Is supply management the way to go?

[cowman]

When you look at how all the big industries operate you see they all practice supply management at some level. When demand for trucks is low does Ford/GM/Dodge lower their price or do they cut back production? How about oil and gas? Now look at what farmers do...the price goes down so they rush out and buy more inputs so they can produce more! This is insane!
The problem is farmers are not organized and never will be. The government and society likes this as it produces cheap food. The dairy and poultry sectors are the exceptions. I believe they have done fairly well compared to other industries. What would happen if these programs were extended to other ag products? Could it ever happen?

[cakadu]

The only time supply management works is when it is limited to domestic supply. If you are at all dependent on exports for sales of your product, then it cannot work. There are pros and cons to supply management and it can be debated ad naseum and still no consensus reached other than you have to agree to disagree.

When it comes to the WTO and dropping subsidies, the supply managed sectors have to be at least a little nervous because if the quota system is dropped, then there will be huge ramifications. On the other hand, the dairy sector in particular is looking to export products as well and I think that it is a case of wanting their cake and eating it too. They can't have it both ways and if they want to export, then all bets are off and they take their chances out on the open market, just like everyone else has to.

The lowest cost producer of milk in the world is New Zealand and Canadian producers cannot compete with them, any more than our grain producers can compete with countries like Argentina etc. The USDA showed what would happen if the quota system were eroded here in Canada and producers would see their incomes plummet by 60% almost overnight. What are the chances of our seeing the quota system disappear? Many of my grain producing friends say that they wish there was a way to have it brought into the grain sector, but I don't see how that could happen. Any suggestions?

[ianben]

Fixed quotas or areas are not the best way forward in my opinion.In most instances they do not produce a managed supply. In good years there is still over production and bad years a bigger shortage which governments dont like.They get the blame for high prices.

These quotas also gain a value of their own which again is a deterant to new enrants.

Could we learn from how others manage over-supply??

I think there are answers out there.

Price monitering is something I think we could all do.

Like you say cowman they are willing to store cars and do not allow prices to fall through the floor. They do not compete on who can produce he lowest priced car but all sell for the same price and compete in other ways, service
quality, location.

It just needs some brave people or marketing board to fix a price and then rest of us to use our common sense.

Every spring I have to wait for the chemical companies to fix a price,I like to spray early, no-one wants to be first but they always manage to do it.As soon as one price is out the rest follow the leader.Won't be a dollar difference between similar products!!!

Cowman you know what your calves are worth if the feedlot fixes the price of beef but if they want 100 it is no good sending 110 or 90. We have to be prepared to store too!!!
Lets fix a price and then give the customer what he asks for.

Regards Ian