Article content continued

Photo by David Paul Morris/Bloomberg

The results of these reforms have been unambiguously positive. Consumers have benefited from lower prices for milk with prices falling by 12 cents per litre in the first six months following deregulation.

While there has been consolidation in the industry, surviving farmers have benefited from a 56-per-cent increase in wholesale prices for their milk. National milk supply has been maintained, and larger farms are driving much greater productivity. Exports of milk have increased as Australian dairy farmers have become more efficient and now represent the third most important agricultural export after beef and wheat, with earnings of roughly AUD$3 billion annually.

The key to this success was the transition period for the industry. Farmers were given only a nine-month advance notice of the reforms — but again, received a transition period of almost nine years. Farmers had three choices: exit, expand or transition. In all three cases, farmers were given financial and policy support to adjust to the new policy environment.

The Australian reforms reduced consumer prices, which disproportionately benefits lower-income households, while also making the industry much more efficient and internationally competitive. Additionally, the transition period and the funding provided to many farmers, particularly those who chose to transition out of the industry, meant the reforms were implemented with minimum disruption.

There is a way forward for Canada to both resolve a major trade irritant and reform an outdated and frankly anachronistic policy that protects a small group of farmers at the expense of higher prices for staples. Australia’s experience shows there’s a better way forward for Canadians, including Canadian farmers.

Jon Berry and Alan Oxley are trade analysts in Australia with ITS Global and authors of a recent study on supply management by the Fraser Institute. Dan LeRoy is a senior fellow of the Fraser Institute and an agricultural economist at the University of Lethbridge.