There's an old saying, “You can sit on a mountain, but you can’t sit on a tack.” In Canada-US trade negotiations, it appears that the tack is Canada’s Dairy Supply Management System.If you want to visualize the Canada-US trade ‘mountain’ versus the ‘tack’ – please look at the visualization graphic on the Observatory of Economic Complexity (OEC) website..The dairy-related Canadian export trade to the US can be found in the collection of the smallest of squares of the pale beige blocks which you can scroll over for details, below the bright red section of “Sawn Wood.”According to the Office of the United States Trade Representative, “U.S. total goods trade with Canada were an estimated (US) $761.8 billion in 2024. U.S. goods exports to Canada in 2024 were $349.9 billion, down 1.3 percent ($4.5 billion) from 2023. U.S. goods imports from Canada in 2024 totaled $411.9 billion, down 1.5 percent ($6.1 billion) from 2023.”But the stumbling block in current US-Canada trade negotiations appears to be Canada’s dairy industry and the DSMS. Trading Economics sets the value of dairy products, eggs, honey, etc. at US $324.96 million (2024). Agriculture Canada’s stats on Canada’s dairy industry ‘at a glance’ are here. In the big picture, dairy Blockadia threatens US-Canada trade dollars and jobs. Billions vs millions. Millions of jobs versus thousands.Canadians are rightly concerned about issues like domestic food security, with many people believing that our US neighbour, might literally bowl us over and run our regional dairy industries out of business. Also, the US reportedly subsidizes their dairy farmers. But is that the essence of the gripe that the US has with us?.Apparently not. According to a recent Brian Lilley Substack, after he spoke with a number of different parties, the upshot is “…what the Americans want is for Canada to live up to our agreement. If we agreed that they can sell us a certain amount of cheese or fluid milk, then we should allow them to do so and not put the health of every other industry in jeopardy.”A good explainer on the intricacies of these matters was posted by the University of Wisconsin-Madison titled: “U.S.-Canada Dairy Trade Dispute: Quotas, Trade Flows, and Economic Impacts.” Though the Canadian ‘elbows up’ crowd is having a field day exploiting this trade issue as being the fault of Trump, the time line in the article shows that the Canada-US dairy issue has been going on for a long time. It may be a surprise to know that the World Trade Organization has also ruled against Canada in this dispute..GIESBRECHT: Supply management can no longer be justified.Likewise, in Lilley’s article, he quotes Martha Hall Findlay of the Calgary School of Public Affairs, “It’s not just the Americans. The entire world is frustrated with Canada’s supply management regime because it basically enforces ridiculously high tariffs on any dairy, poultry and egg imports into Canada.”According to the Food Professor – Dr. Sylvain Charlebois, in a paper he co-authored, “Canada is unique amongst large dairy producing countries in that it still has a dairy supply management system (DSMS).” The rather shocking title of the paper is, “Over 6 billion liters of Canadian milk wasted since 2012.” The Dairy Farmers of Canada reportedly reject these findings, but so far have not offered different numbers of insights, according to a Food Professor tweet.Milk and dairy products have a uniquely problematic aspect – that being perishability. Though some of that can be mitigated or extended through the production of certain types of cheese, whey powder, skim milk powder, etc., there could be mutual cross-border benefits for Canadian and American dairy producers due to our close proximity for deliverability of this set of short-shelf-life products..The Thomas et al paper, co-authored by Charlebois, also sheds light on the environmental, economic, and health/food security implications of massive milk dumping. This is gut-wrenching to think of, particularly at time when millions of Canadians are lined up at food banks and paying ever higher prices for dairy products.Just on the climate and environmental aspects the Charlebois team calculated, one would think that a climate-obsessed government like that of Prime Minister Mark Carney would be eager to get such emissions, waste and impacts to Net Zero. But no, they seem determined that dairy quota is the mountain to die on in US-Canada trade negotiations.If that makes no sense, let me help you. A key factor in this in domestic politics. You guessed it. Quebec. According to the Charlebois co-authored paper, “Quebec is the largest dairy producing province in Canada (36 % of farm sales by volume).” Likewise, as reported by the Western Producer in 2015, it appears that a number of high-profile players in Quebec, like La Caisse de Depot et Placements du Quebec (the Quebec provincial pension plan) are invested in Agropur Co-operative, Canada’s largest dairy co-op..CARPAY: Ottawa's assault on our internet freedoms must stop now.In other words, the Quebec dairy tail is wagging the Canadian trade dog. To be fair, Alberta Milk also makes an argument in support of the dairy supply management system.The Food Professor thinks some policy tweaks could resolve the issue without letting this ‘tack’ destroy the mountain of trade we share with the USA. Should we be morally and ethically comfortable with the evidence of billions of liters of spilt milk, just keep an outdated dairy quota system alive, when people across the country are hungry, and reduced to standing in line at the food bank?Are we really willing to lose out on or further damage the US-Canada trade relationship of some US $411.9 billion (2023) export trade to the US over our dairy (etc.) exports of US $324.96 million (2024)? Let’s hope we won’t end up collectively, economically crying over spilt milk.
