This approach is particularly important for farmers who have recently bought quota and therefore not yet realized the full value of the quota, which takes about 10 to 15 years. A market value buyout is unfair because it would compensate farmers for quota where they have already realized a return, effectively paying them twice for the same quota.
The buyout cost could be funded through a consumer levy on dairy products, as was done in Australia. In the short-term, Canadian consumers are unlikely to see a significant change in dairy prices from current levels, which the Organisation for Economic Co-operation and Development has estimated costs about $2.6 billion more than prevailing world prices, or $276 per family. Within about five years, prices would likely settle at about the world average and consumers would see this amount returned to them in lower prices.
While price and quota reforms are taking place, trade policy negotiators need to gain access to international markets for Canadian dairy products. The worse-case scenario is one in which the domestic market opens to dairy imports before Canadian farms are ready to compete by scaling up production.
This report is one of 20 being produced by the Centre for Food in Canada. Since 2010, the Centre has been engaging stakeholders from business, government, academia, associations, and communities in creating a Canadian Food Strategy —one that will meet the country’s need for a coordinated, long-term strategy on industry prosperity, healthy and safe food, household food security, and environmental sustainability.
The strategy will be launched at the 3rd Canadian Food Summit 2014: From Strategy to Action, March 18-19 at the Metro Toronto Convention Centre.