the Canadian and US Dairy Industries
R. R. BarichellO, R. Lambert, T. J. Richards;
R. F. Romain, and B. K. Stennes
The international competitiveness of Canadian dairy is now a primary concern with the prospect of gradual elimination of import controls under both the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFTA). Little is currently known about the state of either international or interregional competitiveness. Less is known of the factors that contribute to such comparative advantages. This chapter presents the results from three independent studies that deal with the various aspects of the dairy industry in Canada and in the United States. The first study uses comparisons of interspatial and intertemporal productivity differences between Alberta and Wisconsin to show that the Wisconsin dairy sector holds a distinct and growing advantage over Alberta. The second study uses a multilateral cost of production (COP) comparison to show that California is the lowest cost region in North America, ' followed by Wisconsin, New York, Alberta, Ontario and Québec. The third study investigates COP variations within the Ontario and Québec dairy industries to show that there are no appreciable economies of scale in either dairy. However, the COP for herds of all sizes can be reduced by making them more technically efficient. The first two studies imply that the Canadian dairy sector will undergo a significant rationalization if cost improvements are not made over the period allowed by GATT for tariff reduction. These studies also show that such improvements may accompany larger herd sizes, but this does not appear to be the case for either Ontario or Québec. As a result, the rationalization of the Canadian dairy industry will impact each region differently with production shifting to regions that are able to adapt to the competition.
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Publication information: Book title: Regulation and Protectionism under GATT:Case Studies in North American Agriculture. Contributors: Andrew Schmitz - Editor, Garth Coffin - Editor, Kenneth A. Rosaasen - Editor. Publisher: Westview Press. Place of publication: Boulder, CO. Publication year: 1996. Page number: 96.
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