Canadian consumers would likely pay a little less for dairy products if Canada further opens its supply management system to the U.S. as part of ongoing trade negotiations, but local farmers say they would bear the brunt of such a move.
In Canada, dairy farmers operate under a supply management system which provides stability for producers through production control, regulating prices and import control through tariffs.
“The way the trade barriers work now is Canada allows in a certain quantity of supply-managed products at a low tariff rate,” said Ryan Cardwell, an associate professor in the department of Agribusiness and Agricultural Economics at the University of Manitoba. “Once that quota is filled then the tariff rate goes very, very high. Prohibitively high.”
“Typically what see in trade agreements like what we’ve recently done with Europe and the TPP is that a larger quantity of these products is allowed in at the low tariff rate. What I would expect to see is that there will be a small increase in the amount of American poultry and dairy products that can come into Canada at the low tariff rate."
Cardwell said this would mean more competition from lower cost producers in the U.S. which could have a small effect on prices at the store.
“There would be a small increase in the quantity of lower-priced products coming into Canada which means at the end of the day retail prices for these products may come down but a very little amount,” said Cardwell.
Lisa Dyck and her husband William operate a second generation dairy farm near Anola, Man. Dyck said changes to the current system could have a negative effect on farm families.
“Everybody thinks we have a golden calf. We don’t,” said Dyck. “We have to be efficient in our operations just like any other business and it could have an impact on our markets. Absolutely.”
“Supply management means farmers get a fair price for their milk at what they call farm-gate prices. We sell our raw milk to Dairy Farmers of Manitoba. They buy our milk and then they sell it to the processors.”
Dairy Farmers of Manitoba chair David Wiens supports the current system. He’s headed to Washington to lobby government officials
"We fully expect that the government will continue to support us in such a way that we will not be negatively impacted by this negotiation or this agreement," said Wiens.
Despite the possibility of dairy concessions Cardwell doesn’t see the basic structure of supply management changing in Canada anytime soon.
