Canadians Tire of Paying More for Groceries
AGRICULTURAL marketing boards in Canada are facing two tests. One is from GATT, the international organization that addresses trade issues. The other is from ordinary Canadians who are tired of paying up to double the United States price for food staples. A package of Kraft Philadelphia cream cheese costs C$2.25 at Jacques Ducharme's grocery store in Mansonville, Quebec. Two miles south, in the US, the identical brand goes for 95 US cents - about $1.12 in Canadian money.
Dairy products can cost almost double on the Canadian side of the border. It's the same story with chicken, turkey, and eggs. The reason is marketing boards which guarantee a return for farmers and set the price for shoppers.
``Marketing boards are dead in the water,'' says Michael Walker, economist with the Fraser Institute in Vancouver, British Columbia. ``What will kill them is free trade, because it is chipping away at monopolies such as marketing boards.''
Marketing boards were not touched by the Canada-US Free Trade Agreement, which came into effect at the start of this year and will eliminate tariffs on trade between the two nations over 10 years. But they are coming under pressure anyway.
The chipping away has started with yogurt and ice cream. A GATT panel has issued a preliminary ruling that Canada must remove tariffs on those products. A final decision will be made by the full GATT council meeting in Geneva later this month.
Removing marketing board restrictions would allow more efficient American producers into the Canadian market. Marketing boards are preparing to battle for their preservation.
``Canada's not lily white in this thing but you can't put the blame on marketing boards,'' says Ken Wilson of the Ontario Milk Marketing Board. ``The Americans subsidize their dairy farmers with direct state and federal programs.''
Mr. Walker agrees that American farmers receive large subsidies but he says Canadian subsidies are greater.
Marketing boards hold that they provides farmers with price stability. Few dairy farmers go broke. The same is true for those in the chicken, egg, and turkey business. The prices are set by monitoring the costs of 150 randomly chosen dairy farmers.
But to stabilize prices, the milk producers have to keep foreign competition out. ``Obviously we have to have effective border controls or the system wouldn't work,'' Mr. Wilson says.
But Walker argues marketing boards keep out young farmers who must buy the right to go into the business.
``For example, in British Columbia you would need about a million dollars to buy [a production] quota to start a 50-cow herd,'' he says. The cost of buying the right to milk a cow effectively keeps many newcomers put of the dairy business. ``Marketing boards benefit rich farmers,'' Walker says.
It is even more expensive to get into turkeys, and broiler hens. It costs about $12 to buy the right to own a laying hen. Anyone owning more than 100 can be fined.
Meanwhile, a lot of people in this border town drive south for bargains. Canadian customs officers allow small amounts of groceries to enter without asking any questions. And while they do a little shopping in the US, Canadians fill up on gasoline. It costs almost half what it sells for on the Canadian side.