Academics warn that supply management in Canada’s dairy sector must change

“For the first time, two Canadian universities unite to provide a strategic roadmap to support the ailing dairy sector in Canada. The roadmap is not only inspired by the opinions of Canadians, but it is also supported by fundamental underpinnings.

If supply management is not fundamentally changed, Canada could see half of its current dairy farms disappear by 2030. COVID-19 showed us that our current regime cannot avoid on-farm waste of raw milk. Saputo announced two plant closures in recent months, which indicates how the sector is adjusting to fragmented demand.”

(Saputo closed its Trenton, Ont. facility in September and will close its Saint John, N.B. plant in January 2021. Production from the two facilities will be integrated into other Saputo plants across Canada. See here for details.)

“Major coffee chain Starbucks intends to reduce the amount of dairy it serves as part of a global sustainability plan. A recent survey conducted by Dalhousie University and the University of Guelph suggests consumers, especially among the younger generations, have mixed feelings about whether the Canadian dairy industry is good for the environment and whether animals in the sector are humanely treated. Dairy alternatives are becoming more popular, but the dairy sector in Canada has no plan to reform its supply management regime to support our dairy sector.

Sylvain Charlebois, Director of the Agri-Food Analytics Lab at Dalhousie University and co-author of the report says, “Dairy farmers are receiving compensation for trade deals recently ratified by the federal government, but by overcapitalizing the system, these funds will hurt many farmers over time, and not just dairy”. Simon Somogyi, Arrell Chair in the Business of Food at the University of Guelph, claims that “Without a strategy and fostering competitiveness, we will see fewer farms and an increased level of concentration of the dairy sector in Central Canada, leaving many regions behind”. The Canadian dairy industry is facing challenging times. Recognizing the difficulties of Canadian dairy farmers, this roadmap provides solutions aimed at revitalizing dairying in Canada.

The purpose of the report released today by both Dalhousie and Guelph Universities is to outline a 20-year plan for modernizing supply management, fundamentally changing it to allow the Canadian dairy industry to become more competitive. We are calling this plan Supply Management 2.0. The plan will provide incentive for Canadian farmers to adapt to a more liberalized market over time, and to become competitive in more niche and premium export markets. Supply Management 2.0 comprises four steps:

1. Create a voluntary program for dairy farmers to exit the industry.
2. Make significant changes to the Canadian Dairy Commission.
3. Remove interprovincial trade barriers on dairy products and create an innovation fund for the sector.
4. Initiate a 20-year plan to reduce general tariffs, develop an exporting strategy, create a Canadian brand and provide incentive for innovation.

Some of these goals are more attainable than others; however, these are the general guidelines that we believe ought to be followed to save the livelihood of Canadian dairy farmers while supporting the industry’s position in a globalized world.”

Full report: https://www.dal.ca/sites/agri-food.html