Canada’s Dairy Dilemma: The Burden of Supply Management
Source: dairynews.today
Canada's stubborn adherence to its outdated supply management system for dairy is hindering its trade negotiations and economic efficiency.
Canada’s much-criticized supply management system appears to prioritize protectionism over price stability, specifically aiming to safeguard Quebec’s dairy sector. While originally intended to stabilize domestic prices in the mid-20th century, this system has outlived its usefulness, especially as global trade has evolved.
Quebec-based dairy farms primarily reap the benefits at the expense of a larger Canadian agricultural economy. The inefficiencies of this system have led to an estimated $11 billion worth of raw milk being wasted between 2012 and 2024. Quebec’s dairy operations account for a significant 37% of domestic production, while larger and more efficient operations in Alberta, Saskatchewan, and Manitoba are capped at 16%.
The American example illustrates a pathway for Canada to enhance efficiency and potentially reduce consumer dairy prices by ending supply management. However, Canada’s adherence continues to pose challenges in international negotiations. For instance, significant concessions were required in the Trans-Pacific Partnership and the Canada-United States-Mexico Agreement, offset by compensatory billions for domestic producers.
The recent reintroduction of Bill C-202 by the Bloc Québécois, backed unanimously, is designed to shield supply management from further concessions. This legislation indicates Canada’s current reluctance to revise the CUSMA amid US pressures for greater trade access, underscoring that such policies might permanently impair Canada’s ability to negotiate future trade deals.
Quebec-based dairy farms primarily reap the benefits at the expense of a larger Canadian agricultural economy. The inefficiencies of this system have led to an estimated $11 billion worth of raw milk being wasted between 2012 and 2024. Quebec’s dairy operations account for a significant 37% of domestic production, while larger and more efficient operations in Alberta, Saskatchewan, and Manitoba are capped at 16%.
The American example illustrates a pathway for Canada to enhance efficiency and potentially reduce consumer dairy prices by ending supply management. However, Canada’s adherence continues to pose challenges in international negotiations. For instance, significant concessions were required in the Trans-Pacific Partnership and the Canada-United States-Mexico Agreement, offset by compensatory billions for domestic producers.
The recent reintroduction of Bill C-202 by the Bloc Québécois, backed unanimously, is designed to shield supply management from further concessions. This legislation indicates Canada’s current reluctance to revise the CUSMA amid US pressures for greater trade access, underscoring that such policies might permanently impair Canada’s ability to negotiate future trade deals.
