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Identifying and Applying a Comparative Advantage Framework in Canadian Supply‐Managed Agriculture

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  • Michael Katz
  • Joel F. Bruneau
  • Andrew Schmitz

Abstract

The marketing of table eggs, broiler hatching eggs, chickens, and turkeys in Canada is limited by federal and provincial supply management (SM) legislation through production quotas. The respective national regulatory agencies in each of these industries allocate, among the provinces, growth in national quotas called “overbase.” Federal legislation stipulates that the allocation of overbase among provinces must take into account the principle of comparative advantage (CA) of production. None of the agencies pertaining to the feather industry has ever identified and applied CA in national quota allocation decisions. To fill this void, we modify the revealed comparative advantage approach developed by Balassa and Bowen to identify CA and develop a provincial agricultural CA index to assign overbase allocations among provinces. Overbase quota allocations should shift toward the agriculturally intensive Prairie provinces that have a CA in the Canadian feather industry and away from the nonagricultural industry‐intensive provinces. Our method of SM overbase quota allocation is consistent with the objectives of Canadian SM legislation. Au Canada, la commercialisation des æufs de consommation, des æufs d'incubation de poulet de chair, du poulet et du dindon est régie par un régime de gestion de l'offre encadré par des lois fédérales et provinciales. Chaque organisme de réglementation national divise, entre les provinces, la croissance des contingents nationaux appelés ≪contingent supplémentaire≫. La loi fédérale stipule que l'attribution des contingents supplémentaires entre les provinces doit tenir compte du principe d'avantage comparatif en matière de production. Aucun des organismes du secteur de la volaille n'a déterminé l'avantage comparatif ni ne l'a appliqué dans les décisions d'attribution des contingents nationaux. Pour combler cette lacune, nous avons modifié la méthode de ≪l'avantage comparatif révélé≫élaborée par Balassa (1965) et Bowen (1983; 1985; 1986) pour déterminer l'avantage comparatif et établir un index des avantages comparatifs agricoles provinciaux pour l'attribution des contingents supplémentaires entre les provinces. L'attribution des contingents supplémentaires devrait être dirigée vers les provinces des Prairies très agricoles qui ont un avantage comparatif dans le secteur canadien de la volaille et devrait être écartée des provinces moins agricoles. Notre méthode d'attribution des contingents supplémentaires concorde avec les objectifs de la loi canadienne sur la gestion de l'offre.

Suggested Citation

  • Michael Katz & Joel F. Bruneau & Andrew Schmitz, 2008. "Identifying and Applying a Comparative Advantage Framework in Canadian Supply‐Managed Agriculture," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(2), pages 129-143, June.
    • Handle: RePEc:bla:canjag:v:56:y:2008:i:2:p:129-143
    DOI: 10.1111/j.1744-7976.2008.00121.x
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    Cited by:

    1. Andrew Schmitz, 2008. "Canadian Agricultural Programs and Policy in Transition," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(4), pages 371-391, December.
    2. Al Mussell & Anatoliy Oginskyy & James F. Oehmke, 2009. "Identifying and Applying a Comparative Advantage Framework in Canadian Supply‐Managed Agriculture: A Comment," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(1), pages 159-163, March.
    3. Predrag Rajsic & Glenn Fox, 2017. "Quota prices as indicators of comparative advantage in supply-managed industries," Agricultural Economics, International Association of Agricultural Economists, vol. 48(2), pages 165-174, March.
    4. Joel F. Bruneau & Andrew Schmitz, 2009. "Identifying and Applying a Comparative Advantage Framework in Canadian Supply‐Managed Agriculture: Response," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(1), pages 165-168, March.
    5. Maurice Doyon & Stéphane Bergeron & Lota Tamini, 2017. "Policy relevance of applied economist: Examining sensitivity and inferences," CIRANO Working Papers 2017s-12, CIRANO.

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