Equity In Dairy Industry

932 Words 4 Pages
Equity focuses on the distribution of resources in an “equal” and fair way amongst the members of a society. Efficiency, is defined as the optimal production and allocation of resources. While at first glance, these terms may be hard to grasp, if you take a look at the Canadian dairy farm industry, you will see a great example of how these terms unfold in reality. It illustrates the outcomes of the market when each is in play. To glean a closer look at the effects of efficiency and equity on market outcomes, let’s examine these two terms a bit closer, illustrate them within the Canadian dairy industry and then refer to the article, “Why Canadian dairy farmers are worried about the Trans-Pacific Partnership: We could go out of business” in …show more content…
The Government of Canada’s regulation of the dairy industry by instilling the quota system is equity; the system is designed around fairness not only for the producers but mainly for the consumers. This has been the case for generations of dairy farmers. The reason for this system was to ensure that supply was regulated so that small farmers were not overrun by larger ones. The system essentially evens out the playing field. Farmers acquire quotas so their production and distribution are stagnant somewhat. This Government control, however, pushed the system to be somewhat unbalanced. There are some farms with larger quotas than others. These farmers are able to produce more and have created a condition where new farmers cannot acquire quota at all. The government intervention in this case has shut out the potential for new producers. The quota system may at times be a good example of efficiency in fact. For example, one of the issues facing the dairy industry is that they have to be concerned that the product is fresh. That is to say, it can’t sit on a shelf for long. Because of this, milk produced in Canada, stays in the Country. There is NO exporting of dairy products. The system provides an efficient mechanism for supply and demand while imposing the equity side as …show more content…
The TPP opens the borders between several countries to free trade. This is a grave concern to many industries and especially in the Canadian dairy industry. In the Financial Post Article about this very topic entitled, “Why Canadian Dairy farmers are worried about the Trans-Pacific Partnership: We could go out of business”, famers discuss their fears. For one, the quota system would be gone. A system that producers have been using for more than 40 years would drastically change. Equity would be lost. As the article writes, lawmakers are asking “Canada to dismantle its protectionist supply management system for dairy or face being shut out of the 12-nation TTP”. The TPP would eliminate trade barriers. Farmers believe if this happens, the industry as we know it collapse because of competitive forces. Guelph University professor Sylvain Charlebois is quoted as saying, “Our farms aren’t efficient enough and they aren’t competitive enough.” What would happen to the open market? If the government supported changing the system and did away with the quota system, could farms become more efficient? Would becoming more efficient have a more favourable effect on market outcomes? These are questions farmers and lawmakers are considering. In an open market system based on supply and demand, it is essentially survival of the fittest. The problem in this case, is that Canada has the risk of

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