GUNTER: If Trump forces end of Canadian supply management, good riddance

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Remember when the Liberals were adamant they would never give up their digital services tax (DST)?

They were all “elbows up.” They huffed they would never give in to the Trump White House.

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Besides, they were sure there were votes to be had in making “rich” American streaming services pay more than $2 billion a year.

That was on a Friday. By late that Sunday, the Libs had folded. Completely.

What changed in 48 hours is that U.S. President Donald Trump threatened to cut off all trade talks with Canada if the Liberals didn’t jettison the DST.

The Liberals did the right thing. The DST was a bad idea. Canadians would have suffered higher subscription costs, higher prices for delivered goods and fewer viewing choices.

But the way the government went about doing away with the DST made Prime Minister Mark Carney look weak. So weak, it’s only a matter of time before Trump comes back looking for more.

The safe bet is supply-managed agriculture will be next. Canadians should be grateful.

In Canada, all but the smallest, artisanal agri-food businesses are controlled by government-backed marketing boards that decide who can produce — and more importantly sell — milk, cream, butter, cheese, yogurt and other dairy products. Eggs, chicken and turkey are included, too.

Price controls and import restrictions are also part of supply management. Some dairy products, for instance, are protected against imports from the States and EU by tariffs as high as 300 per cent.

It’s a good deal for supply-managed producers. It protects them from competition and ensures they received stable prices without much risk.

But it’s a bad deal for consumers. Economists estimate the average Canadian family pays $400 a year more for dairy alone.

There’s another problem, too. Milk supply is heavily skewed toward drinkable milk. That makes the price of milk for producers of, say, special yogurts, too expensive. So consumers have fewer choices.

Supporters of supply management claim it protects farmers’ incomes, making it unnecessary for governments to subsidize their livelihoods, as they often do in the U.S.

But that only means that Canadians are subsidizing farmers as consumers, rather than as taxpayers. (They shouldn’t have to do either.)

For decades, Canadian politicians of all stripes have been afraid to significantly modify supply management. The farm lobby is more vocal than the consumer lobby. And supply management is heavily concentrated in vote-rich Ontario and Quebec.

It’s no coincidence that the first motion passed by Parliament after April’s election was a unanimous resolution, introduced by the Bloc, to exempt supply management from any future trade talks.

It won’t be as easy for the Liberals to crater on supply management as it was on the DST. The digital tax had few supporters. Supply management has vehement defenders in parts of the country the Liberals count on to keep them in power.

For instance, while the farm receipts from supply-managed operations account for less than 10 per cent of total farm income on the Prairies, they can be more than three times that much in Ontario and Quebec.

And all across the country, diary quotas in particular can cost millions for new farmers to buy from older ones. That is a “stranded cost” that would have to be paid for by any government wanting to disband supply management.

The cost could be well over $20 billion to buy out supply-managed farmers.

But Australia ended supply managed dairy during the 1990s. Their consumers now enjoy lower prices while their farmers enjoy revenues more than 50 per cent greater after inflation.

When the Harper government sought to get rid of the Wheat Board monopoly over Prairie grains in 2012, there was no end of fearmongering over the devastation it would rain on farmers. But that never materialized. There are very few wheat farmers who would go back to old way.

Provided the stranded costs are fairly handled, a decade from now few farmers would miss supply management, either.