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

"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." Copyright (c)2008 Canadian Agricultural Economics Society.