Wednesday Night #1321 – Postscript – Agricultural subsidies

Feds find a cheesy way to rip off consumers
The Gazette
Tuesday, July 03, 2007

It was not exactly a story that galvanized the Canadian public last week. In fact, it certainly couldn’t compete with Paris Hilton getting out of jail. But the Canadian Food Inspection Agency’s plan to change the regulations about production of different cheeses in Canada is, alas, not mere government busy-work but rather yet another case of Ottawa pandering to Canada’s powerful dairy lobby.

The impact of the change, slipped into the official Canada Gazette last month with little fuss, is to prop up even higher the prices Canadians must pay for dairy products, so that fat-cat (or perhaps we should say fat-cow) dairy producers continue to prosper.

Buried deep in the verbiage of the proposal is the news that the change will add 25 cents per kilogram to the price cheese producers pay for their ingredients; this will no doubt be passed to consumers. Milk producers will rake in an extra $187 million a year.

Along the way, this scheme – which will take effect a year from now, unless Ottawa relents – will require the licensing of cheese importers, which could restrict imports of some specialty products now available, and which would certainly create a whole new bureaucracy for which taxpapers and/or consumers will have to pay. Anything to protect that farm vote.

With Canada’s milk prices kept artificially high by carefully-enforced rules about who can sell milk, the dairy sector has grown only slowly. Domestic cheese producers have offered new varieties, and increased the market for well- established products, by finding an alternative source of raw material The government has made the import of milk virtually impossible. But the spirit of free markets is like the weeds that grow up through the smallest crack in a sidewalk: It finds a way. As the Canadian Food Inspection Agency puts it, “Technological advances in cheesemaking have made possible the inclusion of higher levels of milk solids in the manufacture of cheese.” And so milk solids – not covered under the current rules – are being imported, in growing quantities, and used in production of specialty cheeses, which can then be sold at more reasonable prices.

Suddenly the system is working, in this slight degree, to the benefit of consumers, rather than dairy farmers. Better close that loophole! In a truly impressive display of hypocritical effrontery, the food-inspection agency blandly claims that the new rules will “enhance consumer interests by reflecting the tradition of cheesemaking.” At least they had the decency to refrain from the more significant observation that these regulations will place Canada boldly in the global forefront of cheese rules. Even the regulation-mad European Union doesn’t control product composition this way.

Legalized price-fixing in dairy products is a disgrace, but one that no politician, in any party, has the nerve and sinew to oppose. Dairy farmers, along with chicken, turkey, and egg producers, all benefit from federal marketing schemes that keep prices high and producers happy. It’s reasonable to assume that in at least some cases, inflated prices for these nutritious staple foods drive consumers, and especially poorer ones, to less healthy alternatives in the grocery store.

The political problem is that consumers are hopelessly unorganized. Probably few Canadian consumers are even aware of the way farmers and bureaucrats and politicians conspire against them. But you can bet that every farmer producing these products knows exactly how thoroughly he’s milking the Canadian public.