Agriculture Canada has announced that restaurants will soon pay less for their mozzarella cheese: a move that’s designed to cut the cost of pizzeria pizza and bring joy to hungry undergrads across the country. It certainly sounds like good news. But it’s really just a small step toward unwinding Canada’s antiquated supply management system that keeps prices high at home and discourages farmers from selling abroad. The best plan? Canadian cheese should follow Canadian wine into the bracing world of free trade.
Canada’s Byzantine supply management system uses quotas, tariffs and price controls to restrict imports and boost farmers’ incomes. As a result, mozzarella cheese, the dominant ingredient in most pizza, is significantly cheaper in the United States. To help make them competitive, makers of frozen pizzas have enjoyed a discount on mozzarella tied to U.S. prices since 1995. But not restaurants. This new rule addresses the discrepancy between frozen and fresh pizzas. According to the Canadian Restaurant and Foodservices Association, which has been lobbying for decades for the change, mozzarella costs should drop five to 10 per cent. This could cut the price of a large takeout pizza by a dollar or so.
As pleasing as cheaper pizza sounds, however, Ottawa’s new policy doesn’t go nearly far enough. And, bizarrely, it creates a new federal pizza bureaucracy.
According to the official press release, the announced price cut is only for “mozzarella cheese to be used strictly on fresh pizza by establishments registered with the Canadian Dairy Commission.” Thus, Ottawa will now need to keep track of all the nation’s pizza ovens. And it will, presumably, need to scrutinize menus, as well—to ensure cheap cheese isn’t diverted into veal parmigiana or other mozzarella-heavy meals. (And what of panzarotti and calzones? Will folded pizzas qualify for the discount?) This pizza comes with a hefty serving of red tape.
More important, why should consumers be shut out of this new opportunity to buy cheaper cheese? Lots of folks like to make their own pizzas at home; Ottawa is not offering this discount to them.
All of the above points to the overarching folly and unfairness of supply management in our modern, trade-oriented era. The federal and provincial governments may conspire to shelter Canadian dairy farmers from world markets, but no government policy can hold the world at bay forever. A special deal to help frozen pizza makers compete has now given way to another special deal to satisfy restaurateurs. The time has come to scrap the entire system and let cheese prices fall for everyone.
The great shame of supply management in dairy (as well as chicken and eggs, etc.) is that this sort of trade protection inevitably creates weak, inward-focused industries, when we should be proudly selling Canadian agricultural products to the rest of the world. Last year, for example, Canada ran a dairy trade deficit of $440 million. While we import more cheese than we sell abroad, the big international dairy markets of Japan, India and China are being served by aggressive competitors from Australia, New Zealand and Argentina. For a country that takes such pride in our natural resources, global outlook and agricultural heritage, this situation should be considered a national embarrassment. Canada ought to aspire to much more than a national pizza-oven registry and a buck off takeout.
Of course, removing trade barriers and opening up domestic markets to international competition can be a difficult process. There will be inevitable transition costs and job losses. It is thus entirely reasonable to establish government policies to deal with these impacts, particularly for farmers heavily invested in quota. But the end result will be a vast improvement for everyone. The history of Canada’s wine industry offers an instructive lesson.
Prior to the 1988 Free Trade Agreement with the U.S., Canada’s wine industry was sheltered by government rules and characterized by low-quality grapes better suited to jams and jellies than to elegant sipping. Free trade brought an end to this trade protection and unleashed a flood of wine imports from around the world. Despite claims the domestic industry would be destroyed, it responded to this new competition by producing much better wine. A $50-million federal transition fund to compensate winemakers who removed poor-quality vineyards helped out. And today, the Canadian wine sector is thriving; production is increasing, and more than just our famous ice wine is winning plaudits from international critics. (Here at Maclean’s, we’ve just released a special newsstand issue and an app devoted to the finest wines Canada has to offer.)
Everyone can learn from the wine industry’s experience. Cheese freedom will not only cut costs and increase choice for all consumers, it will also give our dairy industry the incentive it needs to improve its product and look far beyond our borders. Today, pizza. Tomorrow, the world.