Supply Management IV: will new NAFTA be our nemesis? 

Some of you have been asking for our thoughts on the latest news coming out of the NAFTA negotiations. And honestly? I’ve been too disheartened to even write about it. We’re scared. Scared about our futures, scared about our children’s futures. As relatively new additions to the dairy industry – we’ve been dairying for less than 15 years, only 6.5 years on our own – we carry a massive debt load. That’s all fine and dandy under the stability of our supply management system, and it should be paid off before our children would potentially take over the reins of the family farm. However, should that stability vanish, as the latest US demands for the abolishment of our entire system would entail, our farm would very possibly cease to exist. 

And why? Our system ensures a stable, fair price for farmers. It also has meant that consumers – and we’re consumers too! – have paid a competitive, fair price for dairy products in the grocery stores. It has allowed Canadian farmers to develop a top notch program that ensures that our dairy farms are held to the highest milk quality, food safety, and animal welfare standards in the world. Our system has helped hundreds of young and not-so-young dairymen and women get a leg up into the industry through various provincial new entrant programs. There are so many benefits to our system! Is it perfect? No! But it’s always changing and adapting to new situations. And quite frankly, it’s the best system out there. Around the world, dairy farmers are struggling to make ends meet. In New Zealand, Australia, the UK, Europe, and the USA dairy farmers are exiting the industry in droves, no longer able to keep their farms afloat after sustained low global milk prices. 

So why attack our industry? It doesn’t make sense to me. The world is awash in a glut of milk. Farmers around the world have been producing more and more milk, all just trying to make ends meet. But now there’s a huge over-supply. Canada’s market look mighty attractive; a good place to dump that excess. But that won’t solve the problem! With only 30 million consumers, 10x LESS than the US, our market would quickly be saturated with this foreign milk, and the problem would still be there. Except now, our small Canadian family farms would be forced out of business, unable to compete with the glut of milk pouring over the border at abnormally low prices. Our complete rural fabric would be torn apart. It’s not just the farmers who would suffer; it would be the feed companies, the veterinarians, the dairy supply companies. In short, it would mean large scale devastation of many rural communities. Instead, these governments eyeing up and demanding the end of our system should fix their problems at home. Manage your supply. There’s no need to over-produce; it’s just plain wasteful and it’s detrimental to the global dairy industry. When supply and demand are balanced, we all win: farmers, consumers, governments, and national economies. 

We’ll be watching the next NAFTA negotiation rounds with bated breath. We are most definitely thankful that so far our government has been vocal about their determination to protect supply management, and we hope and pray that these words will be reflected in their actions at the negotiating table. To our supporters: thank you. Thank you for your moral support. And thank you for continuing to support your local dairy farms with your purchasing habits. We wouldn’t be farming and living this dairy life, caring for our cows with dedication without you behind us! 

For now, we continue on. Our kids still follow us around the barns, helping out when they so wish, learning to do by doing. Will this knowledge and these skills ever be put to use one day? Will they ever follow their dreams to be just like mom and dad? I don’t know. Time will tell. 

Supply Management: Good for farmers, good for consumers, good for Canada. Hands off, Bernier!

Okay friends, we’re coming down to the wire here in the Conservative leadership race. With all of the uproar in the last week with President Trump taking aim at our Canadian dairy industry, we can’t forget that we also have domestic challenges facing our industry. Just this morning, Canadian businessman and Conservative leadership candidate Kevin O’ Leary, one of the polling front-runners in the leadership race, pulled his name from the race and threw his support behind Maxime Bernier. As you know from our previous posts, Maxime Bernier has pledged to end supply management if he is elected leader of the Conservative Party of Canada, and Mr. O’ Leary had admitted that he would use supply management as a bargaining tool in future trade negotiations. Both he and Mr. O’ Leary are leading in the polls, so as you can understand, this bolstering of Bernier’s campaign is rather unsettling.

Supply management keeps Canadian dairy, poultry and egg farms vibrant, viable, and an integral part of our national fabric, from both a social and economic perspective. Without supply management and our border tarriffs, our family farms would have a very hard time competing with the glut of excess milk currently flooding the world dairy market. We know that our system that ensures a fair return for farmers is the envy of dairy farmers around the world, and we personally have received many messages from farmers south of the Canadian – US border who long for a system like ours that would allow their farms to remain viable in this turbulent time for the dairy market.

So the benefits for farmers are obvious, but what about for our consumers? Mr. Bernier alleges that if supply management were scrapped, consumers would pay much less for their dairy; he’s even claimed that Canadian consumers pay twice the amount they should pay for their dairy products. Unfortunately, Mr. Bernier does not have his facts straight. Check out the photos I’ve posted below.

 

 

 

 

 

 

Both research from an accredited research firm and very current anecdotal evidence from a fellow dairy farmer doing her own research prove that Canadians pay a very competitive price for their eggs and dairy. In fact, if we compare apples to apples, Canadian pay LESS for dairy compared to the same dairy products in the US (all Canadian milk is produced without the use of artificial growth hormones). Now, Mr. Bernier, either you’ve been misinformed, or you’re deliberately trying to garner support from unsuspecting Canadians by quoting “alternative facts”.  Judging by the number of times dairy farmers and industry representatives have presented the correct information to you, I’m leaning towards the latter assumption. That doesn’t say much for your integrity, and, in my opinion, throws your entire campaign and character into question. Definitely not the type of individual I want to see at the helm of the Conservative party or – if the Conservatives are re-elected in 2019 – leading our country.

Friends, let’s get the word out! We’re not only facing threats to our family farms from south of the border, we have a very real challenge right here at home too. If you want to enjoy the stable, competitive dairy prices that are the current reality, produced right here in Canada according to the highest safety, quality and animal welfare standards in the world — all the while benefitting family farms and rural economies across our country, speak up! Canadians need to understand that a vote for Bernier is a vote against food sovereignty, against family farms, and against the very fabric of our rural communities. Your help in sharing this message is appreciated.

Devastating News for our Friends to the South — and our response.

I’m a proud Canadian. I’m also a dairy farmer. I farm with my family, and our kids dream of farming themselves one day. I have dairy farming friends all around the world, many in the USA. Borders do not seem to matter to friendships; we’ve shared experiences and information, and celebrated successes and achievements with each other, irrespective of which side of the 49th parallel our farms are located. It’s understandable, then, that we hate to see our farming friends hurting and scared. You see, there’s been some very scary developments in the US dairy industry, specifically in Wisconsin. We’ve read with shock and dismay of the 75 farms that were dropped by their processor with just one month’s notice to find a new home for the milk that their cows produce. These are farmers with families, with bills to pay, with dreams and hopes for the future – just like their dairy farming compatriots across America and also up here in Canada. They also dream of seeing their children take up dairy farming in the future, but they now face the very real prospect of those dreams never becoming a reality. Their hurt is our hurt because we can understand just how painful this experience must be.

Farming is not just a job, it’s a lifestyle. It’s a lifestyle that we pour our whole selves into; our farms and our cows and our land are our life, our heartbeat, our hope for the future.

Seeing these dreams dashed and hopes destroyed is devastating, regardless of your nationality.

 

Allow me to briefly explain this issues at hand that have resulted in this situation. For years, several processors in the USA have exploited a loop hole in the trade regulations that control dairy imports into Canada. They’ve shipped a product called ultra- or dia-filtered milk north to Canadian cheese plants. Classified as an ingredient at the border, this product was able to pass our border controls tariff-free. However, once the product arrived at the processing plant, the classification was changed to dairy in order to be permitted for use under the Canadian cheese standards, which regulate which percentage of cheese ingredients must come from milk. This situation was causing our Canadian processors to forego using Canadian milk for their cheese, and sourcing the cheaper US diafiltered milk, reconstituting it, and using it in the cheese and other dairy products. As you can understand, this resulted in a loss to Canadian dairy farmers as our milk was no longer being used in this cheese – and it was no small sum either, some pin it at over $230 million annually! Over the past few years, our provincial and federal milk boards and committees have worked hard to create a way to encourage our processors to resume using Canadian milk. We’ve created a new class of milk that is priced at the world milk price. Now that our milk is financially competitive, several processors have dropped the American product and are sourcing all Canadian milk. We have not, as some sources claim, added import tariffs to the American ultra-filtered milk, we’ve simply made our milk the same price. Again, to repeat, no new tariffs have been created that would restrict USA access to the Canadian market. Canadian businesses have the right to choose their suppliers, just like American companies do. Business decisions may also be influenced by the fact that the American dollar, when it is high like it is now, makes it more expensive for Canadian businesses to buy American. This new pricing mechanism was adopted in Ontario last year, with the rest of Canada following suit several months later. US processors knew of our plans. It was no secret; there were several news sources on both sides of the border reporting on our efforts. Now that Canadian processors have resumed sourcing Canadian milk products for cheese, these American processors are left with unwanted filtered milk, and that has resulted in this terrible situation for those farmers. As many American farmers have accurately pointed out, the problem is not Canada’s dairy industry; the problem is the excess milk on the world market. The US needs to manage their excess dairy production more efficiently to prevent surpluses and this type of waste.

 

At this time, I’m incredibly grateful for our supply management system. With our system, if demand for milk falls, all producer quotas are reduced; individual farms are not dropped by processors. In my opinion, it’s a fair system that offers stability to farmers; stability that is necessary for innovation, growth, and the sustainability of the industry. I’ve read various comments from American farmers lamenting that fact that there is no such system in the US.

 

In my opinion, it’s not fair to blame Canadian dairy farmers or our supply management system for looking out for our own industry and attempting to regain the share of the market that once was ours.   I’m sure it should be obvious that this is not a time to point fingers or to adopt an “us vs them” mentality. At the same time, while our hearts go out to the farmers affected, we also need to look to our own farms and realize that we too need to make a living and ensure that our Canadian dairy industry remains viable.  I don’t claim to have answers or solutions to this problem. But I know that right now, those farmers dropped by their processors don’t need blame or acrimony, they need support and understanding and sympathy. They need help to find a new home for their milk, and I hope with all my heart that they will find a way to continue shipping milk and caring for their animals, land, and families.

 

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He’s the Face of Canada’s Future Dairy Farmers… but will he realize his dream?


Farming is in this five-year-old farm boy’s blood. No doubt about that! Farming is a lifestyle, not just a job, and it’s driven by a love for the land and animals that often runs strong and true through the generations. If his dreams come true and he takes over our farm one day, he’ll be a sixth generation dairy farmer.

But what does the future look like for him? Around the world, the dairy prospects are currently very grim for aspiring dairy farmers, established dairy farmers, even five-year-old dairy dreamers. The world milk price is very very low, depressed by a huge glut of excess milk on the world market, thus driving farm gate prices down below the cost of production. Around the world – the US, EU, New Zealand, Australia – dairy farmers are producing milk at a loss. Many have been forced to give up their dream, closing their barn doors forever, shipping their animals off to auction. They just cannot continue to run a business while losing money hand over fist, regardless of how much they love their animals and land and farm.

Thankfully, here in Canada we are blessed to farm under different circumstances. Under our stable and secure supply managed system, farm gate prices have remained fairly stable. Our milk price is determined by the cost of production, not by the world milk price. Still, there are threats looming over our enviable system also.

Supply management is based on three pillars that ensure that our system works effectively:

1 Production management that matches supply with Canadian demand.

2 Predictable imports to ensure Canadian dairy market requirements are primarily met by Canadian milk production.

3 Farm gate prices that provide a reasonable return that covers production costs. Canadian dairy farmers do not rely on taxpayer subsidies.

Unfortunately the second pillar, government management of imports, has been slowly eroding over the past few years. A modified dairy product called diafiltered milk has been flowing over our borders tarriff-free because it has been classified as an ingredient at the border. That’s all fine and dandy, but once this ‘ingredient’ arrives at the processing plant, suddenly it is treated as ‘milk’. Canada’s dairy processors are required to adhere to our cheese standards, which require that a set percentage of each type of cheese must come from ‘milk’ while the remainder can be made up other ‘ingredients’. So this diafiltered milk, classified as an ingredient at the border, suddenly is re-classified at the processing plant as milk to meet the minimum milk percentage requirements. Not really fair, is it? And it’s not just small change we’re talking about here, but rather a huge hit to Canada’s dairy farmers, to the tune of 231 million dollars per year, and climbing.

There have also been troubling rumblings in the political world of late. Government support has historically been a critical part of supply management working well. This is why I, along with my fellow Canadian dairy farmers, have also been extremely unsettled to hear of a certain Member of Parliament’s recent attack on our system. This MP has shown little understanding for the current world dairy situation and has intimated that our Canadian dairy farmers would do well to imitate Australia’s example and dismantle supply management. Obviously he has not been following the news as the situation Down Under is very grim at the moment, not an ideal dairy utopia in the least! I don’t want to call extra attention to this MP and his stance on supply management by addressing these inaccurate and concerning comments, but still feel that Canadians should be aware of the battles facing dairy farmers, both at present and possibly in the future.

Just like an old fashioned three legged milking stool, our system only works if all three legs or pillars are strong and stable. Allowing one of these pillars to weaken or erode will unsettle supply management and even has the potential to topple the whole system, plunging Canadian dairy farmers into the turbulent and uncertain waters currently engulfing our international dairy farming compatriots. If that should happen, our five-year-old farm boy’s dream of following in our dairy farming footsteps would meet a sudden and heartbreaking end. Our small family farm would likely be unable to compete with the glut of foreign-government-subsidized milk flooding the world’s dairy market, and perhaps we too would be forced to close our barn doors and say goodbye to our cows and our way of life. We were unable to join our fellow Canadian dairy farmers drawing attention to these issues at the dairy rally in Ottawa last week and so are doing what we can to express our concerns in other ways, including here on social media. We’re calling on our government to show support to Canadian dairy farmers by enforcing the cheese standards and committing to continued support for our system.The Canadian dairy industry is a huge and beneficial contributor to our country’s economy and social fabric and we feel that as such we’ve earned our government’s support. Fellow Canadians, please join us in voicing your support for your Dairy Farmers of Canada. I’m sure none of us, farmers and consumers together, want to see our family farms disappear from our nation’s landscape.

Supply management: Better than Ever for Canadian Farmers, the Economy and our Consumers

I support supply management. Period. As a member of a Canadian dairy farming family, proudly producing top quality milk for my fellow citizens, I know that supply management’s demise would mean the end of the dairy life that I know and love. Recent articles from various news outlets as well as a newly released study have brought these feeling to the foreground once again. In my opinion, the media’s discussion about the future of the Canadian dairy industry is sorely lacking any input from Canadian dairy farmers themselves. I’d like to add my voice, a dairy famer’s voice, to the discussion as well. In all likelihood, you’ve read one or more opinion pieces recently speculating about the fate of supply management as the Trans Pacific Partnership negotiations continue. According to various sources, Canada’s participation in these trade talks depends on our willingness to dismantle our supply managed poultry, egg, and dairy sectors. Looking north, the US sees Canada as a veritable treasure trove of untapped export opportunities. In the wake of falling global milk prices, increased competition from newly emerging dairy powerhouses like New Zealand, and lost markets due to the Russian embargo,  a new dairy export market would inject some much needed income into the US dairy industry. As though throwing a dog a bone, supporters of the TPP claim that Canada will also be able to export dairy products south of the line, but, in my opinion, this half-hearted benevolence does little to mask their true intent: flooding the Canadian market with mass produced milk. Additionally, a  recent article in the Globe and Mail falsely accused Canadian dairy farmers of producing too much milk and that milk dumping was occurring as a result, and used this standpoint as a grandstand to air anti-supply management sentiments. This article has since been soundly discredited, here, here and here, but the ideology behind those sentiments remains, and is extremely worrisome to my fellow dairy farmers and myself.  Here’s why:

What does Canada actually stand to lose if supply management crumbles? A study commissioned by the Dairy Farmers of Canada shows just that. This study “affirms the significance of the economic impact of the dairy sector in Canada. Conducted by EcoRessources, the study, entitled “The Economic Impacts of the Dairy Industry in 2013”, is third in a series which tracks the changes and impact of the sector over the years, beginning in 2009.” Highlights of this year’s study point to :

  • Local, provincial and federal tax revenue produced by the dairy sector: $6.3 Billion in 2013
  • Growth in Gross Domestic Product (GDP) output by $3.7 Billion in four years, to 18.9 billion in 2013
  • 215 000 jobs maintained by the industry
  • More milked shipped: 7.8 billion litres in 2013, up from 7.6 billion litres in 2009.
  • Less than 10% of Canadians’ disposable income is spent on food, one of the lowest in the world (1.03% on dairy).
Dairy Industry Statistics

Dairy Industry Statistics

In addition to this study that highlights the dairy sector’s vibrancy, viability and important contributions to the Canadian economy, recent analyses have also shown increased growth in the dairy industry due to Canadians’ higher demand for dairy products. The retail sales of cream (+5.5%), butter (+4.4%), cheese (+3.2%), and organic milk (+15%) registered quite remarkable growth rates over the past year. Dairy farmers have been asked to produce more milk than last year – 8% more in the past year here in BC alone! – to keep up with this increased demand.

The risk Canada runs by dismantling supply management is this: we could lose many of the above mentioned contributions and more than that, we would stand to lose what we value the most, a safe, secure supply of milk, produced to the highest quality standards that Canadian consumers have come to rely on. The ultimate sacrifice if supply management is eliminated would be our Canadian family farms. With an average size of 77 milking cows, we would have a very difficult time competing with the glut of foreign-government-subsidized milk flooding in over an opened border, most produced by mega dairies. This would likely mean the end of the dairy industry as we know it. Canada’s small, family run, environmentally conscious, local farms would likely be replaced by what experts call CAFOs – confined animal feeding operations. With CAFOs come a number of environmental risks, and they require special legislation to operate, but they can produce milk at a lower cost. I am quite active on social media, sharing our daily farm experiences, and I have had many conversations with consumers who are concerned about the environmental risks and animal welfare concerns that tend to be attached to CAFOs. The current situation in California is a prime example of this: farmers there are paying a huge price for over-concentrated farming and the subsequent consumer backlash against agriculture. Would Canadian consumers really appreciate our family owned and operated dairies turning into massive conglomerates?  I have my doubts…

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Our family owned and operated 80 cow dairy farm. Will it be a casualty if supply management falls?

Claims that Canada could become a big player in the export game have little standing. Since deregulation in Australia in 2001, exports initially grew for a short period of time, but have since dropped rather dramatically, from 6.1 million tonnes in 2002 to 2.9 million tonnes in 2011. From this we can see that more market access does not necessarily mean more industry growth. And we’re not comparing apples to apples here! Australia’s climate allows their dairy industry to rely on a cheaper, pasture based system, which is unfeasible due to Canada’s much harsher climate. Our cost of production due to the need to store and purchase feed and house our animals for extended periods of time is therefore higher, and would lead to challenges in competing on the world market. And of course, we cannot forget that presently there is an excess of milk globally, contributing to very low milk prices. What little Canadian farmers could export after deregulation would likely not have very much monetary value relative to the cost of production. Another interesting recent development, to me, is that the oft-mentioned comparisons of prices of dairy products for consumers in the US and Canada seem to have faded into the background. The lower Canadian dollar has resulted in the price difference shrinking considerably. Even with the government subsidized milk prices in the grocery stores, US milk prices are very close to, and sometimes even higher than, Canadian prices. Meanwhile, prices paid to US farmers have dropped in the last few months to below the cost of production (according to an American dairy friend). Dismantling supply management would likely not result in a decrease in consumer pricing, but could result in an increase in taxes to fund government subsidies if the cost of producing milk in Canada is not covered by farm gate prices.

Price of milk in Florida vs Prince Edward Island

Price of milk in Florida vs Prince Edward Island (photo and tweet credit:Randall Affleck)

So what can you, my fellow dairy farmers and consumers, do to help others understand the value of our current system? Talk about why you support the supply managed system, write about it, or, better yet, contact your local member of parliament. In an election year, our voices are more influential than ever and are more likely to be heard. MPs need your support to win their seats come November, and they need to know what is important to their constituents. With such a significant contribution to our country’s economic vitality, we have the obligation to make our voices heard; our voices matter. And our voice is this: We support supply management… because it works! It works for farmers, for consumers and for our country. Stand firm, Canada!

Supply Management Part 3: Addressing Recent Globe and Mail Article

Mondays are busy days on the farm and in the farmhouse. We generally take care of just the necessary chores on Sunday, so Monday really signals the start of a new, busy work week. But I’ll still usually find time to sit down with a cup of coffee, usually after the kids are on the bus to school, to go through my twitter feed. This is mostly a pleasurable, relaxing time of day for me. Not today. I was confronted with this article in the Globe and Mail by Barrie McKenna, who has added to his rather lengthy repertoire of anti-supply management opinion pieces with this: http://www.theglobeandmail.com/report-on-business/the-world-is-rapidly-closing-in-on-canadas-dairy-industry/article23678491/

I contacted a few of my friends in the industry, a dairy farmer and an industry leader. Here is what they had to say:

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Jennifer Hayes’ thoughts on the article. Find her on Twitter @FarmShigawake for more thoughtful commentary on supply management.

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Wally Smith, President of Dairy Farmers of Canada, reacts to the article.

 

Initially, I was tempted to just move on with my day, but the more I thought about this article, the more I realized that I have much to say to Mr. McKenna, and that I would like to have my opinion, and the opinion, I believe, of all Canadian dairy farmers, heard as well. I don’t pretend to be an expert on trade, or supply management either, for that matter. But Mr. McKenna’s biased opinion piece leaves me with the impression that either he doesn’t understand the system or that he blatantly takes advantage of his readers’ lack of knowledge on the subject presented here.

Mr.McKenna’s first sentence already shows his bias. He says our dairy “regime” is sealed off from the rest of the world. While I know that we do use tariffs to limit imports of dairy products from other countries, Mr. McKenna conveniently leaves out the fact that we allow more tariff free imports than the US and the EU – 6% of imports are tariff-free in Canada, with only 2.75% tariff free imports allowed into the US. Additionally, as part of the new CETA agreement, Canada will allow 9% of the cheese consumed in Canada to come from the EU tariff free, up from the current generous access of 5%. The (EU) currently imports only a modest number of Canadian dairy products, despite the fact that the EU is a market about 15 times the size of Canada.

Moving further along in the article, Mr. McKenna references a confidential report from the Dairy Farmers of Ontario. But rather than being what he seems to think is a smoking gun detailing Canada’s dairy woes, it rather is a piece that “indeed is confidential, and was prepared in the context of reviewing policy and identifying growth opportunities among farmer delegates … it actually identifies that there is an opportunity for more competitive pricing to compete in the domestic dairy ingredients market which is already directly subject to international price competition from duty-free imports. More competitive pricing will create some export opportunities but these are small compared to the opportunities within the domestic market and below current permitted exports.” https://www.milk.org/Corporate/News/NewsItem.aspx?id=5461

I have difficulty believing the statement that Canada is facing a growing glut of unwanted milk. How on earth would Mr. McKenna like to explain the extra quota allotted to Canadian farmers over the last year and a half? BC farmers have received an extra 10% of quota, and Ontario, Quebec, Nova Scotia, New Brunswick and PEI have received 5%, while the remaining Western provinces have received an amount in-between these numbers. This extra quota has been allotted to encourage farmers to produce more milk to fill the increased demand for milk products by Canadian consumers. I’m sorry, Mr. McKenna, but numbers don’t lie.

Further in the article, the author states that creating a new market to compete with foreign imports of milk proteins or export at world milk prices amounts to an “illegal subsidy.” The irony is actually laughable. Mr. McKenna would like to see our borders open to imports – imports that are very highly subsidized by their country of origin. Care to explain your double standards, Mr. McKenna?

Mr. McKenna drops his two most infuriating comments at the end of the article. First of all, he says that consumers pay an inflated price. Now, if you remember, I addressed this in a previous post, here. Farmers are paid the cost of producing the milk. Period. The recent reduction in the price paid to farmers ($0.06/L for us on our farm) because of decreased costs of production illustrates this perfectly. Keeping prices artificially low in the store by supplying farmers with government subsidies (like in the US, which appears to be Mr. McKenna’s ideal system) does not benefit the consumer, but rather inflates their taxes. Secondly, he indirectly calls farmers greedy. Now, I personally take offense to this, and I’m sure other dairy farmers do as well. Is wanting a fair price for the product we produce “greedy”? Maybe he should talk to dairy farmers in the UK and France who are dumping their milk to protest the dropping milk price, a price with which they cannot cover the cost of production. Are they, too, greedy?

Let me paraphrase my opinion like this: supply management is a great system. It ensures a stable economic outlook for farmers and stable prices in the grocery stores for consumers. Stability on the farm means that farmers can dedicate more of their time and investments in sustainability, technology and advancing animal welfare. With supply management, we all win, consumers and farmers alike. And no, Mr. McKenna, dairy farmers don’t think the system is broken. I am a dairy farmer, and I support supply management – because it WORKS.

Supply Management Part 2: Recent Developments and Comparisons

Perhaps you’ve heard some of the latest news from New Zealand, detailing their current dairy woes. Since my last article explaining supply management was published, several readers have reached out, asking about New Zealand’s deregulated dairy industry. Long promoted as “the Miracle Down Under“, New Zealand has traditionally been held up by various anti-supply management groups and individuals as an example of how the Canadian dairy sector would prosper if our dairy industry were to be deregulated. Supply management critics purport that dairy prices for consumers would drop, but farmers would be able to compete in the world market and begin to export milk products, thus expanding the dairy sector.

Those dreams have been shattered over the past few months. Due to global issues, such as the ban on dairy products from the EU by Russia and the drop in China’s imports of skim milk powder, global milk supply has increased dramatically, causing prices to drop. The global milk price has HALVED since last February. Farmers in New Zealand now can no longer cover the cost of production by the price they are paid for their milk. Farmers are currently being paid about $0.45 per liter of milk. They are doing whatever they can to cut costs, reducing labour costs, feed costs, and lowering production. The dairy industry in New Zealand accounted for one-quarter of their exports and one-third of their economic growth last year. It’s still too early to put real numbers together, but economic experts expect that this situation will definitely negatively affect New Zealand’s economic outlook as a whole.


But what about the price consumers pay for their milk? The decreased price paid to farmers must coincide with a lower price for consumers? NO! The price of milk in New Zealand grocery stores has actually increased by 3.2% in October alone. Consumers there generally pay between $1.75 and $2.50 per liter of milk. Compare that to our price: approximately $1.48/L, which has risen at less than the consumer price index for the last 30 years, and actually dropped by 0.4% in the last fiscal year. I’ve corresponded with “Kiwi” dairy farmers who complain that consumers don’t seem to realize that the astronomical supermarket costs are not associated with the dairy farmers, who can barely scrape by, but with the processors and retailers who set whatever profit margin they desire.

I suspect New Zealand has now lost the rights to the title “Miracle Down Under”. For both their farmers’ and consumers’ sakes, I hope it doesn’t become the “Debacle Down Under”.

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Our 70 milk cows. 76 cow herds are the average in Canada. 98% of our dairy farms are family owned. Herd size in NZ is much higher: 393 cows on average. 25% have more than 500 cows and over 490 of these have more than 1000 cows. 65% are owner operator businesses, the rest are part share or equity partnerships.

Both Canadian dairy farmers and consumers are fortunate to enjoy a dairy industry that is strong, stable, and self reliant. Supply management benefits Canada’s economy as well as our local economies. Milk products, especially fluid milk and cream, are generally sold locally, creating local jobs and revenue. The dairy sector’s GDP contribution increased from $15.2 B in 2009 to $16.2 B in 2011, and has created thousands of jobs, increasing from 215,104 to 218,330 over the same time frame. Additionally, the dairy industry contributes more than $3B in local, provincial and federal taxes every year. A situation like the one “down under” would be disastrous to dairy farmers, would not benefit consumers, and would likely result in economic instability for the agriculture sector and quite possibly for the Canadian economy as a whole.

support Canadian dairy

I hope supply management critics and our politicians sit up and take notice: this is NOT the type of future that would be beneficial to Canadian farmers or consumers. The current Trans-Pacific Partnership trade talks are rumoured to be a threat to supply management. Our Canadian negotiators should ask themselves if the situation in New Zealand is one that Canadian voters would appreciate and support. Canada has signed other trade agreements without sacrificing supply management, and, in my opinion, these present global circumstances heavily favour retaining the current system to protect all Canadians – farmers and consumers alike. I challenge our politicians and policy makers to stand up in support of supply management because, really, in all likelihood, the future of dairy would be looking rather grim without it.