Canada’s supply managed sectors must now avoid stagnation

Ed White’s series on lessons learned from the financial crisis of 10 years ago will resume next week.

Now is the time to face up to the bad math that threatens to throttle the future of the Canadian dairy industry.

In the aftermath of the United States-Mexico-Canada Agreement, there is a lot of talk of how the deal successfully saved most of the Canadian economy from U.S. trade actions, and there is a lot of talk of the dairy industry being thrown under the bus for everybody else’s sake.

Most are celebrating. Some are grieving.

And there is talk of compensation for supply management farmers for the market losses they are facing.

But what needs to be talked about is how to restructure the supply managed industries in order to avoid the stagnation trap that has now been set. That doesn’t necessarily mean abandoning supply management but reforming it so that it won’t get trapped in something worse than a zero sum game.

Here’s the bad math that cripples the future, for dairy in particular: take today’s industry, subtract a chunk of today’s market, add low domestic growth, shut off export growth and keep the system operating mostly as is.

That’s pretty much where we are. Dairy farming faces a dreadful situation with a shrinking market, a growing inability to clear excess protein products and little reason to believe that enough new domestic growth will appear to lift the ship.

Class 7 milk was supposed to fix that problem, but it’s mostly gone now.

So we’re left with what the Americans are probably quite happy with: a shrunken, weakened supply management sector, particularly in dairy, and no ability to challenge the American industry.

That circumscribed size might be what we have to live with, but we don’t need to accept that the industry needs to be a stagnant, declining sector.

Perhaps it can become a dynamic, growing sector — if not in gross milk production, then in some other way.

And hopefully it can be allowed to get off the defensive, where it has been forced to operate for years, and embrace some path of dynamic growth.

How can it do that? It’s hard to see, especially with the losses of the USMCA, the Comprehensive Economic Trade Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership still so keenly being felt by producers. However, at some point, everybody inside and outside agriculture will need to focus on Canada’s stagnating and relatively declining supply management sectors, and dairy farming in particular, and find a fruitful way forward because what we’re left with now is not an acceptable vision of the future for an agricultural powerhouse such as Canada.

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