There is much in the news of how U.S. President Donald Trump is upset with Canada’s agricultural-management systems and his blaming of them for the delays in the trade talks.
Here is how it works in the Canadian Dairy Industry and why it is so important to protect its existence. If not, then we will be in the same predicament as American dairy farmers are today.
It is the very fact that the U.S. dairy industry does not have a supply-management system like Canada’s excellent one that their dairy farmers suffer at the mercy of their unregulated system and regularly go through boom-and-bust cycles. And why they are looking north of the border to sell their surplus products.
Canada is one of the few countries in the world, if not the only one, that had the foresight to regulate the production of milk. We used to have oversupply, as the U.S. has, and learned that regulating the industry was better than costly, long-term storage facilities paid for by taxpayers.
In 1973, farmers, after joint consultation with the government, agreed that their next three years’ of production would henceforth determine what they would be allowed to ship annually — their quota. That way, our dairy farmers would stand on their own two feet with assurance and dignity, and processors could count on a guaranteed supply. In other words, this was the best way to manage the supply.
Supply management was born. If a farmer produced more than his allowable quota, he or she would receive almost nothing for that milk, quite the incentive for complying and producing only what was needed for the Canadian market.
Here’s how the vicious circle works with our neighbour to the south: When the price of milk drops in the U.S. from over-supply, dairy farmers continue to produce more milk in order to survive and to avoid bankruptcy. However, many dairy farms do fail, thereby causing a shortage of milk.
In a shortage, the price rises. When the price rises again, they still produce extra milk in order to pay off the additional debt incurred when the price was low.
This unregulated supply and demand market causes great havoc to dairy farmers in the U.S., as referred to in Trump’s comments about Wisconsin’s dairy industry a few days ago.
What has not been mentioned in any news reports, and only adds to the oversupply of milk, is that almost 50 per cent of American dairy farmers’ incomes are derived from hidden subsidies, a fact not mentioned by Trump in his complaints about Canada.
Canadian dairy farmers do not receive subsidies. None.
Hence, Canada’s superior supply-management system, designed to fend off this very problem, ensures that Canadian farmers have stability and a reliable paycheque, the envy of most, if not all, American milk producers.
It’s not a bed of roses, though, as Canadian farmers face economic challenges due to the ever-rising costs of production. In order to succeed, farms have had to grow bigger and bigger, which is why we see so few family farms nowadays.
Americans are not the only ones with a lot of milk to get rid of. New Zealand and Australia are in this game, too, with small populations and low-cost over-production. Like America, neither has a supply-management system, so they want to palm off their cheap, lower-quality surpluses to Canada. With Canada’s current high standards, these countries’ milk would not qualify to be sold here.
Trump blames us as a means to solve America’s problem by making us the bad guys, responsible for their own short-sighted mismanagement.
In Canada, both farmers and consumers have hugely benefitted from the vision of a supply-management system, with stability for farmers and an assured supply of high-quality milk for families.
So, Canada, please don’t give into the bullies. And Trump, stop playing the blame game; keep your hands off our dairy farmers and take care of your own. Try supply management.
Anita Mark of Saanichton is a former dairy farmer.
