Governments can easily address high food prices by phasing out marketing boards
Rising food prices have taken centre stage in Canada, and at the core of this issue are the marketing boards, which hold considerable sway over our ability to buy affordable groceries.
While governments have acknowledged the importance of ensuring Canadian families have access to affordable food for their well-being, their approach to addressing the issue is misdirected.
Rather than addressing the root causes of rising prices, the Trudeau government’s strategy is simply to blame supermarket chains and demand that they lower prices, backing their demand with the threat of increased taxes.
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While large grocery retailers do have some control over pricing, their influence is not absolute. Competition abounds among the supermarket giants, smaller food vendors, and fast-food suppliers, all vying for consumer loyalty. This competition acts as a natural check on price hikes.
However, there’s a critical aspect that grocery retailers cannot govern – the costs of essential inputs needed to keep their businesses running. Labour shortages are driving up staff wages, energy prices impact fuel costs for delivery trucks and other logistics, and most significantly, the supply of food itself has become scarcer and more costly due to external factors such as wars and unpredictable weather events.
In light of these uncontrollable cost pressures, the government’s tactic of threatening retailers with taxes, if they fail to reduce prices, is akin to attempting to quell a boiling pot without adjusting the heat.
One food industry segment that holds considerable monopoly power, resulting in prices significantly higher than market rates, is marketing boards. These boards allow producers to restrict supply, set prices above global market rates, and inhibit competition from more efficient suppliers.
Dairy, eggs, and poultry, staple components of the Canadian diet, fall under the purview of these marketing boards. The escalating prices for these essential items, like milk, place a strain on Canadian households, particularly young families.
We’ve long endured overpayment for these basic foodstuffs, even earning the moniker’ cheese heads’ when we cross the U.S. border in search of more reasonably priced dairy products, free from the constraints of Canada’s marketing boards.
The justifications for this monopolistic pricing revolve around safeguarding both farmers and the public. The argument asserts that farmers would struggle to survive without these boards, and food security and safety would be compromised. However, this narrative doesn’t hold up under scrutiny.
Even if Canada didn’t produce dairy, eggs, and poultry domestically, we could import these foods at global market prices, often lower than our domestic rates. Are we to believe that food from countries like Australia or the U.S. is inherently unsafe?
In Canada, around 15,000 farmers benefit from the protection of marketing boards. With a population of 40 million, this means that approximately 2,700 consumers bear the burden of monopoly pricing for every protected farmer.
I have faith in the resilience of Canadian farmers and believe that they can thrive in a competitive market economy. New Zealand serves as a prime example, transitioning from a highly protected environment for its farmers to an open market. Faced with competition, their producers became more efficient and productive, resulting in lower food prices for New Zealanders and transforming the country into a major food exporter.
If the government genuinely aims to address the rising cost of food for all Canadians, it’s high time that marketing boards are phased out.
Dr. Roslyn Kunin is a public speaker, consulting economist and senior fellow of the Canada West Foundation.
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