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Are we jeopardizing NAFTA to protect farmers?

Are we jeopardizing NAFTA to protect farmers?

Are we really jeopardizing NAFTA to protect 13,500 farmers?

Source: Fraser Institute
Author: Danny LeRoyJason Clemens

The United States has repeatedly indicated that a key tension in NAFTA renegotiations is Canada’s continued protection of dairy, poultry and egg producers. These protectionist policies, known as supply management, were also an irritant in the Trans-Pacific free trade negotiations. The question for Canadians is why broad trade agreements, which benefit almost all Canadians, are being jeopardized to continue to protect a small subset of farmers in Canada—estimated at 13,500 nationwide.

Supply management is a set of government-imposed production quotas and structured prices to limit domestic supply while impeding consumer access to foreign imports through high tariffs. The outcome is reduced choice and higher prices for consumers, and higher revenues for producers.

An often overlooked aspect of this protectionism is that it disproportionately affects the poor. A 2012 analysis by economists Christopher Sarlo and Larry Martin concluded that poorer families spend almost 25 per cent of their income on food compared to less than 6 per cent for high-income families. Policies that raise prices of milk, butter, cheese, eggs and chicken affect lower-income families, and those with children, to a greater degree than other families.

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