The application of the concept of supply management in the Canadian egg industry is discussed in this essay. The principal objective of the essay is to describe the functioning of the industry from the perspective of market economics. Within this context, issues associated with supply, demand, and pricing are addressed in the essay.
The Functioning of the Canadian Egg Industry in the Supply Management Framework
The term supply management is used in many contexts. With respect to the Canadian economy, the term supply management refers to a legislated structure wherein federal product/industry-specific agencies and provincial product/industry-specific marketing board manage the production and marketing of specified agricultural products (Canadian Egg Marketing Agency, 2009). There are several objectives of this management structure. Three of these objectives are central to the supply management process. The first is to maintain equilibrium in supply and demand for the product. The second is to maintain price levels that are reasonable for consumers, while simultaneously assuring products a fair return on their operations. The third is to assure Canadian consumers that the product supply is high-quality and safe (Canadian Egg Marketing Agency, 2002).
The functioning of the supply management system involves several specific activities. Advance projections of product demand are made. Production allocations are made to producers to (a) assure product volume adequacy and (b) to prevent surplus production. Prices are established at the level of that provides efficient producers with a fair return on their operations (Canadian Egg Marketing Agency, 2007).
The supply management system in Canada is criticized for countries such as the United States as being anti-free trade (Smith, 2007). The Canadian approach, however, has been approved by the World Trade Organi
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