Why do Canadian cross-border shoppers stock up on milk, butter, cheese, yogurt, egg’s and other food products? Simply for prices that are “considerably” less than what Canadians pay for the same “essential” food products. A cow is a cow! It eats the same amount of grass in Canada as it does in the US and, since the geographical area of Canada is greater than the United States logic says that we must have more grass in Canada thus eliminating the old “raw materials” cost theory. So why am I paying $1.75 for a gallon of milk in Buffalo and $4.58 for a gallon of milk in Toronto?
Here is the second installment as to why Canadians pay more than our U.S. neighbors for certain foodstuffs. In this Blog we will look at milk and products derived from milk such as cheese and butter. Research is from articles and studies by the Conference board of Canada, Statistics Canada and press articles.
The Canada Government has maintained and supported a “dairy supply management” policy for more than forty-years. In a nutshell, the system limits milk production and keeps dairy imports out in order to provide producers with higher milk prices.
Ottawa also has rules to keep out cheaper imports that would undercut domestic production and prices. Ottawa limits cheese imports to one-twentieth of Canadians’ cheese consumption the rest is subject to a 246% tariff (see chart). We allow in even less yogurt and other dairy products.
High milk “policy prices” come at the expense of all other Canadians. Buyers of dairy products—processors, restaurants, retailers, and consumers—effectively subsidize dairy producers by paying higher prices than they would otherwise. The OECD estimates the subsidy at $175,000 per dairy farm.
According to Stats Canada the Retail Price for 2012 were Cheese $13.77/kg, Butter $3.88/454kg and Margarine $2.14/454kg
The Conference Board of Canada, November 2009 Report by Danielle Goldfarb “the substantial protection the system affords comes at the expense of the processors and consumers who buy milk and dairy products”
So there you go, you pay a higher price for milk, butter, cheese and other milk products not because the Canadian Retailer is making more money from you but because the government is and says you will.