Wednesday, April 19, 2017

Quebec Dairy Mafia Strikes Again

Quebec's Dairy Board
If one thing the Mob is famous for, it is protecting their turf. Everyone knows what happens to those who try to horn in on their business.  Bada bing, bada boom!
Quebec's dairy producers are almost as protective and run a cartel that would make the mob and Hell's Angels blush.
This week Donald Trump took a well-deserved swipe at Canada's dairy industry and we should all applaud him for his efforts.
"Trump dropped the gloves on Canada's well-guarded dairy sector, one of the sacred cows of Canadian industry.Other countries have taken runs at Canada's sacrosanct supply-management system in previous trade negotiations, and Trump appeared to be taking dead aim during his appearance Tuesday in the U.S. Midwest — in a state he took from the Democrats with his "America First" anti-trade message.
"When it comes to wasteful destructive job killing regulations, we are going to use a tool you know very well — it's called the sledgehammer," Trump said.
Standing up for dairy farmers in Wisconsin "demands fair trade with all of our trading partners," Trump said, "and that includes Canada."
In Canada, he continued, "some very unfair things have happened to our dairy farmers and others and we're going to start working on that." Link

 Perhaps he can become a modern day "Elliot Ness' and finally take down Canada's dairy cartel, something long overdue.

Like all cartels, the Canadian dairy industry chief strategy is to control production and keep prices high.
Now I've heard apologists for the industry tout the benefits of supply management, a polite euphemism for a cartel and their defence is as stupid as is the defence of pit bulls or advocacy against compulsory childhood vaccinations. The arguments sound good, but are a mix of falsehoods and nonsense.
Every time I hear someone defend the Canadian dairy cartel, or supply management system I would suggest to them that if the model is so good, it should be applied to all industries.

Canadian automobile makers could double the price of each car sold, with foreign producers forbidden from selling competing products, even those from the USA.
The pizza industry could organize themselves by creating a cartel that sets quotas for each pizza parlour. No more pizza could be produced than quota allows and restaurants would be free to sell their quota to those wishing to enter the industry or those wanting to expand. Of course the consumer price of a pizza pie would be regulated at a price no producer could undersell. This would make pizza double or triple the price, with the decrease in demand due to price, widely offset by high prices.
This could be applied to all industries and Canada could lock out any and all foreign competition, the only loser being all of us.
Why is it if cement companies get together to fix the price of cement, the executives might be hauled off to jail for the shameful practice of 'fixing' prices, yet we proudly embrace the practice among dairy producers, with defenders calling it a model of efficiency and good business?

In Quebec six industries to my knowledge, (milk, eggs, chicken, turkey and maple syrup,) are subject to cartel control and some with quota requirements. 
One of the sad consequences of supply management is that ubiquitous quota becomes a crucial element in the final consumer price. As I said, every dairy farmer in Quebec  must obtain quota (permission to produce a set amount)  in order to produce milk. If a new graduate of an agricultural school decided that he'd want to become a dairy farmer, he'd have to buy quota from someone else, perhaps a retiring farmer. The average dairy herd in Quebec is about 60 cows and with the quota trading at about $25,000 per cow, our young potential farmer would have to come up with or borrow, $1.5 million just to obtain the right to produce. That cost is just part of why our milk is so expensive.

I heard an industry spokesman on the radio defend the high prices of dairy products saying consumers pay more for just about everything as compared to Americans. The only part he left out is that we are paying two to three times more for dairy than in the USA. He also mentions pasta as a good example of where we pay more than Americans.
Now I know this to be false because pasta in Canada is dirt cheap. This past year both Wallmart and Loblaws sold 900 gram bags of assorted pastas for 99¢, an incredibly cheap price.
I don't even eat much pasta but couldn't resist the bargains and stocked up with bags and bags, perhaps satisfying a secret prepper addiction.
Last year in Brooklyn, in order to prepare my grandkids my special edition of fettuccine Alfredo, I bought a pound of  pasta in the local supermarket for US$1.50. So when all the conversions and calculations are done, the American pasta cost me C$2 a pound and the Canadian pasta C50¢. Yup!

There are plenty of websites that compare consumer prices between countries and the truth is that while there are some increased prices for consumer products in Canada, the difference is small compared to the disparity in dairy products.

At any rate the dairy cartel remains a formidable foe, with politicians afraid to take them on..
Canada recently signed a trade deal with Europe called CETA (Comprehensive Economic and Trade Agreement) and reluctantly negotiated to allow some European cheese to enter the country duty-free. It is not a lot of cheese and won't affect the market much, but what is becoming a hotly debated issue is who will receive the quote and be allowed to import the cheese.
Of course it would make sense to allow retailers to benefit from the quota directly and thus save consumers a little money.
"Retailers argue they should import all the new cheese because that's what's most efficient.
Not so fast, Canada's dairy sector says: we're the ones whose products are threatened, so we should get a cut to offset that risk." LINK
Yes, the dairy cartel wants to get the quota so that it can slap on another layer of profit, thus levelling the playing field once more by making the European cheese as expensive as the locally produced dreck. This after shaking down the government for a new $350 million subsidy to offset the 'harm' of the new imports, making taxpayers the unwilling suckers to another cartel action, an action best described by that mafia staple..... a 'shakedown.'

It is sad that Canadians don't have the smarts to understand what is going on and how much they are being ripped off by Canada's dairy cartel.
Somehow we don't complain about the 30%-%40 that we overpay for dairy products but bitch and moan when gas goes up a few cents.
And so a liter of milk in Texas today costs in Canadian dollars 59¢, while in Quebec it is $1.80, almost three times the price.
A pound of cheddar cheese is US $5 and US 8.32 in Canada which is 40% more expensive.

I hope Trump buries the Canadian dairy industry, for which I've no pity because it has been ripping off Canadian consumers for decades and this for billions of dollars.
There is a slim glimmer of hope that Trump will do for Canada what it could not or would not do for itself, that is to throw off the evil shackles of a cartel that has sucked Canadian consumers dry.

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