Rob Breakenridge: Hey, guess what sector is going to hobble our trade talks again?
Just kidding. You don't have to guess. You know.
By: Rob Breakenridge
There was a collective sigh of relief across Canada earlier this month when U.S. President Donald Trump announced a 30-day pause on his plan to slap our country with massive, across-the-board tariffs.
Not that anyone is or should be under any illusions here about the threat that Trump poses. He did, after all, hit Canada (and the world) with steel and aluminum tariffs well before the 30 days were up. He insists the tariffs will hit on schedule on March 4. Still, any day without these new tariffs is a good one and there is always at least the chance that we can come to some sort of arrangement.
Unfortunately, Canada’s stubborn intransigence on a significant trade-related issue once again threatens to undermine our position and, with it, the possibility of a deal. I probably don’t have to tell you, but in case you couldn’t guess … yup. It’s the dairy sector.
At this point it should be noted that there are basically two agricultural industries in Canada. One of those industries relies heavily on exports, has thrived under the various free-trade deals Canada has been party to, and is filled with dread at the prospect of U.S. tariffs. Given the obvious significance of the U.S. as an export market for Canadian goods, one doesn’t have to look too far to find all kinds of nervous folks in these industries. For example, nearly $9 billion in agricultural products were exported to the U.S. in 2023 from just Alberta alone. Beef exports represent about a third of that total, and in fact the U.S. and Canada comprise the world’s largest two-way trade in beef and live cattle. There is much at stake here (pardon the terrible pun).
The other agricultural industry in this country, is, of course, the supply managed sector. That’s dairy, as noted above, but also eggs and poultry. The supply managed sectors of the agricultural industry are governed by a system of quotas, price controls, and sky-high tariffs. It’s essentially a legalized cartel system. This sector not only wants nothing to do with free trade, but actually sees free trade as a threat. To them, “tariff” is not a dirty word because they hide behind a shield of tariffs that are far higher than anything Trump has ever threatened or conceived.
Now, it should also be noted that these two sides of the agricultural sector are vastly different in size and importance. Yet, the vocal and irrational demands of the small, sheltered component seem to be the demands that our politicians remain most beholden to. Consider comments made recently by the contenders for the Liberal leadership: during this week’s debate, nearly all of them bent over backwards to declare fealty to supply management, even while expounding upon the existential threat posed by Trump’s tariffs. Even now, it’s clear that our politicians are afraid to pick this fight.
But they should. The frustrations of our trading partners aside, it’s not clear that preserving this whole set-up is even in the interests of Canadians. When you factor in the precarious position this obstinacy places us in, the case for change becomes even stronger. However, it’s hard to think of many issues where the commitment to the status quo remains so rock solid.
As we ponder what other trade options Canada might pursue if things really go sideways with the Americans, it’s worth harkening back to the trade drama of one year ago that we ran into with our British friends. As Canada and the U.K. were trying to hammer out the final details of a bilateral trade agreement between our two countries, our negotiating partners abruptly walked away. The cause of the schism? Canada’s refusal to budge on supply management.
While that could have been a wake-up call for Canada, we instead went in the other direction. In the aftermath of the U.K. situation, Parliament went ahead and passed Bill C-282, which would enshrine into law the principle that supply management should never be on the table in any trade talks (the bill ended up being bogged down in the Senate and its future is unclear).
It’s naïve in the extreme to think that any trading partner, including and especially the Americans, would simply shrug and say “Well, shoot, that’s too bad. Let’s move onto other issues.” We’re needlessly harming our position even before talks begin.
Still, it seems, nothing has changed. Every signal from the government and the Liberal leadership candidates suggests this remains their position. The Conservatives have been noticeably quiet on this front, as well.
This is a very legitimate trade gripe that our partners or would-be partners have, and it's a risky and damaging approach to start any talks by flatly rejecting legitimate concerns. That’s especially true now with Trump. The president and his team have specifically cited supply management several times as an example of Canada’s “unfairness.”
Just a few weeks ago, Trump told reporters, “Canada is very tough. They’re very, very tough to do business with, and we can’t let them take advantage of the U.S. They don’t take our agricultural product for the most part, our milk and dairy, etc. A little bit they do, but not much. We take theirs.”
Look, I get it. It’s entirely possible that even if Canada did make sweeping concessions on supply management, Trump could still push for tariffs. He could very well be using this gripe as a pretense for advancing an agenda that has little or nothing to do with access to the Canadian dairy market. We have to be realistic about what negotiating with Trump is going to mean.
But why hand him that pretense on a platter like this? If Trump really doesn’t want to make a deal, then so be it, but let’s not be so quick to sabotage the possibility of an agreement.
It is true that the U.S. doesn’t block Canadian dairy products in the same way that we block American dairy products, but it’s a moot point since the Canadian sector is completely uninterested in exports. The sectors of the agricultural industry that are very much interested in maintaining and growing exports just have to take a back seat, apparently.
We're ostensibly protecting some farmers by embracing a trade strategy that poses a substantial risk to a far higher number of farmers — not to mention the rest of the economy. We’re once again choosing to die on this hill for no good or obvious reason.
Make it make sense, please.
Rob Breakenridge is a Calgary-based broadcaster and writer. He can be found at breakenridge.ca and on X (Twitter) @RobBreakenridge and reached at rob.breakenridge@gmail.com
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Super glad to see Rob join the writers for The Line, and hope it continues. You won't agree with Rob all of the time (nor should you) but he's a strong writer who defends his opinions. Obviously The Line still has its own editorial policies, but I look forward to Rob's opinions on subjects perhaps a bit less constrained by the editorial policies of Corus or Postmedia.
As someone who both grew up in and has made my career in the agricultural-environmental sector, this topic is very meaningful to me. My own family had a mixed farm that over the decades raised cattle, chickens, geese, grains, oilseeds, flax, and various forage & hay products. My father was a fierce opponent of the Canadian Wheat Board who held our grain production hostage, and our farm prospered when its monopoly ended, allowing us to diversify our grains to supply malt barley for brewing & distilling, feed barley to support cattle feeders, durum wheat for pastas, and hard red spring wheat for baking flour. He also enthusiastically grew canola to support the burgeouning oilseed industry. I know some still mourn the loss of the Wheat Board (which only applied to Western farmers), but our family farm benefited from the freedom that resulted from its demise.
My wife's family made their living in the cattle feeding sector, and her father was part of the executive team of Canadian cattle leaders in the 70s through the 90s that developed our beef export sector to the US and the Asia-Pacific. This benefited both cattle producers and the feed grain farming sector that supported it. By no means is the Canadian cattle feeding sector without its own issues (as cow-calf producers will no doubt note), but the beef industry in Canada is much more diverse than it would have been if these early beef cattle leaders had pursued the cartel model like their dairy and poultry industry neighbours did.
I'm (barely) old enough to remember the era prior to the dairy cartels, when on our farm we received our milk in resusable glass bottles delivered personally from the neighbours' dairy down the road a few miles. Just a few miles from that was a locally owned cheese factory in a tiny community that supplied cheese in Alberta and beyond. Another nearby small commuity had a creamery that processed locally produced milk into all kinds of dairy products. I'm quite certain this was the case across Canada. Since supply management came into Canada in the early 1970s, all that is gone, likely forever. I know I will get pushback on this from those connected to the current dairy industry, but I'd argue today's Canadian dairy products are more expenseive, more homgenized (pun intended), and frankly, less palatable. Canadian butter today is a brickish monstrosity compared to butter served in most other countries in the world, as an example.
I think the hold the dairy cartel has over our politicians and media is down to one simple fact - money. It greases the palms of media and politicos across the spectrum. All industries do this, of course, but the dairy quotas are so lucrative after 50 years (worth millions) that the cartel can quite literally bankroll multiple political candidates of all parties, and make large advertising deals with both social and traditional media. I'm not sure if they've approached The Line's editors with a sponsorship of their offerings, given Matt & Jen (and now Rob's) consistent opinions against supply management. The Line clearly (to this point) appears not to be sponsored by the dairy cartel, or from government, which I applaud them for.
The Line is sponsored by Unsmoke Canada and TikTok Canada, among others. Some may have concerns about both these entities, but as a subscriber (and an independent businessperson myself) I understand that Matt and Jen have to make money at this new media game to survive, and to this point they are ethically okay with those two sponsors. We all have the choice to either subscribe and support them in those choices, or not.
Like most things, this issue is maninly about money and control. For me, I obviously have to support the supply managed dairy and poultry sectors in order to feed my family, but I would love a mindset shift in both industries to not be afraid of foreign competition, but to instead positively view the challenge of competing with their production product offerings to the world, rather than artificially keeping out that competition at the expense of Canadian consumers.
I don't even really like American cheese. I prefer UK, French, or Dutch cheese any day to anything I've tasted from North America, and I'm a third generation Canadian. That might change, if new Canadian and foreign dairy and poultry producers were able to enter the market, and compete with newer, more interesting product choices.
The Canadian dairy cartel and all of the subsidized industries elsewhere in the world studiously avoid discussing New Zealand, where the government eliminated dairy subsidies and protections decades ago to familiar predictions of doom. However, the industry has actually flourished. They're also providing a higher quality product than the Canadian producers: pick up a package of New Zealand cheddar at Costco and compare the taste and texture to a Canadian one from the same cooler. Try the butter, if you can get it before the limited quota we're allowed to import is swept off the shelves. It behaves the way butter's supposed to, softening at room temperature and without the weird sticky texture of Canadian butter since Canadian producers decided to goose production (and profit) by adding palm oil additives to their cattle feed.
The whole notion that Canadian farmers couldn't survive the loss of subsidies is probably true for those who refuse to adapt and insist on being sheltered from competition. For the industry as a whole, it's self-serving nonsense.