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The CFFO Commentary The $25,000 Cow - The Rest of the Story (part 2)
By Nathan Stevens
September 9, 2011
Andrew Coyne, one of Canada’s most respected journalists, has garnered a lot of attention in his recent article in Maclean’s that turned a harsh eye towards supply management. He makes a number of strong assertions in his article that are worthy of further discussion. This is the second in a series of commentaries that will provide counter-points to those assertions, this time focusing on trends towards higher prices and fewer farms.
Coyne asserts that supply management has led to higher prices, fewer farms, less product innovation, and general inefficiency up and down the supply chain. While these statements may be accurate in and of themselves, the connections between them are more complex and less straight-forward than his article makes them appear.
Let’s start with fewer farms and innovation on farm. The progression to fewer farms is one that has been taking place since man decided that living in urban areas and specializing in an activity that wasn’t subsistence food production was a good idea. This process was hastened with the domestication of work animals like horses and oxen, progressing to tractors and now enveloping all the advances that science has made in both cropping and animal production. The net result in the proliferation of technology is that a single farmer can handle far more than his predecessors. That supply-managed farms have consolidated is an indication that innovation, technology adaptation, and a focus on efficiency are in fact strong drivers in the industry.
Higher prices are a product of having bargaining power in the marketplace. Supply-managed farms have been able to demand that their prices rise as the cost of production rises. Average consumers are aware of the impact of rising energy prices and probably not as aware of much higher prices for grains. This is simply a fair approach to dealing with other players when your product, like milk or eggs, is perishable. In a “free market” arrangement, these farmers face the threat of becoming price-takers, rather than negotiators.
Andrew Coyne turned a harsh eye towards supply management in his recent Maclean’s article. Such scrutiny is necessary and good for regulated industries from time to time. However, fewer farms is a natural process in agriculture due to the impact of technology, and higher prices are a result of bargaining clout. Expect more on the Coyne column next week.
Nathan Stevens is the Research and Policy Advisor for the Christian Farmers Federation of Ontario. The CFFO Commentary represents the opinions of the writer and does not necessarily represent CFFO policy. The CFFO Commentary is heard weekly on CFCO Chatham, CKNX Wingham, and UCB Canada radio stations in Chatham, Belleville, Bancroft, Brockville and Kingston. It is also archived on the CFFO website: www.christianfarmers.org. CFFO is supported by 4,200 family farmers across Ontario.
September 9, 2011
Andrew Coyne, one of Canada’s most respected journalists, has garnered a lot of attention in his recent article in Maclean’s that turned a harsh eye towards supply management. He makes a number of strong assertions in his article that are worthy of further discussion. This is the second in a series of commentaries that will provide counter-points to those assertions, this time focusing on trends towards higher prices and fewer farms.
Coyne asserts that supply management has led to higher prices, fewer farms, less product innovation, and general inefficiency up and down the supply chain. While these statements may be accurate in and of themselves, the connections between them are more complex and less straight-forward than his article makes them appear.
Let’s start with fewer farms and innovation on farm. The progression to fewer farms is one that has been taking place since man decided that living in urban areas and specializing in an activity that wasn’t subsistence food production was a good idea. This process was hastened with the domestication of work animals like horses and oxen, progressing to tractors and now enveloping all the advances that science has made in both cropping and animal production. The net result in the proliferation of technology is that a single farmer can handle far more than his predecessors. That supply-managed farms have consolidated is an indication that innovation, technology adaptation, and a focus on efficiency are in fact strong drivers in the industry.
Higher prices are a product of having bargaining power in the marketplace. Supply-managed farms have been able to demand that their prices rise as the cost of production rises. Average consumers are aware of the impact of rising energy prices and probably not as aware of much higher prices for grains. This is simply a fair approach to dealing with other players when your product, like milk or eggs, is perishable. In a “free market” arrangement, these farmers face the threat of becoming price-takers, rather than negotiators.
Andrew Coyne turned a harsh eye towards supply management in his recent Maclean’s article. Such scrutiny is necessary and good for regulated industries from time to time. However, fewer farms is a natural process in agriculture due to the impact of technology, and higher prices are a result of bargaining clout. Expect more on the Coyne column next week.
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