An international dairy industry news service, edairynews, has dusted off a four-year-old report calling on Canada to reform is supply management system.
It comes amidst renewed trade tensions between Canada and the United States and increasing export opportunities.
The report was authored by Sylvain Charlebois and Janet Music of Dalhousie University and Simon Somogyi, Arrell Chair in Business of Food, Arrell Food Institute and Gordon’s Lang School of Business and Economics, University of Guelph.
It argues that supply management needs to adjust to a changing world, including the Canadian market.
It notes that more than 74 per cent of Canada’s dairy farms are in Quebec and Ontario which are home to 61 per cent of the national population and “this concentration exacerbates supply chain inefficiencies and increases price disparities. Consumers in Atlantic Canada, the North and Indigenous communities face disproportionately high dairy costs, raising serious food security concerns.
“Addressing these imbalances requires policies that promote regional diversification in dairy production,” the authors said.
They said modernization must include gradual reform of quotas and tariffs. The existing quota system restricts farmers’ ability to respond dynamically to market signals. While quota allocation is managed provincially, harmonizing the system at the federal level would create a more cohesive market. A flexible quota model tied to demand would enhance competitiveness and efficiency.
That recommendation speaks to the current priority Canadian politicians have put on eliminating inter-provincial trade barriers.
Tariff policies also warrant reassessment. While tariffs protect domestic producers, they contribute to artificially inflated consumer prices, the report said.
A phased reduction in tariffs, complemented by direct incentives for farmers investing in productivity-enhancing innovations and sustainability initiatives, could strike a balance between maintaining food sovereignty and fostering competition.
Despite calls for reform, entrenched interests within the sector resist change. Industrial milk prices in Canada are now the highest in the Western world, making the sector increasingly uncompetitive globally.
Abolishing supply management outright is neither desirable nor practical, they said. Sudden removal of protections would expose Canadian dairy farmers to aggressive foreign competition, risking rural economic stability and domestic food security. A balanced approach that preserves the core benefits of supply management while integrating market-driven reforms is essential.
Canada’s supply management system, once a pillar of stability, has become an impediment to progress. As global trade dynamics shift and consumer expectations evolve, policymakers have an opportunity to modernize the system.
The report’s recommendations emphasize regional diversification, value-chain-based pricing models aligned with market demand, and a stronger focus on research and development.
Performance-based government compensation, rather than blanket payouts that preserve inefficiencies, would improve long-term sustainability.
