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Quebec | By the 70's, milk production was far outstripping demand here in Québec resulting in unsustainable prices. The government had to choose whether it wanted to bailout and subsidize production on a yearly basis or rip the band-aid right there and then. It instituted production quotas. The number of dairy farms went essentially went down by 50% or so in 25 years while the number of cows per farm doubled.
Once in a while, the government re-evaluates the balance between production and demand and sells quotas at an auction thereby increase supply. This prevents oversupply, maintains healthy price levels, but somewhat handcuffs the sector making it harder to react to sudden market changes. And as I alluded to in my previous post, I wouldn't want to be have been a dairy farm during the late 70s to early 80s; it was a bloodbath for the small family farm.
As an outsider looking at USA's ag sector, I see alot of parallels to to what ours looked like in the 1960s. The difference is we choose a different path for better and/or worse. And it is quite clear why, we don't have the massive tax-payer base of the USA to continue bailing out our ag sector. | |
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New Zealand subsidy story
