For years the U.S. dairy industry has claimed that Canadian dairy producers are heavily subsidized through the countryâs 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. âOne of the things we are seeing is that the way dairy industries are supported on both sides of the border are different,â Haney says. âCanada on the front end, is clearly supported through the quota system. In the U.S., itâs more through other means like MPP, SNAP and so forth.â âThe 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,â Wiesemeyer says, especially with the update to programs recently announced in the newly approved spending package. âThat 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)
For years the U.S. dairy industry has claimed that Canadian dairy producers are heavily subsidized through the countryâs 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. âOne of the things we are seeing is that the way dairy industries are supported on both sides of the border are different,â Haney says. âCanada on the front end, is clearly supported through the quota system. In the U.S., itâs more through other means like MPP, SNAP and so forth.â âThe 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,â Wiesemeyer says, especially with the update to programs recently announced in the newly approved spending package. âThat 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)
