Comparative Advantage Of Production

Chicken Farmers of Canada ("CFC") is supposed to be allocating additional quota based on a provinces "comparative advantage of production".  How well did CFC do on this responsibility.

Yesterday's Blog posting used Lloydminster, a city on the provincial border between Alberta and Saskatchewan, to examine the impoact of CFC's MOU for the Chicken Wars (see Chicken For Lloydminster.

As mentioned there, Canada's Farm Products Agencies Act requires CFC to consider "comparative advantage of production" to assign additional quota.

What exactly is "comparative advantage of production"?

You can read more about it here, here, and here.

I'm not sure who was advising CFC when they came up with their bastardized lists of factors for the assignment of chicken quota according to their MOU, but they certainly have little to do with "comparative advantage" as I understand the terms.

If I am wrong, let CFC disclose overwhelming evidence that the 7 factors they have chosen:

• Provincial shares of national base allocation,
• Population growth;
• Income - based Gross Domestic Product (GDP) growth;
• Consumer Price Index,
• Farm Input Price Index,
• Quota utilization; and
• Further processing and supply share.

as CFC has done in Section 1.(1.1).(A) of their Memorandum of Understanding are indeed factors for "comparative advantage of production".

If CFC is unwilling or unable to convince me and all other Canadians, then CFC needs to fix its mistake.

Why would CFC do such a crazy thing?

Because CFC realized their government masters were getting impatient with CFC about the chronic squabbling, and Alberta finally leaving the Federal-Provincial Agreement Chicken 2001.  That dirty laundry in public was an embarrassment, and had to be eliminated pronto.

CFC let the kids decide that candy would be served as the main course at all meals, they could watch TV all day, and could go to bed whenever they felt like it.  What kid wouldn't agree to accept negotiated terms like that?  CFC abdicated and capitulated to everybody's wanton depravity so as to get a quick deal.

In doing this deal, CFC has kicked Canada's Supply Management System out of orbit, and on a course heading into deep outer space.  Soon, we will be into uncharted space.

All of this has untold risks to Canadian chicken consumers.

Because Supply Management is a private world unto itself, only those who are "directly" affected by CFC's nonsense can complain.  All others must sit still, speak only when spoken to, and mind our own business.  CFC gets to destroy everybody but we, the public, must grin and bear the slow torture inflicted by CFC.

Thanks CFC!

Food Security

A debate on food security and the impact of Supply Management ("SM") is raging on Better Farming.

These issues have been debated since Rev. Malthus in 1798, the Corn Laws in UK of 1815, and Ricardo's 1817 Comparative Advantage Principles.

UK's Corn Laws restricted the importing of most cereal grains into UK by imposing high import tariffs, so as to subsidize and protect domestic food production, UK farmers, UK grain dealers, and UK mercantilism in general. The UK Corn Laws in 1815 are similar to Canada's SM system today.  The UK debate ended in 1846 when the Irish Great Famine created an urgent need for new food supplies, forcing the repeal of the Corn Laws.

One million or more Irish citizens died, and another 1 million people were forced to emigrate from 1845 to 1852; causing a 25% drop in population for Ireland.  How many lives would have been saved if the protectionist Corn Laws had not been implemented, or government had played its role more effectively?

The UK government allowed long suffering problems and poverty in Ireland to fester unresolved and worsening for decades before the 1845 potato blight occurred.  The government was slow to detect the consequences of the potato blight.  They took ineffective actions that didn't help those in greatest need, and those actions often resulted in severe unintended consequences. Some government officials saw the famine as a God-sent solution that would allow them to eliminate the troublesome Irish.  In other cases, the government ran Ireland as a business, maximizing exports of foods and goods for profits, and huge financial leakage from Ireland by payments to absentee landlords; all while the indigenous populations starved.  Numerous historians reported that God may have caused the potato blight, but it was the English government overlords who turned that potato blight into a famine.  Some say the Irish Famine is comparable to the Jewish Holocaust and other cases of Genocide.

Is that what Canada has in store for us? The Canada of today with its dysfunctional SM system seems to be tracking along the same path as the Irish in the 1800's.

The UK's Corn Laws lasted 31 years.  Canada's SM debacle will be 50 years old soon; 19 years more stale dated than the Corn Laws.  Apparently we haven't yet learned these important lessons, so we need to re-learn them again.

In the short term, all countries are limited by their existing infrastructure capacity, and comparative advantage.  Governments have a duty to ensure that its citizens can feed themselves.

Governments should ensure the greater good of all their citizens by understanding the current domestic limitations, the weaknesses and opportunities, and take the necessary steps (ie. facilitate & encourage co-ordinated free market action, or unilateral government action if necessary) to improve infrastructures, domestic capacity and capability.

Some gaps and disadvantages are temporary or occurred at random, and can be easily solved.  Others are chronic, exist for good reasons, and can only be changed by continuous government subsidies, interventions, and false economies (eg. growing bananas and oranges in Canada); a costly and wrong-headed approach.  Sometimes the solution is worse than the original problem, doesn't solve the original problem, and creates even more problems (eg. Canada's Supply Management system). Sometimes it isn't easy to determine which category the problem and/or proposed solution will fall into.

In SM's case, the unintended consequences, excessive costs, and limitations are obvious.  The ongoing damage to Canada and Canadians, and the future risks, will continue until SM is reformed or removed.