It is the very fact that the U.S. dairy industry does not have a supply-management system like Canada’s excellent one that causes their dairy farmers to suffer under their unregulated system and regularly go through boom-and-bust cycles.
Canada is one of the few countries in the world that had the foresight to regulate the production of milk. We used to have oversupply, too, and learned that regulating the industry was better than costly, long-term storage facilities, paid for by Canadian taxpayers.
In 1973, farmers, after consultation with the government, agreed that their next three years of production would henceforth determine what they would be allowed to ship on a yearly basis — called their quota.
That way, our dairy farmers would stand on their own two feet with assurance and dignity, and processors could count on a guaranteed supply. In other words, this was the way to manage the supply.
Supply management was born. If farmers produced more than their allowable quota, they would receive almost nothing for that milk — quite the incentive for complying and producing only what was needed for the Canadian market.
Here’s how the vicious circle works with our neighbour to the south: When the price of milk drops in the U.S. from oversupply, dairy farmers continue to produce more milk in order to survive and avoid bankruptcy.
However, many dairy farms do fail, thereby causing a shortage of milk. In a shortage, the price rises.
When the price rises again, they still produce extra milk to pay off the additional debt incurred when the price was low.
This unregulated supply-and-demand market causes great havoc on dairy farmers in America, as referenced by U.S. President Donald Trump’s comments about Wisconsin’s dairy industry a few days ago.
What has not been mentioned in any news reports, and only adds to the oversupply of milk, is that almost 50 per cent of all American dairy farmers’ incomes are derived from hidden subsidies. Canadian dairy farmers do not receive subsidies.
Hence, Canada’s superior supply-management system is designed to fend off this problem, ensuring that Canadian farmers have stability and a reliable paycheque — the envy of most, if not all, American milk producers.
It’s not a bed of roses, though, as Canadian farmers all face economic challenges due to the ever-rising costs of production. In order to succeed, farms have had to grow bigger and bigger — which is why we see so few family farms nowadays.
Americans are not the only ones with a lot of milk to get rid of. New Zealand and Australia are in this game, too, with small populations and low-cost overproduction. Like the United States, neither has a supply-management system, so they want to palm off their cheap, lower-quality surpluses to Canada. With Canada’s consistent high standards, these countries’ milk would not qualify to be sold here.
So Trump blames us as a means to solve America’s problem by making us the “bad guys,” allegedly responsible for what in fact is its own short-sighted mismanagement.
In Canada, both farmers and consumers have benefited a great deal from the visionary implementation of the supply-management system, with stability for farmers and an assured supply of high-quality milk for families.
So, Canada, please don’t give in to the bullies. And, Mr. Trump, stop playing the blame game; keep your hands off our dairy farmers and take care of your own. Try supply management.
Oliver and Anita Mark are former dairy farmers. They live in Saanichton.
