A different view
Trump attacks put fresh focus on Canada’s supply-managed dairy system
U.S. President Donald Trump upped the ante on Canada’s supply-managed dairy system over the weekend as he repeatedly warned that the country would face repercussions unless it is dismantled.
Here’s what you need to know about supply management, including why Trump wants to get rid of it - and why federal governments of all stripes have said no:
The Basics
Supply management in its current form has been around since the 1970s and applies to three main segments of the farming industry: dairy, eggs and poultry.
The system basically limits production by allowing only a certain amount of each to be produced.
The idea is to keep the market from getting saturated, which aims to keep prices stable and ensures steady incomes for farmers.
The system also limits imports by slapping tariffs on imports beyond a certain level. For dairy products, those tariffs can be steep: nearly 300 per cent for butter and cream, and 240 per cent for cheese, whole milk and yogurt.
There are approximately 12,000 dairy producers in Canada, with about 80 per cent of production in Ontario and Quebec. As for cross-border trade, the U.S. sold $631 million in dairy to Canada in 2016 while Canada sold $112 million to the U.S.
The Pros and Cons
Trump is far from the first to attack supply management in Canada, particularly when it comes to dairy; New Zealand and Australia threatened to keep Canada out of the Transpacific Partnership (TPP) if it didn’t change its ways.
Critics of the system, which includes many people inside Canada, say it poses a barrier to the completion of ambitious free-trade deals with other countries, with the government having to give up on other areas to protect the industry during negotiations.
It also drives up the cost of dairy, eggs and chicken for consumers, which opponents of the system allege has had an unfairly disproportionate impact on low-income families.
The Canada West Foundation, a Calgary-based think tank that advocates for an end to supply management, estimated last year that the average Canadian household pays $600 more for milk and chicken than in the U.S.