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Yes, Canadian dairy prices were always higher than US prices, probably by 10-20 percent or so. There's an internal quota system, and a prescribed allowable volu

Yes, Canadian dairy prices were always higher than US prices, probably by 10-20 percent or so. There's an internal quota system, and a prescribed allowable volume for imports with very high tariffs on imports above that prescribed limit. Canada did this to protect its dairy industry, and to ensure there's a level of self sufficiency to their food production. Canada has the same issue in many industries, where the need/desire for Canadian firms to compete against US firms - even though Canada has a population roughly a tenth the size of the US - results in a handful of bloated monopolies/monopsonies that the Canadian population has to deal with. For an alternative perspective you can look at the US healthcare system, where the US has a protectionist system that props up its healthcare industry (insurance, providers, pharma companies, etc) at the expense of its population, to the tune of about 2x what Canada spends per capita. Canadians who live near the border will commonly hop over for some shopping and fill up their tank with cheap gas, while Americans try to fill their prescriptions from Canadian pharmacies and travel to Mexico for procedures they can't afford to get done in the US. It's all a matter of what the system is set up to do.

ericmay 21d ago
Got it, so really Canada has historically instituted protectionist policies to protect certain industries and ensure self-sufficiency for items deemed important to national security/national welfare and the result at least in part is consolidation into monopolistic entities in Canada. I'm curious what options Canada has to break up these monopolies and lower prices with respect to their ongoing protectionist policies?
- digdugdirk 21d ago
  Honestly, most of the incentives aren't aligned with breaking them up or trying to lower prices. If the large corporate entities were broken up, they wouldn't have the scale to compete against their much larger American counterparts. They'd either get pushed out or bought up. And low prices aren't the goal for a company that is protected by government policies - they'll aim to maximize profits within the policy framework instead, and the framework itself does the job of preventing competition from smaller upstart rivals. Think of the Canadian aircraft manufacturer Bombardier. Canada wants to keep a domestic aircraft manufacturer around so they have a backup in case of US shenanigans (like what just happened with the F-35) so the government ensures there's ongoing contracts for those domestic aircraft as well as subsidies for things like manufacturing plant expansion or modernization. But Canada's population only needs so many aircraft, so why would they waste government resources on a new upstart rival aircraft manufacturer? Bombardier knows this too, so why would they spend their own resources on R&D or modernization when they know they can get the government to pay for it instead? It's a feedback loop, and not necessarily a good one.
  - badc0ffee 21d ago
    De Havilland is another Canadian aircraft manufacturer, and is expanding massively right now. But I suppose they serve a different, simpler market than Bombardier.
    - digdugdirk 21d ago
      Kinda? Originally a Canadian subsidiary of a British company, privatized in the 80's, then sold to Boeing, then bought back by Bombardier with big financial support from the Ontario government, then sold off to a domestic buyer in a corporate restructuring. Their big commercial aviation product is an old Bombardier design. To your point - Even as domestic "competition", the market is still separated by aircraft type. And honestly, their history is a good example of why countries act in this way. When they were sold to Boeing, it seemed to be a way for Boeing to "grease the wheels" in order to land a big Air Canada contract. When Airbus got the contract instead, Boeing immediately put De Havilland up for sale and let the company languish until it was purchased by Ontario/Bombardier. Corporate histories can be interesting!
  - ericmay 21d ago
    Thanks - informative comment. It really seems like Canada is in a tough spot economically. They don't have the scale to compete against, say, China or the United States but they want to protect domestic industries against foreign competition and so have enacted trade barriers and other protectionist policies like supporting Bombardier (or the dairy industry or whatever) even if it means higher prices for Canadiens and goes against free trade practices. In my mind that makes a lot more sense as to why, at least in part, there is the ongoing trade dispute between the US and Canada (whether I agree or disagree with it and how it is handled would be a different matter). The US also seeks to in part protect domestic industries that are being outcompeted by China or face significant regulatory barriers (diary industry in Canada for example, other various exports to the EU, Chinese ban on American technology companies) and so we're winding up in a world where the US is now also putting the hammer down on protecting industries like the EU, China, and seemingly Canada does which is causing a lot of political conflict over trade and jobs. It seems inevitable that as one or more countries put up trade barriers (EU, Canada, China being some large ones here) the US and others would eventually respond if they found that they were unable to compete on price due to government intervention.

ericmay 21d ago

Got it, so really Canada has historically instituted protectionist policies to protect certain industries and ensure self-sufficiency for items deemed important to national security/national welfare and the result at least in part is consolidation into monopolistic entities in Canada. I'm curious what options Canada has to break up these monopolies and lower prices with respect to their ongoing protectionist policies?

digdugdirk 21d ago
Honestly, most of the incentives aren't aligned with breaking them up or trying to lower prices. If the large corporate entities were broken up, they wouldn't have the scale to compete against their much larger American counterparts. They'd either get pushed out or bought up. And low prices aren't the goal for a company that is protected by government policies - they'll aim to maximize profits within the policy framework instead, and the framework itself does the job of preventing competition from smaller upstart rivals. Think of the Canadian aircraft manufacturer Bombardier. Canada wants to keep a domestic aircraft manufacturer around so they have a backup in case of US shenanigans (like what just happened with the F-35) so the government ensures there's ongoing contracts for those domestic aircraft as well as subsidies for things like manufacturing plant expansion or modernization. But Canada's population only needs so many aircraft, so why would they waste government resources on a new upstart rival aircraft manufacturer? Bombardier knows this too, so why would they spend their own resources on R&D or modernization when they know they can get the government to pay for it instead? It's a feedback loop, and not necessarily a good one.
- badc0ffee 21d ago
  De Havilland is another Canadian aircraft manufacturer, and is expanding massively right now. But I suppose they serve a different, simpler market than Bombardier.
  - digdugdirk 21d ago
    Kinda? Originally a Canadian subsidiary of a British company, privatized in the 80's, then sold to Boeing, then bought back by Bombardier with big financial support from the Ontario government, then sold off to a domestic buyer in a corporate restructuring. Their big commercial aviation product is an old Bombardier design. To your point - Even as domestic "competition", the market is still separated by aircraft type. And honestly, their history is a good example of why countries act in this way. When they were sold to Boeing, it seemed to be a way for Boeing to "grease the wheels" in order to land a big Air Canada contract. When Airbus got the contract instead, Boeing immediately put De Havilland up for sale and let the company languish until it was purchased by Ontario/Bombardier. Corporate histories can be interesting!
- ericmay 21d ago
  Thanks - informative comment. It really seems like Canada is in a tough spot economically. They don't have the scale to compete against, say, China or the United States but they want to protect domestic industries against foreign competition and so have enacted trade barriers and other protectionist policies like supporting Bombardier (or the dairy industry or whatever) even if it means higher prices for Canadiens and goes against free trade practices. In my mind that makes a lot more sense as to why, at least in part, there is the ongoing trade dispute between the US and Canada (whether I agree or disagree with it and how it is handled would be a different matter). The US also seeks to in part protect domestic industries that are being outcompeted by China or face significant regulatory barriers (diary industry in Canada for example, other various exports to the EU, Chinese ban on American technology companies) and so we're winding up in a world where the US is now also putting the hammer down on protecting industries like the EU, China, and seemingly Canada does which is causing a lot of political conflict over trade and jobs. It seems inevitable that as one or more countries put up trade barriers (EU, Canada, China being some large ones here) the US and others would eventually respond if they found that they were unable to compete on price due to government intervention.