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Furthermore, SM subsidizes less efficient farms and impedes innovation. While farmers who bought quotas early on benefit from the system, those who came later had to pay high prices with capital that could have otherwise been used for livestock and equipment, creating economic growth and jobs rather than trading pieces of paper. Then there are the businesses, including farmers both in and outside the supply system, who would benefit from broader access to international markets if our government did not have to defend supply management in global trade arrangements.

…poorer Canadians are adversely affected almost five times as much as wealthier families…

Free-trade deals with the European Union (CETA) and the Trans Pacific Partnership (TPP) would open supply-managed markets, but only marginally. CETA will open five per cent of the dairy market to foreign imports. TPP would increase the foreign market share by 3.25 per cent. The former Conservative government set aside $4.3 billion as compensation to dairy, eggs and poultry farmers and for the loss of quota values for those who sell their businesses. The Liberal government has signed the TPP, but not yet ratified it, so the question is still open whether it will, and if it does, what compensation it will provide for farmers.

There is a model for how we can extricate ourselves from this self-imposed burden. Australia disbanded its SM system in 2000, compensating farmers with a temporary tax on milk of 11 cents a litre. The result was a decline of prices of 18 per cent for brand-name milk and 29 per cent for no-name milk. No major political storm ensued and the industry prospered. Drawing on the Australian model, a viable Canadian plan has been suggested by a variety of observers, including former Liberal MP Martha Hall Findlay. It would have the government purchase dairy quotas at book value, eliminate tariffs on imports and — in order to ensure revenue neutrality — impose a levy on wholesale milk of about six cents a litre for 10 years.

That plan could be a win for everyone, providing lower costs for consumers and processors, wider markets for producers, compensation for farmers who exit the market and expanded trade opportunities for the country. With all those advantages it should be possible to persuade Canadians to support what is in their best interests and eliminate this affront to free markets.

Joe Oliver is the former minister of finance.