Graham Lane’s piece on price differences between Canada and the United States (For lower prices, end supply management, Nov. 14) accurately points to some of the causes behind the gap, but supply management is not one of them.

The Senate Committee on National Finance’s report on the Canada-USA Price Gap concurs that higher transportation, fuel and tax rates are big drivers, but the influence of Canada’s higher wages and lack of economies of scale cannot be understated; “higher sales volumes” doesn’t quite do the situation justice when our next-door neighbors have a population about ten times the size of our own.

Even the Organisation for Economic Co-operation and Development (OECD) has demonstrated that Canadians pay an average of 23% more than Americans for all their goods and services, from ketchup to cars, including ones that Mr. Lane himself has cited. It is disingenuous to put a handful of products – namely dairy, poultry and eggs – at the epicenter of the price gap issue.

The crucial point is missing from this conversation, however: Farmers don’t set retail prices.

It’s true. Farmers working in supply management can negotiate a “farm-gate price” – what they’ll receive for their products as they leave the farm – but that’s it. That fair farm-gate price covers a farmer’s cost of production and helps make farming a sustainable industry for family farms.

As for retailers and restaurants, they determine their own prices and will charge what the market will bear. They set the price for food – and for everything else – for many reasons that have nothing to do with how much the farmer receives, including retailer competition, brand positioning, cost of competing items and specials to get consumers in the store.

Another important point is that farmers only receive a small percentage of the consumer dollar that is spent on food: a poultry or egg farmer’s share of a restaurant meal is typically smaller than the tax on the meal and much less than the tip you might leave your server.

There are a variety of factors that influence the Canada–US retail price gap, but our system is not one of them; dismantling supply management in no way guarantees any potential savings and may, in fact, drive prices up. For example, the author points out that Australia abandoned its supply management system and became more “competitive”. Not true. Last month in Canberra, Australia’s capital, 30 eggs cost $6.69 CAD while, at the same time, they cost $5.99 in Ottawa.

You want to know what the biggest determinant in consumer price is? Where and when you shop.

If Mr. Lane wants sound policy, I’ll happily invite him down to my farm to see it at work.

Dave Janzen, Chair
Chicken Farmers of Canada