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Reforming Canada's Dairy Sector: USMCA and the Issue of Compensation
Author(s) -
Kooten G. Cornelis
Publication year - 2020
Publication title -
applied economic perspectives and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.4
H-Index - 49
eISSN - 2040-5804
pISSN - 2040-5790
DOI - 10.1093/aepp/ppy038
Subject(s) - supply management , obstacle , business , agricultural economics , dairy industry , compensation (psychology) , agriculture , economics , international trade , agricultural science , natural resource economics , geography , environmental science , psychology , power (physics) , chemistry , physics , food science , archaeology , quantum mechanics , psychoanalysis
Supply management (SM) in Canada's dairy sector was an obstacle to the successful renegotiation of the North American Free Trade Agreement. Reform of agricultural SM regimes in sugar, peanuts, tobacco, and dairy in various jurisdictions are reviewed, and an analytic framework is developed to investigate how Canada might eliminate its dairy quota regime while not overcompensating producers. Compensation based on quota values amount to $5.9 billion if untargeted, but only $2.9 billion if targeted; in contrast, theoretically correct estimates of the loss that dairy producers would face range from $0.2 to $1.9 billion. Such costs are low enough not to impede the elimination of supply management.