Supply Management

Myth: Canadians pay significantly more for milk and dairy products than residents of other countries.

Reality: Prices for Canadian dairy products are comparable to prices in other countries. Moreover, the part of Canadian disposable income spent on food – and dairy products – has decreased over the years. The USDA reports American cheddar cheese costs $12.54 per kilogram, and in Canada it is $13.70 (2011). In Canada, dairy farmers receive no government subsidies. The price of milk in stores varies from region to region and store to store. It cost between $4.00 to 6.00$ for 4 litres in Canada, while in the US, consumers pay about $1.00 a litre, in China $1.70, in Australia $1.00 to 1.55 $, in New Zealand $1.65.

Myth: Supply management is a barrier to efficiency and innovation.
Reality: The jobs in the dairy industry have been created by the investments, creativity, resiliency of farmers and processors. Canadian dairy farmers have made investments and are considered world leaders in many ways – genetics, productivity, and animal welfare standards. Out of the 215 Canada’s cows showed at the World Dairy Expo, 93 (43%) were in the top 5! These are very impressive results and show that dairy farmers of Canada are well respected by their peers from all over the world.

Myth: Canada blocks imports of dairy products.
Reality: Canada does not close the doors to imports. The EU, with heavy subsidies for dairy products, exports 10 times more dairy products to Canada than what it imports from us, even though it has more than 500 million consumers!

Myth: Supply management stops Canada from signing free trade agreements.
Reality: Supply management hasn’t stood in the way of Canada’s ability to successfully negotiate trade agreements. Since 1986, Canada has concluded NAFTA and bilateral agreements with Jordan, Colombia, Peru, Costa Rica, Chile, Israel and EFTA (Switzerland, Norway, Iceland and Liechtenstein). Canada is close to concluding a comprehensive trade deal with the European Union, and has been accepted in the Trans-Pacific Partnership negotiations; all the while the government says it will defend supply management.

Myth: If Canada eliminated supply management, the price of dairy products would drop.
Reality: In New Zealand, the most competitive milk producing country in the world, retail prices for dairy products are comparable to ours. Dairy farmers from California, United Kingdom, Australia and many other countries are in a precarious financial situation, as they get less for their milk and face increased input prices.

The United Kingdom deregulated its dairy industry in 1995; Australia deregulated its drinking milk market in 2000. Farm price went down, but retail prices went up. When Canada experienced a case of BSE in 2003, beef farmers suffered a huge drop in price, but retail prices dropped a bit for a few months only before going up higher than before (even if beef farmers were still receiving lower prices).

In the last few years, the global food crisis has meant rapidly increasing food prices around the world. Throughout it all, both farm and retail prices for dairy remained more stable in Canada.

Myth: The price of quota is a barrier to those wanting to enter dairy or poultry farming.
Reality: Getting started in any type of farming nowadays is costly. Agricultural land values have risen astronomically in recent years, due in large part to increased grain prices. The number of farms in this country continued to shrink, yet farms are getting larger, because farmers who already own land are better able to leverage credit than outsiders. They also need more land to produce more to afford the increased costs of inputs. Alberta Milk has a New Entrant Program that helps relieve some of these start up costs associated with starting a farm. As well, our quota prices are set by the market.

Myth: Eliminating supply management in Canada would stop foreign agricultural subsidies.
Reality: Rather than stopping government subsidies to farmers in the U.S. or Europe, scrapping supply management would allow subsidized milk to enter Canada, damage our dairy industry, make it difficult to find Canadian milk and dairy products and put pressure on our governments to subsidize our farmers. In the Canada’s Supply Managed Dairy Policy: How Do We Compare? study, second of a series of policy papers on the dairy supply management policy in Canada by the George Morris Centre for the Conference Board of Canada, it is recognized that dairy farmers’ of Canada do not rely on government’s fiscal support, unlike other countries, and that volatility is having severe effects on the dairy sector globally.

Myth: Only Canada manages imports of dairy products.
Reality: Many countries use tariff rate quotas to limit the importation of various products, including milk and dairy products.

Myth: Canadian dairy farmers are subsidized by taxpayers.
Reality: Canadian dairy farmers receive no government subsidies. European dairy farmers receive 55 billion Euros in subsidies per year and Americans paid $4 billion in dairy subsidies in 2009 – or about 31 cents per litre – in addition to retail prices. This money did not even all reach US farmers!