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ADMS 1010 Lecture Notes - Lecture 7: Perfect Competition, Equilibrium Point, Dairy Cattle

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goldelephant80
26 Mar 2017
School
York University
Department
Administrative Studies
Course
ADMS 1010
Professor
Alex Browning

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Document Summary

Canada"s supply management system provides balance in the dairy sector by enabling. Canadian dairy farmers to act collectively to negotiate price and adjust milk production to meet consumer demand. While farmers around the world face unexpected and inexplicable wild market fluctuations, canadian farmers sell their milk at constant and stable prices. As a result, canadian dairy farming is one of the few agricultural sectors that are self- sufficient providing income security for farmers and requiring no government subsidy. This means canadian farmers can invest in their farms, communities and. It increases focus on product quality and standards. Consumer: consumers have access to a variety of local, quality, 100% canadian milk products at affordable prices year-round: fosters investments in research and on-farm infrastructure. Each farm owns a number of shares in the market (quota), and is required to increase or decrease production according to consumer demand.

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Related Questions

For years the U.S. dairy industry has claimed that Canadian dairy producers are heavily subsidized through the country’s supply management program. This argument has been a key point in trade negotiations as the U.S. claims that the supply management system, and the Class & pricing system in place, creates an unfair playing field. In a new report, Canadians have suggested that perhaps the U.S. dairy industry should examine its own subsidy programs before making accusations. The 588-page report commissioned by Dairy Farmers of Canada examined the role subsidies play in the U.S. dairy market. According to the report, 73% of the returns received by U.S. dairy farmers in 2015 were a result of dairy farm subsidies, such as the Margin Protection Program (MPP), the Supplemental Nutrition Assistance Program (SNAP) and others. That amounts to about $12.06 per cwt. “One of the things we are seeing is that the way dairy industries are supported on both sides of the border are different,” Haney says. “Canada on the front end, is clearly supported through the quota system. In the U.S., it’s more through other means like MPP, SNAP and so forth.” “The Canadians should realize that the U.S. is not over subsidized, but has a tremendous safety net that will give larger producers confidence to expand production knowing they have revenue assurance and other industry backups,” Wiesemeyer says, especially with the update to programs recently announced in the newly approved spending package. “That will be the story over the next 3 to 5 years in the U.S. dairy market. Adapted from www.milkbusiness.com (October 2018)

Answer the following questions: Identify the type of restriction represented by the milk subsidy in the U.S. Use the Extract to provide a justification for your choice. (5 marks)

To settle the trade dispute in NAFTA both the U.S. and Canada agree to remove the subsidy on milk. Discuss the impact of this on the U.S. milk market. Identify the pros and cons aswell as provide advice to the government.(15 marks)