The Big Leagues weigh in !!

I can tell we must be really irritating a lot of major players. More WTO negotiations are closing in and the BIG players are pulling out all the stops. Just like clockwork, major 'Economic think tanks' publish more stuff to tell Canadians what they should and should not do.

The Montreal Economics Institute joins a long line of economists who delight in trying to prove that Canadian dairy farmers are wrong. This years' attempt is " Reforming dairy supply management in Canada: the Australian example".

They have a really detailed report with major headings designed just for easy media pickup like : "Even with a temporary reprieve from the latest WTO talks in Hong Kong in December 2005, the supply management system in Canada’s dairy industry will have to be reformed in the longer term. The system clearly benefits certain milk producers, but on the other hand it holds Canadian consumers hostage and stifles entire industries that have to pay more for their milk. It erects an obstacle to competition throughout the Canadian dairy industry, penalizing the most dynamic producers by means of extravagantly expensive quota."

Or how about this one? "By protecting inefficient producers, the current system makes the Canadian industry less competitive."

It's this kind of dangerous, mis-leading kind of half truth that I am trying to balance. Just which industries' are we "stifling" anyway? Most Canadian dairy companies are performing extremely well. They are showing healthy profits. They have shareholders who are receiving dividends. I can tell you my dairy farmer friends would love to make as much return on their investment as those poor big processors.

The referrence to "certain milk producers" would also make you think there is a huge group who are on the outside looking in. This is just plain wrong. Supply management is all about co-operative, inclusive, regional, marketing. More about this later.

And the big finish is always the same old thing: "it holds Canadian consumers hostage". "IT' of course, refers to our Canadian marketing system for milk.

To prove their point they have taken a look at Australia, the most recent country to de-regulate their dairy industry. The report is full of graphs and data. The author presents various tired, standard economic theory to set the stage. The downside of Australia's de-regulation is ignored and even flaunted.

Economists also develop their arguments using a "set of assumptions." If you begin with incorrect assumptions, you get incorrect projections. Garbage in results in garbage out, as they say.