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MONTREAL — A Montreal-based think tank is calling on Ottawa to abolish Canada’s supply management system, arguing the policy drives up food prices and disproportionately affects lower-income households.
A new report released Thursday by the Montreal Economic Institute estimates supply management adds an average of $224 annually to the grocery bills of Canadian consumers through higher prices for dairy products, eggs and poultry.
The report comes as affordability and food prices remain key concerns for governments across the country. Earlier this week, the federal government unveiled Canada’s first National Food Security Strategy, aimed in part at making food more affordable through increased competition and domestic food production.
The MEI report compares Canadian prices with those in comparable markets in the American Midwest and concludes consumers pay significantly more for supply-managed products.
According to the analysis, milk costs 171 per cent more in Canada than in the U.S. comparison markets, while eggs cost 46 per cent more and chicken 29 per cent more.
The think tank argues the financial burden falls more heavily on lower-income households.
While higher-income families spend more in absolute dollars on supply-managed products, the report says the cost represents a much larger share of disposable income for lower-income Canadians.
“The main effect of supply management is to drive up the prices of a number of staple foods such as milk, poultry, and eggs,” said Gabriel Giguère, senior policy analyst at the MEI.
The report estimates households in the lowest income quintile spend an additional $279 annually because of supply management, compared with $1,141 for households in the highest income quintile.
However, the report says those additional costs amount to 1.25 per cent of disposable income for lower-income households, compared with 0.33 per cent for the wealthiest households.
The institute also argues the policy contributes to poverty by increasing the cost of essential food items.
According to the report, an estimated 41,279 households, representing about 120,000 Canadians, are living below the low-income threshold because of the higher food costs associated with supply management.
“Supply management is a regressive policy that places a particularly heavy burden on the less fortunate while benefiting only a small number of farmers,” Giguère said.
Supply management governs Canada’s dairy, poultry and egg sectors through production quotas, import controls and price-setting mechanisms designed to stabilize farm incomes and domestic production.
Supporters of the system argue it provides food security, predictable farm revenues and stability for Canadian producers, while critics contend it limits competition and increases prices for consumers.
The MEI is urging the federal government to consider eliminating the system as part of broader efforts to address affordability and reduce grocery costs.
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