Thursday, October 28, 2010

You are being milked!

Most Canadians don't know that the price of milk in Canada is more than it should be. Should be? Thats right, the price of an item should be determined by its scarcity and the demand for it. The scarcer an item, the more it should cost in relative terms.
That U.S. gallon (3.7854 litres) jug of milk over there costs $2.79 at ShopRite stores in urban New Jersey, a 4-litre bag in Southern Ontario costs $3.99. Given that the currencies of the two countries are roughly at par, why the discrepancy in price? The answer is complex, so complex that the milk producers and the Canadian government are happy to keep the electorate "blissfully ignorant" as reported this week in the Financial Post.
The Post article blames the Canadian Dairy Commission or CDC, a Crown corporation that arbitrarily sets the price of milk and other dairy products based on something called supply management and without regard for market conditions. Of course an arbitrarily high price affects the poor and needy the most. Does the government care?    

2 comments:

  1. FWIW;

    The USA provides farm subsidies that deflate the cost of some goods, including milk. I don't know off hand how that works out per-gallon as a percentage of the retail sales price.

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  2. I'm sure that is true, I know its true of corn products. Even so it is not right, just, fair or moral, and it is the poor who have the least ability to absorb the extra costs.

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