We can dismantle a sticky and economically terrible system while sticking it to the Americans, making a bid for national unity, and ultimately reducing grocery costs.
Good thinking. But I don't think there is any chance - zero - of either the Liberals or Conservatives even having an objective discussion about supply management, never mind getting rid of it.
The fact that you are almost certainly correct is, among many other consequences, one of the biggest drivers for the Alberta secession movement.
Canada's parasitic vested interests have grown so strong that the only thing an electable government can do is to throw away money, because actually fixing anything steps on toes. This doesn't solve any problems, but it allows them to pretend that they are solving problems.
Separation is now about milk..... right. ok, gotcha. There are many dairy farms in Alberta that are equally part of this mob. Careful the separatists don't want to upset the farmers and the rural contingent; that's the main place they are getting support. Wasn't it about oil exports? A land with no taxes, getting rid of the man, no rules, no debt, no immigrants, just money sloshing around? Isnt that the dream?
Supply Management may be a small issue by itself but it pancakes on top off all the issues on which Alberta takes one for the team.
Supply managed quotas are awarded per province, which disadvantages Alberta producers because their alloted quota is both below the province's percentage of national population and, more importantly, isn't merit bases. Without quotas, the best producers win, consumers win and the Canadian economy wins. Supply management is nothing more than an arcane seniority system.
MG is "smarter than your average bear" ... so y'all can betchyorass that this is gonna be screen-grabbed and shared with Uncle Jacques and Jim's daughter Andrea, and Helen (who admires Jen too.)
Nice idea but will never happen as no federal party will touch this with a hundred-foot pole. The truth is that the Quebec dairy industry has much greater political power than any western province. This is the tragedy of Canada as an imbalanced federation and is a major driver of separatist sentiment.
“If any single Liberal ever manages to come up with a single original idea while in office, I swear to God, I will eat a sock.”
For your sake, I hope it doesn’t come to this.
We studied the negative, inefficient effects of Supply Management in the 70s economics classes. Yes, the debate is that old.
Economists are united in the notion that there are better ways to support producers, if producers in fact need support.
One slight disagreement I have with your essay goes as follows: why would producers need to be compensated for quota, if they have been earning higher than normal returns from quota in the past? Aren’t they then getting paid twice?
The security of supply argument has always been rusty and hollow; if world events ever get to the point that Canada & America face food insecurity, we will have a lot bigger things to worry about than feeding ourselves.
One last thought: you make a great point, Jen, pointing out that Pierre Poilievre and the Conservatives have made a tactical error in agreeing to protect Supply Management with legal means.
Imagine the leverage he could have created by supporting a free market solution to Supply Management and healthcare.
30 years after they ended supply management, the USA is now a net importer of food. They already cannot feed themselves. Their dairy farmers are in constant crisis despite government subsidies. Theirs is not a system that we should emulate.
Here's another one about who manages the egg supply when the government doesn't manage it. Dominant processors literally conspire to rig prices and cut supply.
Your last line is very much correct; not only about Supply Management , but also regarding a plethora of other economic interactions that collide with the political reality.
Let’s be honest; Supply Management is in place for political, and not economic reasons.
If we were to start from the beginning, and devise a product distribution system from scratch, Supply Management would not be the one selected.
That no system is perfect does not make it acceptable to choose the absolutely worst possible alternative.
Yours is the last word, friend; I have said my piece.
You know what kind of savage beating any Conservative leader would get if they so much as whispered about messing with supply management? By the time the Liberal / news media propaganda campaign was through, they would be down another 5 points nationally and the public would be majority in favour of expanding supply management to all our domestic industries (boomers 95% in favour naturally). The alternative, of course, would be "dangerous American-style unregulated free market chaos".
The Line would then criticize said CPC leader for being so naive and bad at politics as to touch this Third Rail.
This. Please this. Wouldn't it be wonderful if the government (s) did things to benefit the population and the country as a whole, as opposed to appeasing niche lobby groups? I will dare to dream.....I expect the reality will be much different.
Love it, but sadly its little more than a dream. This unnecessary shake-down of Canadians to enrich a few wealthy dairy farmers, and avoid any conflict with Quebec has been around for decades, and neither Liberals or Conservatives have the guts to do anything about it. The dairy cartel is a mob, that is much happier to dump millions of gallons of milk down the drain, than to sell it at fair market value. So much for eliminating inter-provincial trade barriers and cutting costs.
Supply Management is a federal government initiative, not provincial. It does not count as an interprovincial trade barrier simply because one or two provinces benefit more than the others. Everyone suffers under Supply Management, including those in the one or two provinces.
I cannot even imagine being able to buy butter that I can spread on my home made bread at room temperature.... NZ jettisoned their supply management and their industry remains competitive. I still cannot listen to Andrew Scheer who sold out all conservative principles when he went down on the dairy industry. I understand the UK FTA failed over dairy? Spending a month there last summer, I found the dairy to be slightly less expensive than here, even spending pounds. Eggs were similar. It is just that supply management has outlived it usefulness. 90% of Canadians live within 100 miles of the US border. Canadians grocery shopp in the USA as well as buy gasoline. This should not be a West Germany/ East Germany situation. Free the Butter!
Arguably the dairy monopoly was always ill-conceived from the very beginning. When a quota system is established by law that you need access to a finite tradable license in order to produce and sell a product - even though said license has nothing to do with quality control - the end result is always going to be destroyed potential business opportunities where the regime is applied (i.e. for potential new Canadian dairy business owners) and reduced accessibility and higher prices for consumers.
It has always been about votes. Protectionism sells well with the public. Remember how all the provinces were going top eliminate the interprovincial trade barriers? How's that coming along?
Quebec and Ontario votes matter more than the west, the north and the Maritimes.
Lobby groups for dairy which is 80% of all supply management.
I did enjoy Andrew Scheer wearing chocolate milk.
Ottawa is going to get away with whatever they want because that's how Canada works. But ... if you want to make voters happy in all of Canada, they will vote with their wallets and purses during times of economic downturn and/or turmoil. Get rid of it.
You can't lose by getting rid of it. Canada can't lose and JG deserves good butter for baking.
Yes, Scheer is a disgrace. His drinking milk on stage at the annual Parliamentary Press Gallery Dinner in 2017 was, I dare say, more *openly* contemptible of the entire country than anything even Junior arguably ever did. Seriously - he was *openly* mocking the entire country (dairy cartel obviously excepted) for having to pay hundreds of dollars more (thousands for families) per year for groceries as though it was some sorta' joke on us that he sold out to the cartels to win the Conservative leadership. And this guy wanted to be our Prime Minister?! How is he still in politics? At least all the other political hacks supporting the cartels have the sense to keep their yaps shut about it unless asked about it - which of course, this being Canada, almost never happens.
Costco occasionally has NZ butter, presumably when their quota allotment allows it. It costs more than the domestic version, but it's totally worth it for butter that tastes and softens the way it did before Canadian dairy farmers started adding palm oil supplements to their cattle feed for higher profit.
One of the most obnoxious aspects of dairy supply management is that it isn't merely protectionist in the sense of applying punitive tariffs against foreign imports: you're not allowed to buy foreign products *at any price* beyond whatever quota is stipulated in trade deals. And sometimes even then, Canadian producers have bought the quota and refused to use it to import products. It's the equivalent of CBC jamming all over-the-air TV and radio broadcast signals and only allowing Canadians to watch re-runs of "The Beachcombers" and other Canadian programs.
Good article Jen. Very bold of you to dare to hover right over the target during USMCA negotiations. If only Dominic LeBlanc were sent a copy of your work here. Canada's Dairy cartel should have been abolished decades ago. Australia shut theirs down 26 years ago, successfully. Allowing dairy associations and acquisition conglomerates like Saputo to twist the screws on political parties who pose a threat to them at the expense of consumers, should enrage Canadians. As a conservative supporter, I was stunned by Andrew Sheer's hypocrisy, as he smiled while drinking from a milk carton at the podium during a past election. Common sense Canadians do not support this absurd distortion of the free market. For those paying attention to president Trump's beefs with Canada, it's obvious that Supply Management has always been his principal political objective.
Honestly, I don’t understand this. I live in Québec and I know several dairy farmers- all of whom struggle to make their business profitable (maybe it’s my small backwards region). In the past fifty years, the farms have grown bigger and bigger to remain profitable. The family farm is now a dream of the past. And yet, it seems that killing supply management would just exacerbate this problem and require us to adopt American practices- mega farms, illegal labour, and frankly an inferior product. Every time Jen waxes poetic about wanting spreadable French butter and then calls for an end to supply management, I think- but you’ll actually just get American butter, not French. The real reason French butter is better is because their food culture is strong enough to demand higher quality. North Americans have a much different culture with regard to food and food quality.
French butter is superior and also much cheaper than ours. I paid $3EUR for what I pay $9CAD at home. I had understood Europe subsidizes their ag industry as well. Does anyone know how their dairy industry works? I’m curious.
While many of the concerns surrounding supply management apply to poultry and eggs as well, the greatest challenge lies with the dairy industry. Over decades, dairy farmers have invested billions of dollars in production quota, which has become a major component of the value of their farms and, in many cases, their retirement savings. Any proposal to eliminate supply management would therefore require compensation, but what constitutes "reasonable compensation" is far from clear. Farmers who paid full market value for quota are unlikely to accept only partial reimbursement, while taxpayers would understandably question the wisdom of spending tens of billions of dollars to buy out the system. This political and financial reality is one of the principal reasons successive federal governments have avoided meaningful reform.
The suggestion that Canadian dairy producers could simply replace the domestic market with exports also overlooks significant challenges. Canada has spent decades developing an industry designed to serve a protected domestic market rather than compete internationally. At the same time, removing supply management would expose Canadian producers to competition from large U.S. dairy operations that benefit from economies of scale, a much larger domestic market, and, in many cases, lower production costs. How would Canadian dairy farmers compete while simultaneously trying to establish export markets in Europe and Asia against long-established exporters such as New Zealand and European producers? That transition could take many years and require substantial investment, with no guarantee that the Canadian dairy industry would emerge stronger or even maintain its current size.
You've described some of the work that needs to be done, yes, but not barriers to the change.
We cannot continue to prop up old models year after year to avoid the consequences of inevitable change. These immature decisions amount to not fixing the roof until all the framing and drywall is destroyed, and the whole house has to be rebuilt.
Well considered, Brad. Nonetheless, it can be done and should be. If Canadian farmers are unable to out-compete offshore sources of supply, then there are far worse problems with this sector. Abolishing the cartel is fraught with risk, but the long-term benefits to Canadians at large, are unmistakable. Australia's journey out of dairy supply management took years, with "wind-down compensation" to buy-back quotas. Unfortunately, I don't know if the recovery of lost smaller farms in Canada is even possible by this point, but the idea could be phased-in gradually over time.
I noticed our dairy prices skyrocketed during and after the pandemic (remember 8$ or 9$/lb for butter?), and this cartel lobbies itself for "cost-of-living" increases in anticipation of inflation - a tactic that self-prophesizes and exacerbates inflation rates. Just like the Liberals' "escalator taxes". This is a "feed-forward loop" that drives inflation, not unlike that which unions use.
What if ... the government buy-back was structured as a loan rather than a buy back? i.e. the quotas get cancelled, so their value is now zero. But the government lends the former quota owner some amount (which for a recent quota buyer would probably go to paying off the bank loan they had to get to buy the quota). Repaying the government would then depend on making a success of the farm in the future. Repayment terms could be adjusted (I don't know how, I'm just blue skying here) depending on how long the quota had been in the owner's possession i.e. some other commenters have made the point - why should a quota owner who has got rich off of owning quota, get rich again from the government buying it back.
I'd be interested in some other reader's (or Jen's) ideas on how to make this (or some other idea) work. I don't doubt that whatever plan the government came up with would probably not be the best one.
Actually, the loan from the government could be on a sliding scale that depends on how long the holder owned the quota. e.g. "very old" quotas (for some value of very old) get no loan. A very recent quota purchaser might get a loan for the full amount paid, or something close to it. Repayment period could be the "very old" length of time less the amount of time quota was actually owned.
Jen Gerson recommends that a tariff be applied to American imports while the Canadian industry adjusts to the lack of supply management and builds its international business.
Almost 70% of Canada's total dairy quota--the licenses to produce milk and sell at fixed prices--are held in Quebec (37%) and Ontario(32%). Almost 60% of House of Commons seats split 36% (Ontario) and 23% (Quebec).
Jen, you are dreaming if you think that 60% of MPs representing 70% of the dairy quota are going to permit ANYTHING to change. Canada be damned.
Add in that it is a good bet that a no-quota dairy industry would shift from Eastern Canada to Western Canada and you can be damn sure that the MPs from Upper and Lower Mordor won't be voting in favour of getting rid of supply management any time soon.
A government simply needs the willingness to scrap supply management and it’ll be gone. The message to the dairy farmers needs to be play nice and we’ll compensate you. Fight this and supply management still ends, but you get nothing.
What a great piece Jen, well researched and well written. Ive been following Slyvain The Food Professor for ages on this subject. Love the American rifle comparison. I can't see Liberals ever doing this but I would love to hear Pierre's up to date on this subject.
The Dairy Cartel are so powerful I wouldn't be surprised if they aren't holding the American Rifle to the politicians head.
I guess it's not enough to have our soybean and canola farms exist at the pleasure of Xi Jinping, let's get the dairy farms under his thumb too! An export-dependant economy is vulnerable to the whims of the great powers, just as the steel and auto industry is suffering from the whims of Donald Trump. God forbid Canada has control over its own economy.
Canada would do well to break up the dairy processing monopolies rather than attack farmers. Most of our dairy products are made by two processors. Supply management is the only thing protecting farmers from those dominant processors.
Additionally, Queen's University John Deutsch Institute for the Study of Economic Policy, in
JDI Policy Paper 25-0301, March 2025, suggests inter-Provincial trade barriers cost the consumer between $2,300 - $5,100 ANNUALLY!
Eby is so mercenary he won't do anything that benefits the entire community of BC if it's hard, costs a single vote, harms a single political friend... any version of "not obviously good for David Eby."
I'm disappointed the feds haven't held their feet to the fire on this, yet. We need more sunlight on this issue, given only lobbying keeps it alive. The public has no lobby power.
Good thinking. But I don't think there is any chance - zero - of either the Liberals or Conservatives even having an objective discussion about supply management, never mind getting rid of it.
The fact that you are almost certainly correct is, among many other consequences, one of the biggest drivers for the Alberta secession movement.
Canada's parasitic vested interests have grown so strong that the only thing an electable government can do is to throw away money, because actually fixing anything steps on toes. This doesn't solve any problems, but it allows them to pretend that they are solving problems.
At Alberta's expense.
Separation is now about milk..... right. ok, gotcha. There are many dairy farms in Alberta that are equally part of this mob. Careful the separatists don't want to upset the farmers and the rural contingent; that's the main place they are getting support. Wasn't it about oil exports? A land with no taxes, getting rid of the man, no rules, no debt, no immigrants, just money sloshing around? Isnt that the dream?
Supply Management may be a small issue by itself but it pancakes on top off all the issues on which Alberta takes one for the team.
Supply managed quotas are awarded per province, which disadvantages Alberta producers because their alloted quota is both below the province's percentage of national population and, more importantly, isn't merit bases. Without quotas, the best producers win, consumers win and the Canadian economy wins. Supply management is nothing more than an arcane seniority system.
There are many issues, and nobody believes that Canada will fix any of them.
It won't get fixed. We are not a serious country and we can't get anything done in Canada.
At all our expense, not just Alberta's. You dont get to own victimhood for our national shortcomings. That joy belongs to all Canadians.
Individually, yes. But the money is going somewhere. Some people in Ontario and Quebec gain from a lot of these schemes.
President Trump will get it done for us!
This would be an opportune time to kill supply management and blame it on the Orange Menace, no political capital required
Not a bad idea. Might even work...
Reading without my glasses I thought you said "Prescient Trump". That brought up a lot of disturbing images.
Trump is the Kwisatz Haderach
Jen, this is exactly what I've been saying ... exactly ... for all the same reasons ... ever since things "went south" with the U.S. government.
Thank you so much for channeling me to a wider audience.
There will never again be a better time.
MG is "smarter than your average bear" ... so y'all can betchyorass that this is gonna be screen-grabbed and shared with Uncle Jacques and Jim's daughter Andrea, and Helen (who admires Jen too.)
Nice idea but will never happen as no federal party will touch this with a hundred-foot pole. The truth is that the Quebec dairy industry has much greater political power than any western province. This is the tragedy of Canada as an imbalanced federation and is a major driver of separatist sentiment.
Bang on, unfortunately.
Great essay, Jen.
“If any single Liberal ever manages to come up with a single original idea while in office, I swear to God, I will eat a sock.”
For your sake, I hope it doesn’t come to this.
We studied the negative, inefficient effects of Supply Management in the 70s economics classes. Yes, the debate is that old.
Economists are united in the notion that there are better ways to support producers, if producers in fact need support.
One slight disagreement I have with your essay goes as follows: why would producers need to be compensated for quota, if they have been earning higher than normal returns from quota in the past? Aren’t they then getting paid twice?
The security of supply argument has always been rusty and hollow; if world events ever get to the point that Canada & America face food insecurity, we will have a lot bigger things to worry about than feeding ourselves.
One last thought: you make a great point, Jen, pointing out that Pierre Poilievre and the Conservatives have made a tactical error in agreeing to protect Supply Management with legal means.
Imagine the leverage he could have created by supporting a free market solution to Supply Management and healthcare.
Great essay, Jen; keep up the stellar work.
30 years after they ended supply management, the USA is now a net importer of food. They already cannot feed themselves. Their dairy farmers are in constant crisis despite government subsidies. Theirs is not a system that we should emulate.
Supply management hurts the producer, the retailer, and the consumer.
Other than that, it is perfect.
Here's a good article about the various failed attempts the USA has made to solve the problems that supply management solves.
https://www.wisconsinfarmersunion.com/post/if-supply-management-is-so-great-why-don-t-we-have-it-already
Here's another one about who manages the egg supply when the government doesn't manage it. Dominant processors literally conspire to rig prices and cut supply.
https://www.ft.com/content/11c97ccc-5795-42ac-9170-a7e2878a4524?syn-25a6b1a6=1
There is no perfect system, only trade-offs.
Thank you for the reading material.
I promise I will take a crack at it.
Your last line is very much correct; not only about Supply Management , but also regarding a plethora of other economic interactions that collide with the political reality.
Let’s be honest; Supply Management is in place for political, and not economic reasons.
If we were to start from the beginning, and devise a product distribution system from scratch, Supply Management would not be the one selected.
That no system is perfect does not make it acceptable to choose the absolutely worst possible alternative.
Yours is the last word, friend; I have said my piece.
You know what kind of savage beating any Conservative leader would get if they so much as whispered about messing with supply management? By the time the Liberal / news media propaganda campaign was through, they would be down another 5 points nationally and the public would be majority in favour of expanding supply management to all our domestic industries (boomers 95% in favour naturally). The alternative, of course, would be "dangerous American-style unregulated free market chaos".
The Line would then criticize said CPC leader for being so naive and bad at politics as to touch this Third Rail.
This. Please this. Wouldn't it be wonderful if the government (s) did things to benefit the population and the country as a whole, as opposed to appeasing niche lobby groups? I will dare to dream.....I expect the reality will be much different.
You're crazy. You're mad.
I doubt that has ever really been up for debate :)
Love it, but sadly its little more than a dream. This unnecessary shake-down of Canadians to enrich a few wealthy dairy farmers, and avoid any conflict with Quebec has been around for decades, and neither Liberals or Conservatives have the guts to do anything about it. The dairy cartel is a mob, that is much happier to dump millions of gallons of milk down the drain, than to sell it at fair market value. So much for eliminating inter-provincial trade barriers and cutting costs.
Supply Management is a federal government initiative, not provincial. It does not count as an interprovincial trade barrier simply because one or two provinces benefit more than the others. Everyone suffers under Supply Management, including those in the one or two provinces.
I cannot even imagine being able to buy butter that I can spread on my home made bread at room temperature.... NZ jettisoned their supply management and their industry remains competitive. I still cannot listen to Andrew Scheer who sold out all conservative principles when he went down on the dairy industry. I understand the UK FTA failed over dairy? Spending a month there last summer, I found the dairy to be slightly less expensive than here, even spending pounds. Eggs were similar. It is just that supply management has outlived it usefulness. 90% of Canadians live within 100 miles of the US border. Canadians grocery shopp in the USA as well as buy gasoline. This should not be a West Germany/ East Germany situation. Free the Butter!
Arguably the dairy monopoly was always ill-conceived from the very beginning. When a quota system is established by law that you need access to a finite tradable license in order to produce and sell a product - even though said license has nothing to do with quality control - the end result is always going to be destroyed potential business opportunities where the regime is applied (i.e. for potential new Canadian dairy business owners) and reduced accessibility and higher prices for consumers.
It has always been about votes. Protectionism sells well with the public. Remember how all the provinces were going top eliminate the interprovincial trade barriers? How's that coming along?
Quebec and Ontario votes matter more than the west, the north and the Maritimes.
Lobby groups for dairy which is 80% of all supply management.
I did enjoy Andrew Scheer wearing chocolate milk.
Ottawa is going to get away with whatever they want because that's how Canada works. But ... if you want to make voters happy in all of Canada, they will vote with their wallets and purses during times of economic downturn and/or turmoil. Get rid of it.
You can't lose by getting rid of it. Canada can't lose and JG deserves good butter for baking.
Yes, Scheer is a disgrace. His drinking milk on stage at the annual Parliamentary Press Gallery Dinner in 2017 was, I dare say, more *openly* contemptible of the entire country than anything even Junior arguably ever did. Seriously - he was *openly* mocking the entire country (dairy cartel obviously excepted) for having to pay hundreds of dollars more (thousands for families) per year for groceries as though it was some sorta' joke on us that he sold out to the cartels to win the Conservative leadership. And this guy wanted to be our Prime Minister?! How is he still in politics? At least all the other political hacks supporting the cartels have the sense to keep their yaps shut about it unless asked about it - which of course, this being Canada, almost never happens.
Costco occasionally has NZ butter, presumably when their quota allotment allows it. It costs more than the domestic version, but it's totally worth it for butter that tastes and softens the way it did before Canadian dairy farmers started adding palm oil supplements to their cattle feed for higher profit.
One of the most obnoxious aspects of dairy supply management is that it isn't merely protectionist in the sense of applying punitive tariffs against foreign imports: you're not allowed to buy foreign products *at any price* beyond whatever quota is stipulated in trade deals. And sometimes even then, Canadian producers have bought the quota and refused to use it to import products. It's the equivalent of CBC jamming all over-the-air TV and radio broadcast signals and only allowing Canadians to watch re-runs of "The Beachcombers" and other Canadian programs.
Good article Jen. Very bold of you to dare to hover right over the target during USMCA negotiations. If only Dominic LeBlanc were sent a copy of your work here. Canada's Dairy cartel should have been abolished decades ago. Australia shut theirs down 26 years ago, successfully. Allowing dairy associations and acquisition conglomerates like Saputo to twist the screws on political parties who pose a threat to them at the expense of consumers, should enrage Canadians. As a conservative supporter, I was stunned by Andrew Sheer's hypocrisy, as he smiled while drinking from a milk carton at the podium during a past election. Common sense Canadians do not support this absurd distortion of the free market. For those paying attention to president Trump's beefs with Canada, it's obvious that Supply Management has always been his principal political objective.
Honestly, I don’t understand this. I live in Québec and I know several dairy farmers- all of whom struggle to make their business profitable (maybe it’s my small backwards region). In the past fifty years, the farms have grown bigger and bigger to remain profitable. The family farm is now a dream of the past. And yet, it seems that killing supply management would just exacerbate this problem and require us to adopt American practices- mega farms, illegal labour, and frankly an inferior product. Every time Jen waxes poetic about wanting spreadable French butter and then calls for an end to supply management, I think- but you’ll actually just get American butter, not French. The real reason French butter is better is because their food culture is strong enough to demand higher quality. North Americans have a much different culture with regard to food and food quality.
French butter is superior and also much cheaper than ours. I paid $3EUR for what I pay $9CAD at home. I had understood Europe subsidizes their ag industry as well. Does anyone know how their dairy industry works? I’m curious.
While many of the concerns surrounding supply management apply to poultry and eggs as well, the greatest challenge lies with the dairy industry. Over decades, dairy farmers have invested billions of dollars in production quota, which has become a major component of the value of their farms and, in many cases, their retirement savings. Any proposal to eliminate supply management would therefore require compensation, but what constitutes "reasonable compensation" is far from clear. Farmers who paid full market value for quota are unlikely to accept only partial reimbursement, while taxpayers would understandably question the wisdom of spending tens of billions of dollars to buy out the system. This political and financial reality is one of the principal reasons successive federal governments have avoided meaningful reform.
The suggestion that Canadian dairy producers could simply replace the domestic market with exports also overlooks significant challenges. Canada has spent decades developing an industry designed to serve a protected domestic market rather than compete internationally. At the same time, removing supply management would expose Canadian producers to competition from large U.S. dairy operations that benefit from economies of scale, a much larger domestic market, and, in many cases, lower production costs. How would Canadian dairy farmers compete while simultaneously trying to establish export markets in Europe and Asia against long-established exporters such as New Zealand and European producers? That transition could take many years and require substantial investment, with no guarantee that the Canadian dairy industry would emerge stronger or even maintain its current size.
I would think it helpful, if, as Canadians, we stopped assuming that every Canadian industry needs to be in some way protected or subsidized.
I am not suggesting you think this way, Brad, and I am not putting words in your mouth that you haven’t spoken.
These farmers have been reaping higher-than-normal returns for many, many years; some for generations.
Why do they deserve to get bailed out again, on the way out? They get paid twice, and Canadians are soaked again in the process.
You've described some of the work that needs to be done, yes, but not barriers to the change.
We cannot continue to prop up old models year after year to avoid the consequences of inevitable change. These immature decisions amount to not fixing the roof until all the framing and drywall is destroyed, and the whole house has to be rebuilt.
Well considered, Brad. Nonetheless, it can be done and should be. If Canadian farmers are unable to out-compete offshore sources of supply, then there are far worse problems with this sector. Abolishing the cartel is fraught with risk, but the long-term benefits to Canadians at large, are unmistakable. Australia's journey out of dairy supply management took years, with "wind-down compensation" to buy-back quotas. Unfortunately, I don't know if the recovery of lost smaller farms in Canada is even possible by this point, but the idea could be phased-in gradually over time.
I noticed our dairy prices skyrocketed during and after the pandemic (remember 8$ or 9$/lb for butter?), and this cartel lobbies itself for "cost-of-living" increases in anticipation of inflation - a tactic that self-prophesizes and exacerbates inflation rates. Just like the Liberals' "escalator taxes". This is a "feed-forward loop" that drives inflation, not unlike that which unions use.
Hmmm ... how could we do this?
What if ... the government buy-back was structured as a loan rather than a buy back? i.e. the quotas get cancelled, so their value is now zero. But the government lends the former quota owner some amount (which for a recent quota buyer would probably go to paying off the bank loan they had to get to buy the quota). Repaying the government would then depend on making a success of the farm in the future. Repayment terms could be adjusted (I don't know how, I'm just blue skying here) depending on how long the quota had been in the owner's possession i.e. some other commenters have made the point - why should a quota owner who has got rich off of owning quota, get rich again from the government buying it back.
I'd be interested in some other reader's (or Jen's) ideas on how to make this (or some other idea) work. I don't doubt that whatever plan the government came up with would probably not be the best one.
Actually, the loan from the government could be on a sliding scale that depends on how long the holder owned the quota. e.g. "very old" quotas (for some value of very old) get no loan. A very recent quota purchaser might get a loan for the full amount paid, or something close to it. Repayment period could be the "very old" length of time less the amount of time quota was actually owned.
Jen Gerson recommends that a tariff be applied to American imports while the Canadian industry adjusts to the lack of supply management and builds its international business.
Almost 70% of Canada's total dairy quota--the licenses to produce milk and sell at fixed prices--are held in Quebec (37%) and Ontario(32%). Almost 60% of House of Commons seats split 36% (Ontario) and 23% (Quebec).
Jen, you are dreaming if you think that 60% of MPs representing 70% of the dairy quota are going to permit ANYTHING to change. Canada be damned.
Add in that it is a good bet that a no-quota dairy industry would shift from Eastern Canada to Western Canada and you can be damn sure that the MPs from Upper and Lower Mordor won't be voting in favour of getting rid of supply management any time soon.
A government simply needs the willingness to scrap supply management and it’ll be gone. The message to the dairy farmers needs to be play nice and we’ll compensate you. Fight this and supply management still ends, but you get nothing.
What a great piece Jen, well researched and well written. Ive been following Slyvain The Food Professor for ages on this subject. Love the American rifle comparison. I can't see Liberals ever doing this but I would love to hear Pierre's up to date on this subject.
The Dairy Cartel are so powerful I wouldn't be surprised if they aren't holding the American Rifle to the politicians head.
The money lenders are the lobby group.......they lend on the value of quota
I guess it's not enough to have our soybean and canola farms exist at the pleasure of Xi Jinping, let's get the dairy farms under his thumb too! An export-dependant economy is vulnerable to the whims of the great powers, just as the steel and auto industry is suffering from the whims of Donald Trump. God forbid Canada has control over its own economy.
Canada would do well to break up the dairy processing monopolies rather than attack farmers. Most of our dairy products are made by two processors. Supply management is the only thing protecting farmers from those dominant processors.
Love this idea, urgently.
Additionally, Queen's University John Deutsch Institute for the Study of Economic Policy, in
JDI Policy Paper 25-0301, March 2025, suggests inter-Provincial trade barriers cost the consumer between $2,300 - $5,100 ANNUALLY!
Eby is so mercenary he won't do anything that benefits the entire community of BC if it's hard, costs a single vote, harms a single political friend... any version of "not obviously good for David Eby."
I'm disappointed the feds haven't held their feet to the fire on this, yet. We need more sunlight on this issue, given only lobbying keeps it alive. The public has no lobby power.