Guest column: Canada’s ‘untouchable’ dairy industry needs review

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Author: Sylvain Charlebois

Over the past few weeks, Canadian dairy farms have launched a well-coordinated charm offensive with the full support of the group Québécois to support the advantages of supply management.

According to its supporters, the system is the best tool to maintain Canadian food sovereignty. But, besides the usual slogan, strict data on actual production costs, profit margins, and the broader economic impact on consumers and processors is evident.

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Supply management in its current form depends on the logic of scarcity of state management, which is a delicate balance that is more similar to House of Cards. Although often portrayed as a stable force for dairy producers, it obscures an opaque set of mechanisms that are understood by the public and, more troublesome, many of our elected officials.

When Canada signs major trade agreements, such as Cusma, CETA, or CPTPP, the federal government often proposes tariff preferences to its trading partners. However, dairy producers never suffered net economic losses. Why? Because they are often generously compensated, even when the import quota allocated under these agreements, there are billions of dollars in funding.

In addition, production quotas (now considered high-value financial assets) are freely allocated to producers. These quotas are currently worth between $24,500 and $55,000 per unit.

On average, a dairy farm now has a quota value of more than $2 million. The more quotas a producer receives, the more wealth they can accumulate – by expanding production or reselling quotas in a loosely regulated secondary market. In some cases, these publicly granted rights have brought unexpected profits to their holders, while the marketing committee remains silent.

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Most importantly, the system provides an “incentive day” that allows producers to exceed their quotas without penalty. These additional production days generate further revenue in the already designed framework to ensure profitability. When will production exceed demand? The excess milk was dumped. In this model, waste is not accidental – it is a structural feature.

There is a fee for this. Canadian processors, artisan cheese makers and restaurateurs are forced to compete with some of the world’s highest prices for industrial milk. Innovation is stifled, competitiveness erodes, and the agility of our agriculture and food sector is compromised.

It is no surprise that countries that once adopted a similar model – Australia, New Zealand, South Korea, the United Kingdom and several EU member states – have since dismantled them in the name of economic efficiency and transparency.

However, in Canada, the status quo continues to benefit closed, protected and largely irresponsible systems. The controversy of “buttermilk” (it was revealed that cows are being fed palm oil by-products), and the annual lens of milk is just a visible symptom of a deeper problem. Current models are detrimental to efficiency, perpetuating opacity and eroding public trust.

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This is not an insult to the producer. They play a key role in national food security. But if they want to retain public support, they must have an honest conversation based on facts, transparency and a willingness to modernize. Lobbying behind the scenes, the time for political complacency and unconditional media recognition must give way to stricter and evidence-based dialogue.

Canadians should have full access to facts about supply management. And, regardless of political conditions, our decision makers must ultimately acknowledge economic, trade and social distortions created through models that become politically untouchable.

Sylvain Charlebois is a professor and senior director of Dalhousie University Agri Food Analytics Lab and co-host of the Professor of Food Podcast.

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