What is Fair Farm Pricing?

What is Fair Farm Pricing?

Perishable staple food products with long planning cycles (12 to 24 months) but relatively short shelf lives, such as eggs and milk, are inherently unstable markets if they are not managed. Stability of supply and prices in these markets is critical public policy for consumers, governments and farmers worldwide.

About 95 per cent of global egg production and 93 per cent of global milk production are consumed in the same country where they are produced. In fact, almost all developed countries use specialized systems to manage and stabilize these markets, often with a complex web of subsidies, government buy-back programs, price supports and many others in countless combinations.

Canada chose a subsidy-free approach through fair farm pricing under a supply management system. In the 1960s and 70s, Canada’s egg industry was plagued by chronic overproduction and unstable prices. The government introduced supply management (fair farm pricing) as a way of stabilizing the egg market for consumers, while providing farmers with fair returns.  Egg farmers operate their businesses in a fair farm pricing system, where farmers produce enough eggs to meet consumer demand. A national egg production target is first set and farmers in every province work to meet this target. They guarantee a stable supply of eggs to feed Canadians in exchange for a fair price for their product that covers their cost of production.

Because production is matched closely with demand, overproduction and waste are avoided. Farmers can earn fair and stable incomes directly from the market, not from subsidies and consumers can be assured of having a steady volume of high-quality eggs on grocery store shelves.