Supply Management: The Past and Future

This paper reviews many of the controversial issues surrounding supply management in the Canadian dairy and poultry sectors. In this context, the underlying theory is extended to include decision making where both joint production and import controls are in place. Also the supply management system is discussed within a rent-seeking framework. This provides both a method by which to analyze the various forces that will either keep the supply management system in operation or lead to its demise, as well as a means by which supply management can be improved. Concerning the former, it appears, for example, that the tariffs under the General Agreement on Tariffs and Trade are sufficiently high that producers are better off with supply management than with a system with no production controls. If this system falls apart, it will largely be due to internal fighting among provinces and/or producers over expanded market share.