Milk production in Canada is controlled by a quota system. Any farmer who wishes to produce milk must have a quota. The quota fixes and controls prices. This is known as price fixing but with friendlier name.
Dairy organizations that collect the hefty fees for not producing anything other than bureaucracy and millions of dollars of commercials and advertising claim that the system helps “Canadians pay fair retail prices” according to Bill Mitchell, spokesperson for the Dairy Farmers of Ontario reports the Globe and Mail.
This hardly seems fair considering the OECD estimates dairy prices in Canada are more than double world market prices.
It would appear price fixing, which any first-year economist student would tell you is a recipe for disaster, gouging and, lining the various daily organization's pockets with consumers hard-earned cash is considered fair by the Dairy Farmers of Ontario.
More shocking is that the Dairy Boards force dairy farmers to flush millions of litres of milk down the drain if the farmer improves efficiency and produces more than is dictated by the 40-year-old quota system. After all, if that fresh milk were to hit the market, consumers might pay a reasonable price, and fewer kids could go hungry.
The system restricts imports by imposing strong tariffs on some dairy products. That is unless for example, you are a Canadian company making frozen pizzas that have to compete with US imports. In this case, the company can buy cheese at the US price, but your local pizza shop will be forced to pay the artificially inflated retail prices which in turn you will end up paying.
We did some research to compare what prices are in North America.
Cost of 4 liters of milk ~ 1 gallon
$8.29 Loblaws on Rideau St., Ottawa, Ontario, Canada
$4.66 Ontario, Canada
$5.29 Walmart, Toronto, Canada
$7.49 Nova Scotia, Canada
$2.29 Walmart, Buffalo, NY, USA
$2.10 Bellingham, Washington, USA
$1.59 Arizona, USA
$1.96 Detroit, MI, USA
$1.69 Madison, Wisconsin, USA
Fair indeed. Canadians are funding some of the most expensive milk in the world out of their own pockets and mouths of their children.
By definition, setting prices through a “marketing board” results in unfair prices. That is why most cartels are illegal. They prevent a free market and therefore distort prices via price fixing.
The Dairy Board(s) should change its name to the Dairy Cartel to prevent the possibility of being accused of false marketing.
To paraphrase the dairy board(s) mantra, “Bend over please, we’ll be fair about milking you dry. It does a body good!”
"Canada’s dairy quota system has been Canada’s shame since it was introduced in 1970. The quota system makes milk prohibitively expensive for poor families, it denies Canadian consumers the right to purchase diverse cheeses from around the world and it destroyed Canada’s once-great cheese industry, whose many small producers capitalized on milk surpluses to make world-famous cheddars — Ontario alone once supplied England with half of its cheddar cheese imports." National Post
Canadian families are milked hundreds of dollars each, every year.