to my op-ed piece, which was published in this morning's Toronto Star, called “The Milking of Canadians.” Actually, I submitted the op-ed to the paper on the weekend, and I proposed calling it “The Plucking and Milking of Canadians Under Supply Management”. However, they condensed the title.
I also refer you to my paper on which the op-ed was based. It was published yesterday by the MacDonald-Laurier Institute, a think tank in Ottawa. It was called “Straight Talk: End Supply Management to Give Better Value to Consumers, Secure New Trade Deals”.
I'll run through this now very quickly.
The key metrics concerning supply management are that 34 million Canadians are being plucked and milked by approximately 14,000 dairy farmers, 2,800 chicken farmers, 1,200 egg producers, and 500 turkey farmers under a system of government protectionism called supply management. Farmers under supply management represent $8.6 billion, or 19% of the total 2010 farm income of $44 billion. And total farm income is 1.7% of GDP. It is very small. It is a very important sector, but it's a very small sector. These are all Stats Canada data, and I'd be more than pleased to provide the citations for those who want them. Notwithstanding that, these farmers in supply management, specifically in dairy, are earning, on average, $100,000 a year net profit under supply management.
A 2008 OECD report found that the price of dairy in Canada is more than double the market price, while the Conference Board of Canada found that, on average, consumers are paying 60¢ more per litre of milk than are Americans, where they have no supply management
This is rank protectionism. This is the 1% exploiting the 99%, and none are more exploited than low-income Canadians, who pay much more of their budget on food than the rest of Canadians.
This protectionism also makes the quotas very valuable and makes it more costly for a farmer to enter farming. For example, it now costs north of $25,000 to buy quota for one cow and about $140 for the quota for one hen. Indeed, Stats Canada 2010 reports that the total value of the supply management quotas across Canada is $31 billion.
It's argued that supply management is necessary to save the family farm. Yet the number of farms has been declining steadily for a half century, according to Stats Canada, from 574,000 farms in 1956 to 229,000 farms in 2006. That is a 60% reduction.