OPINION: Canada could lower grocery bills by scrapping supply management

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In response to increasing grocery prices that contribute to the growing cost of living in Canada, a group of consumers has organized a boycott of the grocery chain Loblaw. But, while Canadians are understandably frustrated about prices at the supermarket, there’s a more fruitful way to lower grocery bills.

How? End supply management, a system of regulation that restricts supply and controls imports, and shields Canadian producers of milk, eggs and poultry from competition, allowing them to maintain higher prices for their products than would otherwise exist in a competitive market. Without this form of protectionism, grocery stores in Canada could provide a broader selection of dairy and poultry products for consumers and potentially lower costs at the supermarket.

Consequently, due to supply management, the average Canadian household pays an estimated extra $300 to $444 annually for groceries. Lower-income households are hit harder than other income groups because low-income Canadians spend an estimated one-fifth of their income purchasing food compared to less than 1/20th for upper-income households. And despite supply management’s stated goal of stable prices, food prices for supply-managed goods are often more volatile than non-supply-managed goods.

Moving away from supply management has been a successful strategy for New Zealand, which abolished its system in 1984. Despite this success story, lobby groups, led by the Dairy Farmers of Canada, and politicians of all political stripes at the federal level, oppose scrapping Canada’s supply management system.

Consider Bill C-282, a piece of legislation currently with the Senate, which seeks to ban supply management from being a bargaining chip in future trade talks with other countries. Every federal party leader endorsed the bill, which passed through the House of Commons without resistance. Supply management has clearly become one of Ottawa’s sacred cows.

Meanwhile, Francois-Philippe Champagne, the federal industry minister, wants to attract a new foreign grocery chain to Canada to increase competition in the grocery sector. Yet he has completely ignored a sure-fire way to increase competition — again, by abolishing supply management.

If the goal is to lower grocery prices for Canadian families, which is a laudable objective, the Trudeau government should acknowledge the elephant in the room. Until Ottawa scraps supply management, Canadians will continue to pay higher prices for milk, butter, eggs, cheese, chicken and other protected products, despite any symbolic boycotts.

Jake Fuss and Alex Whalen are analysts at the Fraser Institute