Last year for the Christmas edition of my weekly radio column at CHOI, I calculated the cost of supply management in Canada. This policy is basically one where the government gives production quotas (which can be traded, but whose number is fixed by decree) to farmers of poultry and dairy products. The intent of that policy is to reduce supply in order to increase prices for farmers. Who pays? Consumers (who have no choice because there are import tariffs of up to 298% on certain goods under supply management)!
So I decided to compare the prices in the United States and transposed them in Canada for the same item. Last year, some claimed that my results were produced by the fact that the exchange rate was favorable to my case (44% more expensive in Canada). However, this year, the exchange rate for the period selected is on near parity (1.01$ to the CAD). The gap for all items has indeed dropped, but most of that gap is caused by the change of the exchange. The remaining gap still accounts for 31% of the difference! This is a huge difference which could amount to hundreds of dollars in extra costs to families.
Considering that the demand for food items is quite inelastic, those who are ill-suited to afford these higher prices are the poorest in Canada! When you’ll be leaving milk for Santa Claus this Christmas, remember that supply management is the Grinch that makes the holidays harder to enjoy for many of us!