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.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Interior Health reported two more COVID-19 deaths at Sunnybank Retirement Center in Oliver Tuesday, Jan. 26, 2021. (File photo)
COVID-19 claims two more lives of Sunnybank Retirement Centre residents

Five residents of the Oliver care home have died since the outbreak was first declared

A sign indicating a COVID-19 testing site is displayed inside a parking garage in West Nyack, N.Y., Monday, Nov. 30, 2020. The site was only open to students and staff of Rockland County schools in an effort to test enough people to keep the schools open for in-person learning. (AP Photo/Seth Wenig)
4 more deaths, 54 new cases of COVID-19 in Interior Health

This brings the total to 66 deaths in the region

Okanagan Clinical Trials is looking at gut bacteria as a way of slowing down the development of Alzheimer’s. (Alzheimer Society of B.C. photo)
Okanagan study looking for volunteers of people diagnosed with Alzheimer’s

The study is looking at how gut bacteria may help slow the disease

Penticton City Hall. (File photo)
City of Penticton seeking grants to fund public washroom improvements

The grant would fund washrooms at Gyro Park and Riverside Park

Oliver Elementary School
Former Oliver PAC treasurer charged with fraud returns to court

Belinda Yorke will be in court to fix a date for trial in February

Dr. Penny Ballem, a former deputy health minister, discusses her role in leading B.C.’s COVID-19 vaccination program, at the B.C. legislature, Jan. 22, 2021. (B.C. government)
B.C. holds steady with 407 new COVID-19 cases Tuesday

14 deaths, no new outbreaks in the health care system

Vernon Fire Rescue Services responded to reports of a structure fire on Valleyview Place Jan. 26, 2021. (Brendan Shykora - Vernon Morning Star)
Fire snuffed in Vernon home

No visible smoke, flames from area of reported structure fire

A Cessna 170 airplane similar to the one pictured above is reported to be missing off the waters between Victoria and Washington State. Twitter photo/USCG
Canadian, American rescue crews searching for missing aircraft in waters near Victoria

The search is centered around the waters northeast of Port Angeles

Kevin Lee Barrett pleaded guilty to the aggravated assault of his mother Eleanor Holmes on Tuesday, Jan. 26. (File)
West Kelowna man who beat his mom could be sentenced up to 9 years

Kevin Barrett entered a surprise guilty plea to the lesser charge of aggravated assault on Tuesday morning

Vernon now has an approved 13 cannabis shops in town. (Jennifer Smith - Morning Star)
Vernon, the ‘Pot capital of B.C.’ greenlights two new stores downtown

Two more shops, within 240 metres, approved, despite neighbouring businesses opposition

11 more cases of COVID-19 have been linked to a cluster on Big White Mountain. Pictured above is TELUS park at Big White Ski Resort, Jan. 26. (Big White Ski Resort)
11 more cases of COVID-19 linked to Big White cluster

This brings the total case count to 225, according to health authorities in a Tuesday update

Jonathon Muzychka and Dean Reber are wanted on Canada-wide warrants. (Courtesy of Victoria Police Department)
Convicted killer, robber at large after failing to return to facility: Victoria police

Dean Reber, 60, and Jonathon Muzychka, 43, may be together

Two fibreglass bees were stolen from Vernon’s Planet Bee Honey Farm Nov. 22, 2020. (Facebook)
Stolen bee returned to Vernon honey farm

Two months after thieves buzzed off with two bee sculptures, public tips led police one of them

B.C. Premier John Horgan listens during a postelection news conference in Vancouver on Sunday, Oct. 25, 2020. THE CANADIAN PRESS/Darryl Dyck
30% of B.C. recovery benefit applications held up in manual review

The province says 150 staff have been reassigned to help with manually reviewing applications

Most Read