Avoiding dairy sector’s boom and bust

Re: Minister Freeland on NAFTA: “Maintaining Canada’s traditional protections under NAFTA… to preserve Canadian culture and Canada’s system of supply management.”

With North American Free Trade Agreement talks starting, most people do not know enough about Canada’s supply management system in the dairy industry and how it compares to the American dairy industry, to understand what is at stake if Canada bows to pressures from south of the border.

It is the very fact that the United States does not have a supply management system like Canada’s excellent one that their dairy farmers suffer at the mercy of their unregulated system and regularly go through boom and bust cycles.

Canada is one of the few, if not the only, country in the world that had the foresight to regulate the production of milk.

We used to have oversupply too and learned that regulating the industry was better than costly, long-term storage facilities paid for by Canadian taxpayers.

In 1973, farmers, after joint consultation with the government, agreed that their next three years of production would henceforth determine what they would be allowed to ship on a yearly basis — called their quota.

That way, our dairy farmers would stand on their own two feet with assurance and dignity, and processors could count on a guaranteed supply. In other words, this was the way to manage the supply.

Supply management was born.

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If a farmer produced more than his allowable quota, he would receive almost nothing for that milk; quite the incentive for complying and only producing what was needed for the Canadian market.

Here’s how the vicious circle works with our neighbour to the south: when the price of milk drops in the U.S. from oversupply, dairy farmers continue to produce more milk to survive and avoid bankruptcy.

However, during the down times, many dairy farms do fail, thereby causing a shortage of milk. In a shortage, the price rises. When the price rises, dairy farmers still produce extra milk to pay off the additional debt incurred when the price was low.

This unregulated supply and demand market causes havoc to dairy farmers in America, as referenced by President Donald Trump’s comments about Wisconsin’s dairy industry a few days ago.

What has not been mentioned in news reports, and adds to the milk oversupply, is that almost 50 percent of all American dairy farmers’ incomes are derived from hidden subsidies. Meanwhile, Canadian dairy farmers do not receive subsidies.

Canada’s superior supply management system, designed to fend off this problem, ensures that Canadian farmers have stability and a reliable pay cheque — the envy of most, if not all, American milk producers.

It’s not a bed of roses, though, as Canadian farmers all face economic challenges due to the rising costs of production. To succeed, farms have had to grow bigger and bigger, which is why we see so few family farms nowadays.

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Americans are not the only ones with a lot of milk to get rid of. New Zealand and Australia are in this game too, with small populations and low-cost overproduction. Like America, neither has a supply-management system, so they want to palm off their cheap, lower-quality surpluses to Canada.

With Canada’s high standards, these countries’ milk would not qualify to be sold here.

So Trump wants access to Canadian dairy markets as a means to solve America’s short-sighted mismanagement problem, which is their own doing. The only ones who benefit in the U.S. are the speculators in a free market.

In Canada, farmers and consumers have hugely benefitted from supply management, with stability for farmers and an assured supply of high quality milk for families.

So Canada, please don’t give in at the trade talks. Mr. Trump, keep your hands off our dairy farmers and take care of your own. Try supply management.

Anita Mark is a former dairy farmer.

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  • Sterling Knox

    This is a very insightful article. It covers the real issues concerning supply management something Mr. trump ,several journalists and many economists should educate themselves about. In the matter of access to our market by american producers – we do not want a milk product laced with hormones and antibiotics..

    • Harold

      Canada cannot contract against the will of the USA and the USA cannot contract with Canada against our will. It will not be the big bad meanie Mr Trump who lets us down, it will be our own spineless politicians who do, as always is.
      Is Anita Mark truly onto something? In the USA you have an Industry that regulates itself under health guidelines and in Canada you have a system that is regulated by a chosen few, much like a dictatorship or communism, and neither system is “superior” and each can never be faultless. The reason why the USA does not have a Supply Management Agency, is not because they have been stupid all along; it was their freedom of choice; something that Canadians no longer have and yet consider themselves “superior”.

      • ed

        Freedom to opt to contract cancer from foreign hormones in milk that have been proven to cause cancer. Hmmm… That may not be the smartest freedom to exercise but it could bring in a cheaper food cost to those that make that choice, and with free Medicare, those who do, have the added freedom to down load their medical costs created by their stupidity to the greater society in general. Kind of like having your cake and eating it too, all at your good nieghbors, friends and relatives expense. Not the worst idea I’ve heard I guess, as long as the cancer thing doesn’t get out of hand.

        • Harold

          Is our “clean milk” owing to the existence of supply management or is it due to a Canadian government Health Agency?
          Capitalism is when you take a personal risk and if you lose, you lose everything; that the bad that the all inclusive American farmers have chosen. The American government regulates the standards of the milk through their Health Agencies. Like anyone, the American farmers complain when a contract has not been honored because (no brain-er) it causes them harm. What does any failed grain contract do to you; nothing?
          The Canadian Government has the duty to Ban products that do not meet our health standards and the contract between countries is written to reflect that. Did the USA not effectively ban our beef? (Was Canada crying?) In Canada we have chosen a socialist standard which is the supply management dictates, eliminating self-determination (capitalism) which in turn places limits on all milk production, (wealth limitations) but also eliminates the small guy (million dollar quotas) and promotes corporate control and corporate wealth. That is the bad that we have chosen. Neither system is superior to the other; for each system – there has been a trade-off.
          Cancer, Medicare, cake, neighbors, friends, relatives; where were you going with that? Contrary to what most believe, the American people are just ordinary people just like the ordinary Canadian people are; the only differences between us are in the laws of each land. Now, can our bozo politicians make a “Canada first” contract or not? I think that Canadians know the answer; they just need to look in their wallets and purses.

  • WELL SAID ANITA MARK!!!

  • Raging Granny

    No mention here of our regulations to prevent hormones and antibiotics being kept out of our milk. We do not want imports containing these substances.

    • ed

      Good point. Hormones that are proven without question to cause cancer are rampant in US milk and dairy products and our system does not allow that for milk and milk products that are produced in Canada.