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 based. 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.
It's not precise accuracy to say that supply management "hurts the producer". It hurts *would-be* producers but benefits *existing* producers who are all by laws quota-owners.
You won't find a single dairy farmer who supports ending supply management - but that's because the beneficiaries of its removal would be the farmers who *don't currently exist*.
I share that because miscommunication of the problem is exploited by supporters of supply management, who support their case with partial information.
If there were no business opportunities to produce Canadian dairy outside of the quota system, then we would not need to arrest Canadians who produce dairy without quota now, would we?
Of course there are business opportunities. But at scale, the same old problems emerge; price volatility destroys farms. That's why every rich nation has agricultural policy.
They cannot expand without acquiring more quota, but they don't need to expand because the quota system gives them more money for producing less. And that's the actual problem: it's a system that by design deliberately reduces industry productivity, and it makes farmers invested in and committed to that reduced produvitivity.
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.
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.
That's a nonsensical take for the simple reason that many of the same economists who have gotten media attention for supporting carbon pricing are also economists who are on the record as opposing supply management.
If the CPC had a Leader who was actually inquisitive about the kind of expert feedback that is behind the persistent criticisms of supply management, they would have a very different Leader than the one they have now. What they have now is someone with a shallow depth in conservative economic policy thinking, yet steeped in petty policy-empty partisan thinking.
My mistake, Poilievre getting up and quoting experts in excruciating detail about the economics of supply management would probably go just great for him.
Surely this persuasion would meet with measured and rational approval across the board and there wouldn't be a responding campaign asking "why does he hate Canada and these adorable moo cows?"
You're not taking seriously just how interested people generally and the media are in instances of politicians behaving in surprising ways. Poilievre "getting up and quoting experts in excruciating detail about economics" is the very last thing that anyone would expect him to do - so naturally doing so would get a lot of attention, both good and bad!
Obviously the dairy farmers would protest, and the media would give coverage to their protests - as they should, because media should in principle be covering major policy conflicts. If Poilievre mocked dairy farmers the same way that he mocked critics of the "Fair Elections" Act, then the media coverage would turn sharply negative and blow up in his face.
If Poilievre explained in simple language what is wrong with supply management and how it harms most Canadians - and showed no indignation in response to the inevitable resulting blowback - then the story would be different. But that would only happen in an alternate universe where Poilievre is the opposite kind of personality than what he actually is: someone who almost always only picks policy fights that have easy consensus within his political base, rather than policy fights where the loudest and most emotional voices are wholly on the opposing side. I cannot think of anything courageous that Poilievre has ever done (besides the small examples of him denouncing Trump's tone towards Greenland and correcting a supporter who called for Carney to be jailed).
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.
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.
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.
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.
The dairy monopoly system makes it illegal to sell dairy without quota precisely because *there are Canadians who would be able to produce and sell cheaper dairy if only the law were not in their way*. Therefore, there is no question that the Canadian dairy industry would grow if the monopoly were removed.
(Of course, removing the tariffs while keeping the quotas in place would be devastating to the industry, as that would cause imports to flood the market - but no Canadian is proposing that.)
Even steep compensations of tens of billions would be worth the price of eliminating a system that would otherwise gouge billions of dollars from consumers forever.
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.
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.
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.
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.
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.
First I'll declare my bias - I own a bunch of dairy cows and milk quota in Ontario
Few factual inaccuracies to clear up
Dairy quota in Alberta (also BC, SK and MB) is worth significantly more than in ON, QC and Maritime provinces. Eastern half of the country it has been capped at $24000/kg of fat for over a dozen years, the price floats in the west based on demand and ranges from $40000 to over $55000
You may be conflating the beef industry (more prevalent in Alberta) - which has no quotas or market controls but also vastly different cost structures with the dairy industry which is present across Canada but does have more farmers in ON and QC where more population resides.
There is zero evidence that dismantling our marketing system will automatically reduce consumer prices. Many items are priced differently in the USA than Canada, and wholesale farmgate prices often have little connection to retail grocery prices. The USA with larger more efficient processors, better transportation logistics and a much larger population will always have a price and competition advantage in grocery when compared to Canada.
There is ample evidence that the USA dairy marketing system is not working particularly well. Many dairy farms have significant challenges with wild price swings and unpredictability that necessitates government intervention and financial bailouts, both on an ongoing basis and as crisis response. In Canada dairy farms receive zero government money. In addition to surviving on government handouts, many rural communities in the States are struggling without a viable dairy farm sector keeping the economy healthy and functional. Take a drive through farm country rural New York, Wisconsin or Minnesota and compare to rural dairy areas in Ontario. Quebec or Alberta and see for yourself. The differences are stark and largely attributable to the success of our marketing system that supports farmers and the wider rural community.
There is scant evidence of opportunity to export dairy into foreign markets. Dairy is often a significant trade irritant as many countries without supply controls (unlike Canada) dump their excess product on the world market depressing prices and distorting trade for countries that rely on exports for a portion of their farm incomes. There are no waiting opportunities for a new player to enter world dairy trade and have any measure of success.
Supply management of dairy, eggs and poultry in Canada does have some challenges and needs to continue to adapt and change to best serve the consumers the rural communities farms are part of and the farmers themselves. But it is at its core sound economic policy that works well for all stakeholders. There are academic arguments against the system but in practical reality the alternatives are all much worse for everyone.
Perhaps you know enough about this to offer a rebuttal to Ms. Gerson's article. I can only speak for myself; I don't understand the intricacies of supply management to evaluate your response through a comment.
Call me naïve if you want; i just admitted as much. When I see a dairy farmer being interviewed as he pours out large volumes of over quota milk, I can't dismiss the hypocrisy of a regulatory organization that can't find some way to make "overquota" destruction of milk, butter and eggs available to folks who need this food source, like those inhabiting the longer and longer lineups at food banks.
I certainly can understand your concern and dismay viewing a farmer dumping milk and claiming the 'system' has forced him to destroy food. I am guessing you are referring to a social media viral video from a few years back, although there are a few others out there.
Hopefully I can offer insight that may explain our system better and hopefully will help clarify some of the concern.
All dairy farms in Canada have production quota that limits the volume we can sell. It varies by province, but there is flexibility built into the system to allow for unforeseen circumstances or seasonal variation. Some farmers, through willful disregard or simply inability to properly plan their business operations, choose to overproduce. They will, understandably, not be paid for this milk. The quotas are carefully managed to match the market needs of Canadian consumers and this is essential for the system to operate properly. Extra product will end up not selling, would spoil then be dumped by the retailers. It is much better to control this excess before the milk is processed, packaged, transported and given space on a grocery shelf. Unfortunately some farmers don't understand the simple reality of how this works and they have been given a voice for kneejerk reactions on social media.
More to the topic you and others have made about how the dumped milk is food being wasted that could be given to food banks, etc. - this is raw milk and would need transportation, pasteurization, packaging and transport which costs more than the value of the milk itself. Should we expect these steps to happen without compensation for the businesses involved? What if the farmer overproducing realizes his folly and starts to match his production to the market needs? How would the logistics of a shifting supply be managed? I am happy to report that there already is a very well established system for individual dairy farms to donate milk to food banks and other charity uses, and in Ontario it currently provides over 1.5 million L per year to 126 food banks in the province.
Sorry if you detected some anger in frustration in my reply - but the stuff circulating about this topic the past few years has been angering and frustrating. An individual is not managing his farm properly and he is blaming the "system" and we (the rest of the farmers) get a bunch of bad press when, in fact, we are donating millions of L of milk to foodbanks and properly managing our farms so food is not wasted.
Yes, your explanations reflect a different and experience-based viewpoint on the benefits of supply management and it's why I suggested a rebuttal argument. Ms. Gerson is a good writer but she isn't a farmer and hasn't had, I would guess, more experience past the farm gate than most of her readers, myself included. Somewhere there must be a compromise that addresses the concerns of parties on both sides of the supply chain issue, and processors absolutely should be included in reaching it. This compromise will be more likely if there are some clearly stated facts and a desired goal.
I'm happy to learn that your industry takes a meaningful role in helping food banks. Thanks for your answer.
The dairy monopoly, aka "supply management, is not a type of farming practice - it is a legal regime that has been structured to support specific economic policies. Dairy farmers are not actual experts on supply management, for the simple reason that economic stakeholders are not experts on economic policy. When a legal regime is alleged to benefit a set of economic stakeholders at zero-sum expense of most other citizens, then those stakeholders' arguments should be judged with suspicion - in deference to the opinions of economists who have no sizable monetary stake in the policy outcomes.
(Jen is not an economist, but she seems to be implicitly relying on economists' opinions.)
Fair point. I'm certainly not qualified as an economist and of course even if I was there would be bias as I am a participant in the system.
I will concede the ideological discussion around supply management makes me uncomfortable - my personal beliefs lean right of center and I get personally conflicted defending this system. All the academic discussion around it is overshadowed by the reality on the ground however.
The experience of the EU dismantling dairy quotas, the challenges for any country trying to make exports a large part of their dairy industry, and many specific examples currently playing out in the USA show me that despite what textbooks and some economists tell us, we should stay the course.
Happening in west central Minnesota right now - only a several hour drive from my farm in Northwestern Ontario. A large dairy farm conglomerate has recently been fast tracked for environmental approval to expand one site to 18855 cows from 7855 cows. This same ownership group already milks over 133000 cows on 15 locations in Minnesota, producing over one third of the state's milk. Lots of details and nuance to discuss around the impacts and risks of that much consolidation of course - but do we want that here? Is that a path we want our rural communities to go on? Do we want to encourage the model to produce businesses of that scale?
We have a system right now that works for the consumers (no taxpayer funded farm bailouts), the farmers and promotes healthy rural communities. It could use some tweaking and adjustment but we need to choose carefully what path we want to take and the impacts it will have on our food supply and how it will may change what our rural landscape looks like in the future.
The dairy monopoly system makes it illegal to sell dairy without quota precisely because *there are Canadians who would be able to produce and sell cheaper dairy if only the law were not in their way*. Therefore, there is no question that the Canadian dairy industry would grow if the monopoly were removed.
(Of course, removing the tariffs while keeping the quotas in place would be devastating to the industry, as that would cause imports to flood the market - but no Canadian is proposing that.)
I would support spending tens of billions of tax dollars compensating quota owners like you, in order to eliminate a system that would otherwise gouge billions of dollars from consumers forever.
Thanks so much for your comments. It is really beneficial to hear from someone involved in the industry and your comments do reflect what I think has been happening in the industry as a general trend. I was on Agriville.com to try and get some first-hand accounts so yours again is very much appreciated. I see that in China, they are now heavily industrializing their nascent dairy industry with the intention of exporting globally in the next decade. They don't run farms but milking factories. No doubt they intend on doing to dairy what they have done with electric cars and solar panels - that is dominate the global market.
Personally, I am on the fence these days with supply management as I would like to see lower prices for consumers but higher quality of product from processors. But I see a dark cloud over the horizon which could upend agriculture in Canada.
>>There is zero evidence that dismantling our marketing system will automatically reduce consumer prices. Many items are priced differently in the USA than Canada, and wholesale farmgate prices often have little connection to retail grocery prices.<<
I am a novice when it comes to dairy cartels, so forgive my lack of knowledge. Is there evidence that not dismantling the marketing system will reduce or eliminate price increases on the retail side.?
Nope. Our system is designed to calculate a fair price to compensate the farmer for his efforts and expenses, in exchange for the farmer managing his production and matching the milk produced to what the market needs. Once it leaves the farm gate, the processors, transporters and retailers will price the various products at what they deem appropriate and/or what the market will bear. If there are cost increases to the farmers - like fuel or fertilizer price increases - it will increase the price farmers receive. This may or may not be reflected in the retail price. Sometimes it doesn't and sometimes the downstream actors in the chain use farm price changes to increase their take exponentially. It is quite possible that if farmers gave the milk away for free the retail price would not change at all, of course the opposite is also possible, although unlikely.
Hi Bernie, I have a few questions maybe you’re in a position to answer.
1. Do you know how the Europeans manage their dairy industry. Namely France. Seems they have the best dairy (no offense) I’m curious as to how they achieve this and their low pricing.
2. Where do food quality standards fit into our Dairy Industry? Maybe a better question is do we have the same food quality standards for our Dairy and the Americans, or as the French? Ie. If Americans are producing a sub-standard (I know it’s safe, but maybe not great quality) product, can we not increase our food quality standards (such that this is even a thing) to the net benefit of Canadian producers and detriment to America mega farm producers? Again I’m speculating a bit, but I believe this is how Europe protects their Ag industry, the byproduct is a superior product which I am 100% in support of.
Hello Chris, EU countries deregulated their marketing regimes in 2015. This has resulted in much more price volatility for both farmers and consumers, which does mean retail prices in Europe are often lower than they are in Canada. There has been tradeoff however - rural communities have had challenges from farmers struggling, which has resulted in the closure of many farms and the rapid consolidation in size of other farms. Also, and perhaps more importantly, EU consumers pay twice for dairy - once at the grocer and a second time through taxpayer funded bailouts that seem to be a regular feature of keeping struggling dairy farms afloat. In Canada dairy farmers receive zero government funding - all of our income comes from the market and we can efficiently manage and plan our businesses thanks to the stability that supply management provides.
Food quality standards are generally similar (all food is safe) between developed countries / regions but there certainly is a significant difference in the food culture between North America and Europe. Believe me, I am as frustrated as you are - my wife has family in Italy and when I see how food is sourced, handled, prepared and celebrated when visiting I wish things were different here. In Italy (suspect similar in France) food has real meaning and meals are highlights of culture, here in Canada / USA food is just fuel and fast, easy, convenient seem to be the focus. There are obviously exceptions to this but generally people here just don't seem to care that much about food and I am with you in longing for change.
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 based. 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.
It's not precise accuracy to say that supply management "hurts the producer". It hurts *would-be* producers but benefits *existing* producers who are all by laws quota-owners.
You won't find a single dairy farmer who supports ending supply management - but that's because the beneficiaries of its removal would be the farmers who *don't currently exist*.
I share that because miscommunication of the problem is exploited by supporters of supply management, who support their case with partial information.
Without supply management there will be fewer producers.
If there were no business opportunities to produce Canadian dairy outside of the quota system, then we would not need to arrest Canadians who produce dairy without quota now, would we?
Of course there are business opportunities. But at scale, the same old problems emerge; price volatility destroys farms. That's why every rich nation has agricultural policy.
There may be fewer producers, or more may enter the industry if the restrictions were removed.
But consolidation is common in many industries; why should farming be any different?
It hurts the producer in that entry is limited into the industry, and that the producer cannot expand without acquiring more quota.
They cannot expand without acquiring more quota, but they don't need to expand because the quota system gives them more money for producing less. And that's the actual problem: it's a system that by design deliberately reduces industry productivity, and it makes farmers invested in and committed to that reduced produvitivity.
Exactly.
So producers are worse off than they otherwise could be.
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.
Quotas are awarded per province. The Quebec quote is far in excess of its population share. The Alberta quota is far less
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.
That's a nonsensical take for the simple reason that many of the same economists who have gotten media attention for supporting carbon pricing are also economists who are on the record as opposing supply management.
If the CPC had a Leader who was actually inquisitive about the kind of expert feedback that is behind the persistent criticisms of supply management, they would have a very different Leader than the one they have now. What they have now is someone with a shallow depth in conservative economic policy thinking, yet steeped in petty policy-empty partisan thinking.
My mistake, Poilievre getting up and quoting experts in excruciating detail about the economics of supply management would probably go just great for him.
Surely this persuasion would meet with measured and rational approval across the board and there wouldn't be a responding campaign asking "why does he hate Canada and these adorable moo cows?"
You're not taking seriously just how interested people generally and the media are in instances of politicians behaving in surprising ways. Poilievre "getting up and quoting experts in excruciating detail about economics" is the very last thing that anyone would expect him to do - so naturally doing so would get a lot of attention, both good and bad!
Obviously the dairy farmers would protest, and the media would give coverage to their protests - as they should, because media should in principle be covering major policy conflicts. If Poilievre mocked dairy farmers the same way that he mocked critics of the "Fair Elections" Act, then the media coverage would turn sharply negative and blow up in his face.
If Poilievre explained in simple language what is wrong with supply management and how it harms most Canadians - and showed no indignation in response to the inevitable resulting blowback - then the story would be different. But that would only happen in an alternate universe where Poilievre is the opposite kind of personality than what he actually is: someone who almost always only picks policy fights that have easy consensus within his political base, rather than policy fights where the loudest and most emotional voices are wholly on the opposing side. I cannot think of anything courageous that Poilievre has ever done (besides the small examples of him denouncing Trump's tone towards Greenland and correcting a supporter who called for Carney to be jailed).
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 :)
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.
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.
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.
The dairy monopoly system makes it illegal to sell dairy without quota precisely because *there are Canadians who would be able to produce and sell cheaper dairy if only the law were not in their way*. Therefore, there is no question that the Canadian dairy industry would grow if the monopoly were removed.
(Of course, removing the tariffs while keeping the quotas in place would be devastating to the industry, as that would cause imports to flood the market - but no Canadian is proposing that.)
Even steep compensations of tens of billions would be worth the price of eliminating a system that would otherwise gouge billions of dollars from consumers forever.
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.
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.
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.
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.
What barriers exist to new processing entrants
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
First I'll declare my bias - I own a bunch of dairy cows and milk quota in Ontario
Few factual inaccuracies to clear up
Dairy quota in Alberta (also BC, SK and MB) is worth significantly more than in ON, QC and Maritime provinces. Eastern half of the country it has been capped at $24000/kg of fat for over a dozen years, the price floats in the west based on demand and ranges from $40000 to over $55000
You may be conflating the beef industry (more prevalent in Alberta) - which has no quotas or market controls but also vastly different cost structures with the dairy industry which is present across Canada but does have more farmers in ON and QC where more population resides.
There is zero evidence that dismantling our marketing system will automatically reduce consumer prices. Many items are priced differently in the USA than Canada, and wholesale farmgate prices often have little connection to retail grocery prices. The USA with larger more efficient processors, better transportation logistics and a much larger population will always have a price and competition advantage in grocery when compared to Canada.
There is ample evidence that the USA dairy marketing system is not working particularly well. Many dairy farms have significant challenges with wild price swings and unpredictability that necessitates government intervention and financial bailouts, both on an ongoing basis and as crisis response. In Canada dairy farms receive zero government money. In addition to surviving on government handouts, many rural communities in the States are struggling without a viable dairy farm sector keeping the economy healthy and functional. Take a drive through farm country rural New York, Wisconsin or Minnesota and compare to rural dairy areas in Ontario. Quebec or Alberta and see for yourself. The differences are stark and largely attributable to the success of our marketing system that supports farmers and the wider rural community.
There is scant evidence of opportunity to export dairy into foreign markets. Dairy is often a significant trade irritant as many countries without supply controls (unlike Canada) dump their excess product on the world market depressing prices and distorting trade for countries that rely on exports for a portion of their farm incomes. There are no waiting opportunities for a new player to enter world dairy trade and have any measure of success.
Supply management of dairy, eggs and poultry in Canada does have some challenges and needs to continue to adapt and change to best serve the consumers the rural communities farms are part of and the farmers themselves. But it is at its core sound economic policy that works well for all stakeholders. There are academic arguments against the system but in practical reality the alternatives are all much worse for everyone.
Perhaps you know enough about this to offer a rebuttal to Ms. Gerson's article. I can only speak for myself; I don't understand the intricacies of supply management to evaluate your response through a comment.
Call me naïve if you want; i just admitted as much. When I see a dairy farmer being interviewed as he pours out large volumes of over quota milk, I can't dismiss the hypocrisy of a regulatory organization that can't find some way to make "overquota" destruction of milk, butter and eggs available to folks who need this food source, like those inhabiting the longer and longer lineups at food banks.
I certainly can understand your concern and dismay viewing a farmer dumping milk and claiming the 'system' has forced him to destroy food. I am guessing you are referring to a social media viral video from a few years back, although there are a few others out there.
Hopefully I can offer insight that may explain our system better and hopefully will help clarify some of the concern.
All dairy farms in Canada have production quota that limits the volume we can sell. It varies by province, but there is flexibility built into the system to allow for unforeseen circumstances or seasonal variation. Some farmers, through willful disregard or simply inability to properly plan their business operations, choose to overproduce. They will, understandably, not be paid for this milk. The quotas are carefully managed to match the market needs of Canadian consumers and this is essential for the system to operate properly. Extra product will end up not selling, would spoil then be dumped by the retailers. It is much better to control this excess before the milk is processed, packaged, transported and given space on a grocery shelf. Unfortunately some farmers don't understand the simple reality of how this works and they have been given a voice for kneejerk reactions on social media.
More to the topic you and others have made about how the dumped milk is food being wasted that could be given to food banks, etc. - this is raw milk and would need transportation, pasteurization, packaging and transport which costs more than the value of the milk itself. Should we expect these steps to happen without compensation for the businesses involved? What if the farmer overproducing realizes his folly and starts to match his production to the market needs? How would the logistics of a shifting supply be managed? I am happy to report that there already is a very well established system for individual dairy farms to donate milk to food banks and other charity uses, and in Ontario it currently provides over 1.5 million L per year to 126 food banks in the province.
Sorry if you detected some anger in frustration in my reply - but the stuff circulating about this topic the past few years has been angering and frustrating. An individual is not managing his farm properly and he is blaming the "system" and we (the rest of the farmers) get a bunch of bad press when, in fact, we are donating millions of L of milk to foodbanks and properly managing our farms so food is not wasted.
Yes, your explanations reflect a different and experience-based viewpoint on the benefits of supply management and it's why I suggested a rebuttal argument. Ms. Gerson is a good writer but she isn't a farmer and hasn't had, I would guess, more experience past the farm gate than most of her readers, myself included. Somewhere there must be a compromise that addresses the concerns of parties on both sides of the supply chain issue, and processors absolutely should be included in reaching it. This compromise will be more likely if there are some clearly stated facts and a desired goal.
I'm happy to learn that your industry takes a meaningful role in helping food banks. Thanks for your answer.
The dairy monopoly, aka "supply management, is not a type of farming practice - it is a legal regime that has been structured to support specific economic policies. Dairy farmers are not actual experts on supply management, for the simple reason that economic stakeholders are not experts on economic policy. When a legal regime is alleged to benefit a set of economic stakeholders at zero-sum expense of most other citizens, then those stakeholders' arguments should be judged with suspicion - in deference to the opinions of economists who have no sizable monetary stake in the policy outcomes.
(Jen is not an economist, but she seems to be implicitly relying on economists' opinions.)
Fair point. I'm certainly not qualified as an economist and of course even if I was there would be bias as I am a participant in the system.
I will concede the ideological discussion around supply management makes me uncomfortable - my personal beliefs lean right of center and I get personally conflicted defending this system. All the academic discussion around it is overshadowed by the reality on the ground however.
The experience of the EU dismantling dairy quotas, the challenges for any country trying to make exports a large part of their dairy industry, and many specific examples currently playing out in the USA show me that despite what textbooks and some economists tell us, we should stay the course.
Happening in west central Minnesota right now - only a several hour drive from my farm in Northwestern Ontario. A large dairy farm conglomerate has recently been fast tracked for environmental approval to expand one site to 18855 cows from 7855 cows. This same ownership group already milks over 133000 cows on 15 locations in Minnesota, producing over one third of the state's milk. Lots of details and nuance to discuss around the impacts and risks of that much consolidation of course - but do we want that here? Is that a path we want our rural communities to go on? Do we want to encourage the model to produce businesses of that scale?
We have a system right now that works for the consumers (no taxpayer funded farm bailouts), the farmers and promotes healthy rural communities. It could use some tweaking and adjustment but we need to choose carefully what path we want to take and the impacts it will have on our food supply and how it will may change what our rural landscape looks like in the future.
The dairy monopoly system makes it illegal to sell dairy without quota precisely because *there are Canadians who would be able to produce and sell cheaper dairy if only the law were not in their way*. Therefore, there is no question that the Canadian dairy industry would grow if the monopoly were removed.
(Of course, removing the tariffs while keeping the quotas in place would be devastating to the industry, as that would cause imports to flood the market - but no Canadian is proposing that.)
I would support spending tens of billions of tax dollars compensating quota owners like you, in order to eliminate a system that would otherwise gouge billions of dollars from consumers forever.
Hi Bernie,
Thanks so much for your comments. It is really beneficial to hear from someone involved in the industry and your comments do reflect what I think has been happening in the industry as a general trend. I was on Agriville.com to try and get some first-hand accounts so yours again is very much appreciated. I see that in China, they are now heavily industrializing their nascent dairy industry with the intention of exporting globally in the next decade. They don't run farms but milking factories. No doubt they intend on doing to dairy what they have done with electric cars and solar panels - that is dominate the global market.
Personally, I am on the fence these days with supply management as I would like to see lower prices for consumers but higher quality of product from processors. But I see a dark cloud over the horizon which could upend agriculture in Canada.
>>There is zero evidence that dismantling our marketing system will automatically reduce consumer prices. Many items are priced differently in the USA than Canada, and wholesale farmgate prices often have little connection to retail grocery prices.<<
I am a novice when it comes to dairy cartels, so forgive my lack of knowledge. Is there evidence that not dismantling the marketing system will reduce or eliminate price increases on the retail side.?
Nope. Our system is designed to calculate a fair price to compensate the farmer for his efforts and expenses, in exchange for the farmer managing his production and matching the milk produced to what the market needs. Once it leaves the farm gate, the processors, transporters and retailers will price the various products at what they deem appropriate and/or what the market will bear. If there are cost increases to the farmers - like fuel or fertilizer price increases - it will increase the price farmers receive. This may or may not be reflected in the retail price. Sometimes it doesn't and sometimes the downstream actors in the chain use farm price changes to increase their take exponentially. It is quite possible that if farmers gave the milk away for free the retail price would not change at all, of course the opposite is also possible, although unlikely.
Hi Bernie, I have a few questions maybe you’re in a position to answer.
1. Do you know how the Europeans manage their dairy industry. Namely France. Seems they have the best dairy (no offense) I’m curious as to how they achieve this and their low pricing.
2. Where do food quality standards fit into our Dairy Industry? Maybe a better question is do we have the same food quality standards for our Dairy and the Americans, or as the French? Ie. If Americans are producing a sub-standard (I know it’s safe, but maybe not great quality) product, can we not increase our food quality standards (such that this is even a thing) to the net benefit of Canadian producers and detriment to America mega farm producers? Again I’m speculating a bit, but I believe this is how Europe protects their Ag industry, the byproduct is a superior product which I am 100% in support of.
Hello Chris, EU countries deregulated their marketing regimes in 2015. This has resulted in much more price volatility for both farmers and consumers, which does mean retail prices in Europe are often lower than they are in Canada. There has been tradeoff however - rural communities have had challenges from farmers struggling, which has resulted in the closure of many farms and the rapid consolidation in size of other farms. Also, and perhaps more importantly, EU consumers pay twice for dairy - once at the grocer and a second time through taxpayer funded bailouts that seem to be a regular feature of keeping struggling dairy farms afloat. In Canada dairy farmers receive zero government funding - all of our income comes from the market and we can efficiently manage and plan our businesses thanks to the stability that supply management provides.
Food quality standards are generally similar (all food is safe) between developed countries / regions but there certainly is a significant difference in the food culture between North America and Europe. Believe me, I am as frustrated as you are - my wife has family in Italy and when I see how food is sourced, handled, prepared and celebrated when visiting I wish things were different here. In Italy (suspect similar in France) food has real meaning and meals are highlights of culture, here in Canada / USA food is just fuel and fast, easy, convenient seem to be the focus. There are obviously exceptions to this but generally people here just don't seem to care that much about food and I am with you in longing for change.