The "free market" crowd has been in high dudgeon for the last few weeks. First applauding the Federal Government's moves to dismantle the "one desk" marketing role of the Canadian Wheat Board for wheat and barley, and now exposing the "price fixing for their friends" activities of the supply management marketing boards. In both cases the benefits of the "free" market are held up as the better alternative for everyone.
Question: Is there anything more red meat, capitalistic, money making, market oriented than the National Football League? It generates billions of dollars, is watched by hundreds of millions of people, and is more American than apple pie. BUT what really makes it work? Why is a team from little Green Bay Wisconsin able to win a Superbowl, and is well on its way to winning another, when other teams from much bigger markets flounder? How can Green Bay afford to pay the big salaries of the talented players on their roster, who can go elsewhere, to a bigger market where the money should be better? (That's how a free market is supposed to work) Why is the league so competitive that almost every fan in every city feels they have a chance at winning a playoff berth at the beginning of the year, when that can't be said in hockey or baseball? Two words: revenue sharing.
It started with the creation of the American Football League in 1959, but new NFL commissioner Pete Rozelle quickly introduced it to the NFL in 1961. He cleverly got the 3 U.S. television networks to bid up the price for carrying NFL games (now worth billions), and convinced some very reluctant owners that the league would be better off to split this television revenue evenly between all teams, big and small, and this principle survives to this day. That's why Green Bay can compete with the New York's and Chicago's, and that's why NFL fans are so devoted to their teams, they really do have a chance to be successful year after year.
OK Petrie what the hell does this have to do with food?
When you look at the Canadian Wheat Board, the marketing principle is that all wheat and barley grown by farmers large and small is pooled under one roof (figuratively). Sales people benefit from larger marketing clout (some reports say this has meant a billion dollars a year more revenue), and this money is then shared equally amongst all participating farmers, based on the volume of their shipments. There are producers who farm close to the U.S. border who could make more money selling to American mills in spot markets, and will now get their chance to do that. It's the smaller farmers further away from large markets who will lose out (think Green Bay).
Supply management has some of the same principles: a regulated system that carves out a certain market share, and assures farmers a fair price, and gives many more people a chance to succeed, not just farms close to large population centres.. As I've written about many times, Maritime farmers have become slightly uncompetitive in "free-market" commodities. They face higher feed and energy costs, pay more money to get their goods to the big consumer markets in Central Canada. Supply management on the other hand has kept farmers in this region competitive, and is more important to maintaining some profitability in Maritime agriculture than most of us realize.
So when Greenbay wins another Superbowl next month, just remember that it wasn't thanks to the "free market", but something most Americans, and business writers in Canada's national press, would say is heresy. Sharing wealth? That's socialism isn't it??