Private members’ bills, especially those from Bloc Québécois members, seldom navigate the parliamentary process successfully. However, after receiving strong support from members of all parties in the House of Commons, a bill from Yves Perron, who represents the Bloc on agriculture, easily passed a second vote in the unelected Senate on Tuesday.
Surprisingly, the bill addresses a contentious issue: Canada’s supply management system, which regulates production and establishes minimum prices for dairy, poultry, and egg products.
Many free-market economists and politicians view supply management as a legalized price cartel that drives up grocery costs for Canadians. In recent decades, the supply management system has been a major sticking point in negotiations for Canada’s key trade agreements.
[Read from 2016: Safe for Now, Canadian Dairy Farmers Fret Over E.U. Trade Deal]
If Mr. Perron’s bill successfully clears the remaining legislative obstacles and becomes law, it will prevent Canada’s trade negotiators from proposing any changes to supply management in future trade talks.
Under this system, farmers are assigned a production quota to prevent oversupply, essentially a license to produce milk, chicken, turkey, or eggs that cannot be exceeded. Imports were historically restricted through high import duties.
Dairy is the most significant and contentious sector. Recent trade agreements have allowed limited quantities of dairy products to enter Canada duty-free or with low tariffs. However, any imports beyond these limits face tariffs exceeding 200 percent.
Despite its advancement in Parliament, the bill has caused division within the Conservative Party and among Canadian farmers.
Supply management has not received as much attention as grocery store profits in the recent food price increase uproar. Determining the exact impact of supply management on Canadian milk prices compared to other countries is challenging.
No one disputes that Canadians generally pay more. A study by agricultural economists from the University of Guelph and Dalhousie University in 2021 revealed that in eastern Canada, where dairy farming is predominant, the average price of 100 liters of milk from 1997 to 2011 was 63.05 Canadian dollars. In New York and New Jersey, the price for a comparable quantity during the same period was around 44.31 Canadian dollars.
The authors of the study also pointed out that opening the market to American imports would not guarantee lower milk prices for Canadian consumers.
However, the economists were clear about the impact of an open market on Canadian dairy farmers.
“If trade were liberalized tomorrow, American milk would likely flood the Canadian market,” they stated. “Canadian farmers would struggle to compete with American milk prices, potentially leading to the entire Canadian dairy industry relying on imported milk.”
All this is occurring as Canadians, like many people outside Asia, are consuming less milk each year.
While farmers under supply management trade the ability to export their products for stability and high prices, most other types of farming in Canada are not covered by supply management and heavily rely on exports.
The Canadian Agri-Food Trade Alliance, representing farmers, food processors, and related businesses, criticized the bill in Parliament for limiting Canada’s ability to negotiate favorable free trade agreements across all sectors of the economy.
The proposed restrictions on trade negotiators are not hypothetical. The United States-Mexico-Canada Agreement, the revised version of NAFTA, is due for review in 2026. Given the United States’ past challenges to Canada’s dairy restrictions through the U.S.M.C.A. dispute process, it is highly likely that they will seek changes to supply management in the future, regardless of Parliament’s decision.
Trans Canada
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Ian Austen, a native of Windsor, Ontario, educated in Toronto, residing in Ottawa, has been reporting on Canada for The New York Times for two decades. Follow him on Bluesky at @ianausten.bsky.social.
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