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Article
Dairy Trade Liberalization Impacts in Canada
Canadian Journal of Agricultural Economics (2008)
  • Abdessalem Abbassi, Laval University
  • Olivier Bonroy
  • Jean-Philippe Gervais, North Carolina State University
Abstract

Supply management in Canada is facing broad trade liberalization pressures. This paper uses a spatial equilibrium trade model to simulate the impacts of various trade liberalization scenarios in the Canadian dairy industry. The results critically hinge on the relationship between increased market access and the market sharing quota (MSQ) at the farm level. Two different MSQ decision rules are simulated: (i) global output at the farm level remains unchanged following liberalization; and (ii) the MSQ is reduced to support the unit production quota rent at its preliberalization level. The results show that if the MSQ is held constant following a potential compromise in the Doha Round, retail prices of fluid milk and cheese would decrease by about 5%. These price movements can be negated by a 1.4% cut in the global MSQ at the farm level. Net welfare gains in the Canadian dairy sector following market access reforms range between 48.2 and $64.2 million when evaluated at the 2003–04 world prices.

Publication Date
2008
Citation Information
Abdessalem Abbassi, Olivier Bonroy and Jean-Philippe Gervais. "Dairy Trade Liberalization Impacts in Canada" Canadian Journal of Agricultural Economics Vol. 56 (2008)
Available at: http://works.bepress.com/jp_gervais/21/