The Influence of Supply Management on Farmland Values in Ontario

Abstract

Supply management programs for Canada's dairy and poultry sectors are intended to reduce price volatility and provide fair returns for producers. However, the reduced risk and higher returns for these producers may contribute to higher farmland values. This paper estimates the impact of supply management on farmland values in the Canadian province of Ontario using a hedonic approach based on over 25,000 farmland sales. The results indicate that farmland values have been positively impacted by supply-managed livestock density. In addition, a recent policy change-a cap on the price of dairy quota-is found to further contribute to increased farmland values.

Supply Management 2.0: A Policy Assessment and a Possible Roadmap for the Canadian Dairy Sector

“…The idea for Canada to adopt a model like Australia’s for dismantling supply management is not new. Policy analysts have been recommending Canada follow suit since at least 2003 [ 35 ]. While this plan would reduce costs, it would inevitably lead Canada into a similar situation as Australia currently finds itself in.…”