The average Canadian family spends $500 per year to subsidize the 10,000 or so dairy farmers — most of whom are millionaires — who make up a dairy lobby that has had a stranglehold on Canadian politics for a generation. Unlike a tax, that $500 doesn’t go towards maintaining roads, or equipping the army. It mainly goes into the pockets of those producers.Let me say at the outset that I’m not intending to disrespect our dairy farmers. They are conscientious, hard working people who have built their farms under the system as they found it. They get up at ridiculously early hours to get their milking done, grab a few hours of sleep, and then do it all over again later in the day. Most don’t take holidays, because it is just too complicated. They have worked for years to purchase their quotas, and build their farms. And they deserve respect, as well as fair prices for their quotas once this quota system comes to an end..But the system they work in can no longer be justified, when Canada is presenting itself as a free trader, and the aggrieved victim of Trump’s tariffs. When Australia and New Zealand went through the painful process of dismantling their supply management systems, many of their producers went on to success, both nationally and internationally, while older producers used their buyouts to enjoy well-earned retirements.There is no reason why the same thing can’t happen here. The fact is that Trump has forced us to focus our sights on an unproductive system that should have been gone long ago. But he has given us an opportunity as well..Canada’s supply management system — a polite term for ridiculously high tariffs on all dairy products, poultry and eggs coming into our country — sits like the proverbial albatross around our necks. A system reminiscent of 1950s Stalinist countries remains in place in 2025 Canada. It is also an incredibly wasteful system. Since 2012, it is estimated that 7% of the milk produced is dumped because farmers have reached their quotas. This amounts to billions of gallons of milk. Canadian consumers bear the cost of that shocking waste. And now it threatens to scupper our incredibly important trade talks with Trump’s America.Given the Carney government’s posture that they are the defenders of free trade, engaged in a titanic “elbows up” struggle with the tariff-loving Donald Trump, the fact that a Canadian system that charges up to massive tariffs on dairy and poultry products can’t be maintained. Simply put, it has to go.So, why are Pierre Poilievre and Mark Carney both clinging to this Soviet-style system that goes against every conservative value in the books?.The answer of course is “politics.” Both leaders are perfectly aware that the system is very popular in Quebec, and even a hint from either of them that they would get rid of it would be politically difficult. So they publicly pretend that they believe that the system is just fine as it is. They are not telling the truth.It can be argued that the system once made sense. There were once 150,000 or so small farms that would be unable to compete with better established, larger operations — particularly from Wisconsin. Like the Wheat Board, there were good arguments in favour of adopting the inward-looking system in an earlier time.But those days are gone. Now, those quaint farms have been replaced by large dairy operations, mainly in Quebec, worth millions of dollars. There are probably fewer than 10,000 farmers — really, businessmen — who are somehow able to control the Conservatives, as well as the Liberals. Exactly why we are allowing these 10,000 millionaires to control the narrative, and why every Canadian must pay a tithe to them every time we go to the grocery store, is not clear..As we head into vital trade talks the American negotiators will laugh as we indignantly demand “free trade” and no tariffs, while we remain committed to a protectionist, tariff system in Canada. The latest demonstration of our elected representatives’ commitment to the system came just a couple of weeks ago. All of the parties voted to exclude supply management from the trade talks. Yes, even the Conservatives.But Trump is unlikely to be impressed. He sees us putting tariffs on American products of up to 400%, while claiming to be the champions of free trade. He sees hypocrisy. As the CBC put it, "When Trump briefly paused trade talks with Canada on June 27 over the digital services tax — shortly before Ottawa capitulated by dropping the tax — he zeroed in on Canada's system of supply management. In a social media post, Trump called Canada a "very difficult country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products.".Why Canada keeps such a trade irritant — an irritant that benefits 10,000 farmers, but penalizes every Canadian consumer — is a mystery.And Donald Trump is not the only world leader who finds these tariffs unacceptable. French cheese, German yoghurt, and all of Europe’s other high quality dairy products aren’t available to Canadian consumers because of our huge tariffs.At the same time, Canadian dairy products cannot be marketed outside of Canada because those nations — understandably — hit us with reciprocal tariffs..There was one Canadian who saw very clearly, years ago, what a dead end supply management was for Canada — a system that no self-respecting Conservative should support. This was Max Bernier. If he had been chosen as the leader of the Conservatives supply management would have been gone long ago. The dairy lobby made sure he didn’t get the votes .So we are stuck with a protectionist system at this crucial time in our history, when trade talks with Trump could determine our economic fate for years to come.And exactly what good does the $500 that the typical Canadian family “donates” to the current system do? How does such a personal sacrifice that every family is forced to make benefit the country?.It’s hard to find even one benefit.As mentioned above, the claim that we are spending those hard-earned dollars to keep small farms functioning might have been true once, but it is true no longer. Once dairy and poultry farms were indeed the quaint Québécois “fermes” one would see in Cornelius Krieghoff paintings of rural Quebec. But that was long ago. Then, there were 150,000 or so such small farms, there are now less than 10,000 large dairy operations — each worth millions of dollars.And what about the claim that Canada will be flooded with dangerous, chemically-saturated products, if we let other nations compete in our market?Nonsense, says former Liberal MP Martha Hall Findlay. Some of the countries who would be sending cheese and yoghurt into our market — like France and Germany — have stringent safety standards. We have laws and regulations to keep inferior and dangerous products from less trustworthy nations out. We don’t need the dairy lobby for that..But finally, by imposing massive tariffs on other countries we have condemned ourselves to selling Canadian dairy products only within Canada. No country will allow our dairy products into their country, for the completely understandable reason that we don’t allow them to sell their products in our market.Large dairy companies, like Saputo, can’t sell outside Canada, so they move operations to other countries. Canada misses out on the jobs, taxes, and economic activity generated by this energetic corporation by forcing them to move elsewhere. Similarly, Canada has excellent artisan cheesemakers who could be selling internationally, but are confined to the small Canadian market by the current protectionist system. We are shooting ourselves in the foot with our tariffs.So, why do we keep doing it?Politics, pure and simple. None of the parties want to risk alienating Quebec.So, we just stumble on with the same dumb plan.But it’s not impossible to get this albatross off our necks. As mentioned, Australia and New Zealand both did it. They both had similar supply management systems, and came to the realization that the antiquated systems had to go.By paying off quota holders without dipping into the federal treasury (adding a few cents to every quart of milk sold) they now have strong dairy industries that compete very well on the international stage. And their citizens don’t pay $10 for a $3 yoghurt or a $3 pound of butter. So, it can be done, if both Carney and Poilievre show some political courage.Max Bernier tried to tell us this almost 10 years ago. If his then party, the Conservatives, had listened, we might not have to go through this painful process in 2025. Now Trump is telling us the same thing. And, we had better listen this time.It is not the fault of our dairy farmers that the system they work in doesn’t fit the times we live in. But that system can no longer be justified, and it has to go. An announcement by Carney that Canada has finally rid itself of this major trade irritant would go a long way to enhance our trade position.Brian Giesbrecht is a retired judge and a senior fellow at the Frontier Centre for Public Policy.
