Ontario Dairy Farmers Underscore Need to Protect Supply Management


Demonstration on Parliament Hill in support of supply management, October 10, 2024

In threatening Canada with all sorts of reprisals if it does not agree to become the 51st U.S. state, Donald Trump said amongst other things that the U.S. doesn't need Canada's dairy products. What he omitted to say is that Canada does not need the U.S. dumping milk and cheese in Canada and destroying Canada's supply management system. More importantly, as Peter and Philip Armstrong, who have a dairy farm with 400 cows not far from Toronto, told the CBC: Trump does not understand the dairy industry either in the United States or Canada.

CBC interviewer Ellen Mauro pointed out that during the Canada-U.S.-Mexico Agreement (CUSMA) negotiated during Trump's first term as president, Canada gave up tariff-free access to 3.6 per cent of its highly regulated dairy market to the U.S. "Dairy always seems to be the sacrificial lamb and I think we are at the point where enough is enough and we are not going to give up anymore," one of the farmers told the CBC.

The brothers pointed out that even though Canada's dairy market is relatively closed off to foreign competitors, the country still imports far more dairy products from the U.S. than Canadian producers sell there. The farmers explained that it is not Canadian dairy farmers who are dumping their products in the U.S. and depressing the prices. "We are not creating a problem," they said, adding that it sounds like Trump does not want to negotiate, he wants to dictate. "We are going to have to stand firm," they said.

One of the farmers explained that supply management revolves around the domestic market and that they produce to meet the needs of the Canadian market. They said it gives them stability, they get a fair price, the processors get a fair return, and the grocers can make a profit as well. Reflecting their lack of control over decision-making, he also said they did not want to give up part of their market but were relieved it was only four per cent. They are very concerned and said they don't know what could happen with the next round of trade talks.

When asked by the interviewer what would happen if the supply management system did not exist, the farmers pointed out that if the choice was to import more from the U.S. a lot of jobs would be lost. In the worst case scenario, the Canadian dairy industry would be decimated which would leave us relying on the U.S., relying on Donald Trump.

We need to look after our domestic industry, the farmers said, because if we don't we are in deep trouble. Addressing what the next round of trade talks could bring, one of the farmers said, sometimes the government caves and gives up one industry over another. Politicians could use one industry, like oil, over dairy but that is not good for the economy or the country, they said.

Supply Management

Supply management is a national agricultural (dairy, poultry, eggs) policy that uses import controls, production discipline and producer pricing to make sure, in the case of dairy, milk supply remains secure and fairly-priced for farmers. It means Canadians can access high-quality milk, and farmers have a secure stream of revenue.

A benefit is that the dairy industry can better prepare for economic fluctuations. The system provides stability to processors (avoiding surpluses or shortages) and enables farmers to think more long term for the economy, the environment and their animals.

Dairy farming is the largest agricultural sector in Ontario. Dairy Farmers of Ontario, the marketing board which represents more than 4,000 dairy farmers in Ontario, explains:

Producer pricing

The Canadian Dairy Commission sets the price of milk based on how much it actually costs to produce. They factor in capital and labour costs, and take into consideration the state of the Canadian economy.

Production discipline

Canadian dairy production must equal the demand from consumers. Production discipline helps avoid overproduction and provides security for farmers, allowing them to invest their profit back into their farm.

Import controls

Tariff rate quotas allow a preset quantity of milk to be imported at a preferential rate. Not having any import controls can lead to overproduction and instability within the system.



This article was published in
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Volume 55 Number 1 - January 2025

Article Link:
https://cpcml.ca/Tmlm2025/Articles/M550014.HTM


    

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