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Comparative Analysis on Canada’s Dairy Supply Management System | Part 2

Second Paper in Series Released on Milk Supply Management Policy in Canada

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The Conference Board of Canada released on Friday, the second paper in a series of policy papers on Canada’s dairy supply management system. The report entitled “Canada’s Supply-Managed Dairy Policy: How Do We Compare?” provides an in-depth look into the experiences of other key dairy producing countries and provides a comparative analysis on their dairy policies. The countries compared were the U.S., Australia, New Zealand, and the Netherlands all of whom had dairy policies at one time to respond to surplus milk and low dairy prices.

“Our findings illustrate that Canadian milk supply management developed to deal with the producer inequities, surpluses, and market power issues related to the additional costs of supplying the fluid milk market on a year ‘round basis; similar policies were developed to engage these same issues in other countries”, says Al Mussell, Senior Research Associate at the George Morris Centre and lead author of the report. 

The report highlights that Canada is the only country to have maintained its cherished dairy supply management policies, compared to similar countries that have experienced significant reforms; as a result Canada has experiences stagnating production. The report is critical of Canada’s supply management policy, noting that it hinders the country’s ability to negotiate in free trade agreements and has created a market whereby Canadian consumers go across the border to the U.S. to purchase less expensive dairy products such as cheese.

The following are some findings from the report:

• Canada’s milk production is lower today than it was in the early 1960s
• All of the countries that were examined against one another i.e. (U.S., Australia, New Zealand, and the Netherlands) experienced a spike in growth once reducing or eliminating their own interventionist policies
• Canada’s milk prices have remained fairly stable – but have steadily increased since the 1980s
• The countries compared have, for the most part, stopped increasing – but they have also become more volatile

The report serves as a tool for policy makers, government officials, and industry stakeholders to develop a common understanding the historical background on where the different countries are coming from during the ongoing trade negotiations. The report hints that Canada could look to these models if it ever considers reforming its own dairy supply management system.

The next installment in the policy paper series will identify the sources of contention with supply management for milk and provide some recommendations on how the supply management system could be enhanced. The policy papers have been authored in partnership with the George Morris Centre – Canada’s only leading agriculture think-thank. The full report can be found on the Conference Board of Canada’s website.


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