Trump’s outrage against 200 per cent tariffs on U.S. dairy product imports can be directly attributed to dairy supply management agencies and their lobby to preserve the status quo of a 60-year-old marketing program.
The success of the dairy lobby is astounding. It has brought to heel every major provincial and federal political party, and every government to unwaveringly support supply management. That influence was shown when, with all-party backing, the House of Commons passed Bill 282, which would prevent the discussion of supply management in any trade discussions.
No other sector of the Canadian economy commands such political power. Recently, in front of a presumably concurring row of premiers, Quebec Premier Francois Legault thundered that in trade discussions, “Supply management was not negotiable.”
How did this country get to a point where a single moderate sector of the economy gets such undisputed privilege above every other sector, many involving millions more jobs and billions more in economic activity? With all due respect to hard-working milk producers, this situation is absurd and can’t continue, considering what’s at stake in the Canada-U.S. trade war.
Here’s a thought — what if those 8,000 milk producers were in Alberta, and it controlled 50 per cent of the dairy industry in Canada through legislation? Do you think national dairy supply management would exist under that scenario?
Quebec would never allow such a regulated production advantage. This brings home the reality of dairy supply management in Canada; it’s become another equalization-type subsidy program for Quebec.
Supply management has cost Alberta billions in lost milk production opportunities over the past 50 years. It’s because supply management mandates that each province is entitled to its traditional share of the national milk market as established in the 1970s. It means that pizza cheese must always come mainly from Quebec, even though milk could be produced and processed cheaper in Alberta.
Consider what could have happened — and still can.
The State of Idaho is the third largest milk producer in the U.S.; it has 350 dairy farms that milk 650,000 cows. Alberta has 500 dairy farms but only 85,000 dairy cows.
Over the past 40 years, the U.S. dairy industry migrated west to Idaho because of its least-cost production advantages, which incidentally are identical to Alberta’s. Oh, yeah, there’s no dairy supply management in the U.S. to stop the industry from going to areas of least-cost production.
In response to that inconvenient truth, the Canadian dairy lobby commissioned excruciating academic studies that twisted economic realities to favour supply management as being best for the industry and consumer.
Dairy supply management served its purpose long ago. It has never been reformed because of relentless lobbying to protect small-time Quebec milk producers at the expense of potentially commercial-scale milk production in Alberta.
With the issue becoming a bigger U.S. trade irritant, we can only hope this 60-year-old relic finally faces economic reality.
Its preservation is certainly not the trade issue hill to die on just for 8,000 Quebec milk producers. Dairy supply management is also not a constitutional right, and Alberta can bring this equalization scheme to heel.
Perhaps Trump will become the dairy dragon slayer that is needed.
Will Verboven is a freelance agriculture opinion writer and policy adviser.
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