Trump attacks target Canada’s supply-managed dairy system

Trump attacks target Canada’s supply-managed dairy system

Trump warns that Canada would face repercussions unless supply-managed dairy system is dismantled

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.

RELATED: ‘Special place in hell’: Trump’s top advisers accuse Trudeau of betrayal

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 Trans-Pacific 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.

Proponents, however, say the system protects Canadian farmers from the type of price fluctuations that have ravaged other segments of the agricultural industry and eliminates the need for government bailouts.

They also argue the system is better at protecting food safety and produces higher quality products, and that the U.S. and other countries have their own protections in the forms of direct and indirect subsidies for farmers.

A study by trade consultants at Grey, Clark, Shih and Associates and commissioned by the Dairy Farmers of Canada earlier this year estimated the U.S. government provided $22 billion in subsidies to the dairy sector in 2015.

Sylvanus Kwaku Afesorgbor, an expert on agricultural economics at the University of Guelph, said whether Canada continues with supply management should ultimately depend on the balance of pros and cons.

“What are the costs and benefits to Canada,” Afesorgbor said. “That is how we should analyze whether Canada should continue implementing some of these supply-management policies.”

RELATED: Trump’s calling Trudeau ‘dishonest and weak’ sparks calls for calm

The Politics

But it’s difficult to separate supply management from politics.

Trump first took aim at Canada’s supply-managed dairy industry last year during a visit to Wisconsin, where local farmers reportedly complained about not being able to sell their products in Canada.

The issue has since taken on a life of its own, with the president repeatedly railing against supply management as an example of what he is says is Canada’s unfair trade practices towards the U.S.

Exactly why Trump has latched onto the issue so strongly remains debatable: some suggest he is using it as an excuse to hit Canada with tariffs on steel while others say his attacks resonate with voters in key parts of the U.S.

The Harper Conservatives did talk about eliminating supply-managed dairy in 2015 as part of a TPP deal, which whetted the appetite of U.S. industry, said Christopher Sands, director of the Center for Canadian Studies at Johns Hopkins University.

But the Liberals have followed in the footsteps of most other federal governments and refused to budge, with Trudeau telling reporters Thursday: “We will always defend our supply management system because it works.”

What the prime minister didn’t mention was that any attempt to dismantle the dairy system would create a political uproar, particularly in the Liberal heartland of Ontario and Quebec, where most producers are located.

“Obviously Stephen Harper could afford to give up dairy supply management because he had very few seats in Quebec and a budgetary surplus and it was in the context of a multilateral agreement with the TPP,” Sands said.

“For Justin Trudeau … there are fewer things he can get in exchange, there isn’t money to splash around to get farmers who have a quota to give it up and this is an important issue in Quebec, which provides many seats for the Trudeau government.”

The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Craft Culture Events hosts its first of four summer markets at Prospera Place in Kelowna (Craft Culture Events/Contributed).
Kelowna’s Prospera Place summer market a success

Craft Culture Events hosts its first of four summer markets and vendors were ‘excited’ to be back

A storm watch has been issued for the Okanagan, Kootenays and Columbia regions of B.C. (Calvin Dickson photo)
Another severe thunderstorm watch issued for the Okanagan

Conditions are favourable for thunderstorms that may produce strong wind gusts, hail and heavy rain

David Larsen, left, and co-host Tony Peyton. (K96.3/Twitter)
Popular Kelowna radio host dies after battle with cancer

David Larsen was half of the longtime Kelowna morning-show duo David and Tony

(Dave Ogilvie/Contributed)
UPDATE: West Kelowna fire crews rescue injured mountain biker

The injury took place at the top of Smith Creek Road

Kelowna flags were flown at half-mast after the discovery of a residential school burial site in Kamloops. (File photo)
Central Okanagan school board chair reflects on recent tragedies

Moyra Baxter offers condolenses to residential school victims, slain Muslim family

Canadian Prime Minister Justin Trudeau participates in a plenary session at the G7 Summit in Carbis Bay, England on Friday June 11, 2021. THE CANADIAN PRESS/Adrian Wyld
Canada donating 13M surplus COVID-19 vaccine doses to poor countries

Trudeau says the government will pay for 87 million shots to be distributed to poor countries

Jane Linden
KCR: Volunteering keeps you active

Kelowna Community Resources shares stories of its volunteers in a weekly column

Public health restrictions on non-essential travel and commercial operation have hit local businesses in every corner of B.C. (B.C. government)
Province-wide travel back on in B.C.’s COVID-19 restart plan

Gathering changes include up to 50 people for outdoor events

A young child has been taken to hospital after being struck by a vehicle on 30th Avenue in Vernon Friday, June 11, 2021. (Jennifer Smith - Morning Star)
Investigation ongoing after child struck by vehicle downtown Vernon

A young child was taken to hospital Friday with undetermined injuries

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Calgary Stampeders’ Jerome Messam leaps over a tackle during second half CFL western semifinal football action in Calgary, Sunday, Nov. 15, 2015.THE CANADIAN PRESS/Jeff McIntosh
CFL football will be played this summer in Canada

Governors vote unanimously in favour to start the ‘21 campaign on Aug. 5

Citizenship Minister Marco Mendicino holds a press conference in Ottawa on Thursday, Nov. 12, 2020. The federal government is announcing that Indigenous people can now apply to reclaim their names on passports and other government documents. THE CANADIAN PRESS/Sean Kilpatrick
Indigenous people can now reclaim traditional names on their passports and other ID

Announcement applies to all individuals of First Nations, Inuit and Métis background

Harvesting hay in the Fraser Valley. (Tom Fletcher/Black Press)
COVID-19: B.C. waives farm income requirement for a second year

Property owners don’t need minimum income for 2022 taxes

Cruise ship passengers arrive at Juneau, Alaska in 2018. Cruise lines have begun booking passengers for trips from Seattle to Alaska as early as this July, bypassing B.C. ports that are not allowed to have visitors until March 2022 under a Canadian COVID-19 restrictions. (Michael Penn/Juneau Empire)
B.C. doesn’t depend on U.S. law to attract cruise ships, Horgan says

Provinces to get update next week on Canada’s border closure

Most Read