> Well when you have a behemoth dairy market next door of 325 million versus 35 million ya gotta do some weird stuff.
If the intent is to protect domestic producers from international competition, wouldn't a sufficiently high import tariff on dairy be a better solution?
> The intent of the boards is not to protect against international compeition
The parent to my comment implied otherwise by bringing up the U.S. dairy market.
> but rather to create a floor price for agricultural goods
Why would we want that? Poor people need cheap food (well, we all could use cheap food). We don't have a national policy of 'floor prices' on other (non-vice) goods and services, do we?
I'm actually on your side, i think it's ridiculous as well.
The logic is that a free market with lean and fat years would result in wild price fluxuations. When yields were really good, prices would drop and some farmers would end up out of business. The cartel brings stability to prices. Each farmer agrees to produce X and in return has confidence they will get Y price.
The system undoubtably results in higher prices than a completely free market.
Oil price being one particularly topical. Over investment in marginal fields that are economical at an artificially inflated ~$100/boe due to speculation. This is particularly evident in the US in hiring booms and busts in the industry and the direct influence at the price at the pump (it is cushioned more in other countries by taxation for example in the UK tax is circa 80% of the pump price for fuel, whereas in the US it is circa 17%).
This wild variability in food prices would be very very bad for not only farmers but the public. Sure, in gluts, $0.50 milk per gallon would be great, but in times of say severe drought, $8/gallon would be devastating to those people for whom food is a large part of their budgets, or most people.
That's the idea behind it anyway. The same is done world wide and cannot be unwound in isolation. The US and EU both have farm subsidies or price smoothing.
I'm sure the system is gamed, like all systems are - but a completely unfettered free market, globally, for staple foods is unlikely to ever happen.
> Sure, in gluts, $0.50 milk per gallon would be great, but in times of say severe drought, $8/gallon would be devastating to those people for whom food is a large part of their budgets, or most people.
You can't stockpile milk, this argument makes no sense.
Not cheap (quality) but inexpensive a big difference I know you meant that but maybe some people don't care about the source of the dairy they get. I live in an area with a lot of farms and fishing but I am neither a farmer or a fisherman.
The problem is all those small dairy farms can't compete with giant industrial farms which use steroids, growth hormones, or antibiotics. Milk is actually dumped and farmers are fined if any trace of antibiotics are found in the milk.
Supply management is based on the cost of production at the farm itself which I think is fair since I see too many poor farmers and fisherman who work 20 hour days only to get a pittance of the final cost of the product.
It's a huge culture difference too Canadians tend to know a lot about their dairy products and don't see it as a product like an iPhone I think they do in the US.
I know people in my region will just refuse to buy imported dairy regardless of price due to the use of hormones, antibiotics (still in the milk) and steroids. Most now buy local beef, pork, chicken and seafood.
The theory is to ensure a consistent supply - if a bunch of dairy farmers can't afford to stay in business then it will lead to shortages and higher prices.
The TPP will add another ~500 million to that 325 million people so ~800 million versus 35 million people of which 12,000 are family farm dairies.