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Canadian dairy supply management: a webliography and timeline

June 17, 2018


This is a very rough draft of a personal research project that is ongoing.  I am not an economist,  a politician, nor am I involved in the Canadian dairy industry or related NGOs, other then as a consumer. June 15, 2018

The content below is licensed as Creative Commons  ‎CC SA 4.0. 

The #NAFTADairyDivide affects US and Canadian 7th generation farmers with fewer than a 100 dairy cows, industrial-size dairy farms, large-scale producers like Saputo and Parmalat Canada, headquartered in Canada, with operations in the US, Canada, and other countries, dairy cooperatives, trade groups, lobby groups, international trade organizations and agreements like GAFF, WTO, TPP, NAFTA, and CETA, politicians, and consumers.

One of the most contentious issues reached a boiling point in 2016, as Canada responded to the exponential increase of the booming Dairy Ingredients Market, specifically MPCs like diafiltered milk (UV), produced in facilities in the U.S. along the CA-US border and sold tariff and quota free to producers in Canada from c. 2008 through 2016. US producers do not use (UV) and Canada does not produce its own. It became the catalyst for placing Canada’s dairy supply management system under the microscope. “[I]t’s all about an imported American dairy ingredient used to create pizza cheese — that’s right — a few hundred million dollars worth of a product called ultrafiltered milk (Verboven 2018).” The American agricultural economy represents $300-billion.

I want to understand what is currently being done in the name of Canada’s dairy supply management, as an overarching concept and in its regulatory details,  and how and why did this evolve historically. Who benefits from Canada’s dairy supply management and who calls for its removal at the local, regional, provincial, national and international level? Who calls the Canadian dairy industry a “success” in 2018, and why? To what extent is the Canadian dairy SM policy a protectionist device that conflicts with liberal trade principles? The dairy industry in particular, and the agricultural industry in general, places farmers at very high risks due to lack of control over prices, environmental conditions, etc, resulting in higher rates of suicide. Is this not the ideal place to re-calibrate capitalism and neoliberalism market policies at the level of WTO, CETA, NAFTA, etc through supply management and other devices to protect farmers first (those who nuture healthy soil using soil science and provide healthy, nutritious food), placing them at the top of the hierarchy, even above consumers, manufacturers, etc., instead of at the bottom? My economist friend is puzzled that such a miniscule section of the GDP, less than 1% has such staying power.

Below is a loosely generated collage of quotes and summaries from a wide variety of sources which I have read to help me enhance my own understanding, not only of the dairy industry in the age of open and free trade, but also the differing cultures between countries that affect the calibration of international liberal trade negotiations and policies.  This contextual material is organized into a webliography in alphabetical order with some of the content on related events from the articles, reports and a thesis, organized in a reverse chronological order timeline.

The Economist, which has championed the liberal worldview incorporating “freedom of speech, freedom of the press, freedom of religion, free markets, civil rights, democratic societies, secular governments, gender equality and international cooperation” since 1843,  recently created a Facebook Group, Open Future to “spur discussion about these liberal values and principles…for people who want to do that in a civil forum”.

I am proposing the topic of liberal trade policies with Canadian diary as an example.

I am developing a 3 sentence summary question that would be a catalyst for a discussion using the June 14, 2018 article in The Economist, “Breaking a few eggs: Donald Trump stomps on Canada’s economy: To avoid further damage, Justin Trudeau may have to stop coddling farmers” as a recommended read. http://bit.ly/NAFTATrumpStomps

Proposed question (draft)

As countries enter into international trade negotiations, with a long-term goal of decreasing and even eliminating barriers to the liberal ideal of free trade, how much consideration should be granted to differences between values within and between countries along the way. Using the Canadian dairy supply management system as a case study, at what point should a country be compelled to give up a system that works domestically. The US dairy industry production method is considered to be an open market in spite of $22 billion in subsidies a year whereas Canada’s is a supply management system. The Canadian Crown corporation, the Canadian Dairy Farmers (CDF), representing Canada’s roughly 12,000 dairy producers, defends the system which restricts overproduction and the number of imports on the supply side based on demand, and has resulted in a thriving domestic dairy industry. Globally the price of milk is low due to overproduction which benefits large milk processors but harms dairy farmers. The use of the Bovine Growth Hormone (rBST) to increase dairy production is illegal in Canada and legal in the U.S. The exponential increase in the amount of Milk Protein Concentrates (MPC) and Milk Protein Isolates (MPI) imported from the US facilities along the Wisconsin/New York/Canada border to Canadian processors, Montreal-based Saputo Inc and Parmalat Canada Inc.  as a cheap alternative which has cost millions of dollars to Canadian dairy farmers. This post-NAFTA invention, relatively inexpensive milk proteins, was previously listed as proteins not milk ingredients at the Canadian border. Through these bureaucratic loopholes, the American dairy industry was at an advantage for many years. In a recent article in The Economist, it was suggested that with the Canadian economy “already suffering” “Canada may have to stop coddling farmers” but warned the tri-partisan unified front behind Trudeau now, would be lost if Trudeau chose the economy over farmers. 

“Defenders of the current system say eliminating it would create new problems — starting with the billions it would cost to buy out existing quotas. They say the status quo provides stability in rural communities, allows farms to survive without boom-bust cycles, and makes taxpayer bailouts unnecessary. The U.S., meanwhile, maintains numerous support programs to prop up its farmers, they note. No major Canadian political party has ever opposed the system (Panetta 2017).” In 2015, the American government gave out “approximately $22.2 billion dollars in direct and indirect subsidies to the U.S dairy sector” which represents “the equivalent of 73% of the [dairy] farmers’ marketplace revenue” according to a February 2018 which focused on “changes introduced by the 2014 Farm Bill” (Grey, Clark, Shih and Associates 2018).

For example, in terms of cultural differences that emerged from different histories, it has been argued that, “Canadians tend to see government as a more positive force in the economy, hence the willingness to use public policy tools, including Crown corporations [like the Canadian Dairy Farmers (CDF), for example] to develop the economy and industry and to meet broader Canadian needs. The US Constitution, with its strict separation of powers, is based on a greater distrust of government (Crane 2009-2015).”

In her 2016 MA thesis, Canadian supply management : a food sovereignty policy? : British Columbia and New Zealand industry stakeholder“, Samantha Gambling described how “since its inception in the 1960s, Canadian supply management has been a contentious policy framework. Both the overarching concept and regulatory details of supply management have been debated extensively amongst political, industry and civil society groups; in recent years, supply management has garnered particular attention during the development of international trade negotiations ( Gambling 2016:5).”

Gambling’s thesis compares and contrasts Canada’s dairy supply management framework with New Zealand’s neoliberal model, which is often cited as a dairy-industry success story (Gambling 2016). (New Zealand rejected Canada’s entry into the TPP because of its SM policies). “New Zealand, which dismantled its supply management system and is a huge exporter of milk, has seen farm revenues decrease while consumers pay higher prices (Council of Canadians 2017).” “According to the Les Producteurs du lait du Québec, “In New Zealand, which exports more than 90 per cent of its production, things are even worse. Milk producers have absorbed revenue losses of more than 50 per cent. Farm debt has tripled in three years and 85 per cent of producers operate at a loss. Consumers do not benefit from the situation. They pay more for a litre of milk than Canadians do.” In New Zealand, prices went down in the short term, but rose over five years (Council of Canadians 2017).”

The Canadian Dairy Supply Management system is popular with dairy farmers who are protected from the extreme risks of market and price volatility faced by farmers elsewhere. Canadian consumers pay the price for this security through “artificially” higher prices for milk and yogurt, but they are not complaining loudly. Most Canadian politicians from all parties do not want to touch the thorny subject and it has been defended in tough negotiations through NAFTA and TPP.  It is regulated by WTO rules, which limits Canadian dairy exports. By 2018, the political climate has changed as have Canada’s relationship with the Trump administration, and NAFTA 2018 negotiations are much more aggressive. The supply-management system is under attack for not being an open system of liberal trade.

“The [Canadian] dairy industry is thriving like never before – and like none other in the developed world. Family farms milking an average of 80 cows each have prospered under a heavily regulated system that supports prices at sustainable levels by restricting domestic overproduction and keeping imports at bay (Barber 2018).” Meanwhile, in the United States, there has been an increase of suicides by dairy farmers on inter-generational family farms, who faced with debt, low milk prices and no prospect of improvements. Many aggressively expanded the size of their herds in 2014 when the price of milk reached a peak high.

By the numbers

 $31 billion The “total value of the supply management quotas across Canada in 2010 was worth $31 billion” according to Statistics Canada reports (Lee 2011).

$25, 000 Supply management uses quotas to restrict the number of license that can be purchased to limit production by limiting the entry to farming. By 2011 the cost of a quota to buy a cow was about $25,000 (Lee 2011).

14,000 dairy farmers, 2,800 chicken farmers, 1,200 egg producers and 500 turkey farmers, farmers who benefit from the supply management system (Lee 2011).

$44.4 billion annual Canadian farm income reported in 2011 with the supply management system representing $8.6 billion or 19 per cent (Lee 2011).

$100,000 farmers under the supply management system “earn an average of $100,000 net profit per farm  (Lee 2011)”.

92% of Canadians are “happy with the range and quality of dairy products available in Canada, and two thirds are satisfied with prices.” (Anderson and Coletto 2017) Canada does not allow the use of bovine growth hormone (BGH) whereas it is legal in the United States. The market would expand to include milk from U.S. farms that may have bovine growth hormone (BGH) in it, unlike the milk here in Canada, which doesn’t allow BGH.” “Only 23% of Conservative voters believe Canada should open up markets; 24% among Liberal supporters, and 9% among NDP voters (Anderson and Coletto 2017).

$1.51 The cost of 1 litre of rbST-free milk in Canada (AC Nielson, 2017 cited in Conway 2018). Canada does not allow the use of bovine growth hormone (BGH) rbST whereas it is legal in the United States (Council of Canadians 2017).

$1.63 The cost of 1 litre of rbST-free milk in the United States (AC Nielson, 2017 cited in Conway 2018).

20 CDN$20 billion The dairy industry in Canada supports nearly $20 billion towards the GDP (Conway 2018).

0 Canadian government subsidies to the dairy industry (Conway 2018). Critics of the system, explain that while “there is no direct subsidization by the government of Canada but there is very large indirect subsidization by all consumers” who pay artificially higher prices for dairy products, particularly for imported cheese, etc that have tariffs.

215,000 The Canadian dairy industry sustains about 215,000 jobs (Conway 2018).

10% No World Trade Organization (WTO) approved tariff rate quotas (TRQ)  are paid on the first 10 % of milk products imported by Canada from the United States (Conway 2018). Once this World Trade Organization (WTO) approved tariff rate quotas (TRQ) are reached tariffs are added.

3% No tariffs are paid on the first 3% of milk products imported by the United States from Canada (Conway 2018). Once this World Trade Organization (WTO) approved tariff rate quotas (TRQ) are reached tariffs are added.

41 countries, including the U.S., have World Trade Organization (WTO) approved tariff rate quotas (TRQ)  (Grey, Clark, Shih and Associates 2018).

14, 000 metric tons “nearly 14,000 metric tons of milk protein isolates (MPI) were imported to Canada in 2014, a “37 percent increase compared to 2013 imports (Howard 2017?).” For years the WTO TRQ could not be applied against the U.S. because of NAFTA. “As a result, U.S. exports of milk proteins over 85 percent protein to Canada have grown steadily in recent years (Howard 2017?).”

10, 000 metric tons is the WTO TRQ limit set for market access to Canada for the rest of the world for MPC and MPI products. Above that, the WTO over-quota tariff rate is 270%  (Howard 2017?).”

USD$22.2 billion In 2015, the American government gave out “approximately $22.2 billion dollars in direct and indirect subsidies to the U.S dairy sector” which represents “the equivalent of 73% of the [dairy] farmers’ marketplace revenue” according to a February 2018 report by Grey, Clark, Shih and Associates, which focused on “changes introduced by the 2014 Farm Bill” (Grey, Clark, Shih and Associates 2018). Because of the subsidies, processors can “purchase milk at prices below the costs of production” which “offers a significant competitive advantage to the American dairy industry (Grey, Clark, Shih and Associates 2018).”

USD600 The “entire trade in dairy products between [Canada and the U.S.] is worth less than US$600 million (Barber 2018).”

USD 30 million The amount the Greenwood, Wisconsin-based Grassland Dairy Products of Greenwood claimed it lost overnight in 2016 when Canadian producers Agropur stopped importing U.S. Milk Protein Concentrates (MPC) and began to use Canadian milk to make cheese in April, 2016 when Ontario’s dairy farmers set a new price Class Six for MPC to compete with U.S. (Barrett 2017).” As a result Grasslands ended their contracts with 75 farmers in Wisconsin (Morgan 2017).”

75 The number of farmers whose contracts were cancelled by Grasslands in April 2016 ((Barrett 2017, Morgan 2017) which raised the ire of US politicians in Wisconsin and New York states and caught the attention of President Trump.

9,200 The number of dairy producers in Wisconsin in 2016.

4,500 The number of dairy farms in the state of New York (Kilgannon 2018).

3.4 “Those working in farming, fishing and forestry were 3.4 times more likely than other American workers to commit suicide on the job (Kilgannon 2018).”

270 The 270% tariff on U.S. milk cited by Mr. Trump to criticize Canada’s trade imbalance. Canada placed a new 200% to 300% tariff on American dairy products through its Class Seven program in 2017 (Orol 2018).” “[T]hose tariffs range from nearly 300 per cent for excess imports of butter and cream to 270 per cent for certain dairy powders to 240 per cent for cheese, whole milk and yogurt (Berthiaume 2018).” They apply only after the WTO quotas have been reached. 

USD 86.97 billion The predicted growth by 2024 of the booming “Global Dairy Ingredients Market (lactose, milk powder, casein & caseinates, MPC & MPI and whey ingredients) up from 13.7 million tons in 2015 (PR Newswire 2018) .”

85 85% or more protein is the percentage of protein in Milk Protein Concentrate (MPC) and Milk Protein Isolates (MPI) products that the United States dairy industry can export into Canada with unfettered access to the Canadian market according to the current NAFTA agreement.

80-85 The average number cows milked daily on Canadian family farms that prosper “under a heavily regulated system that supports prices at sustainable levels by restricting domestic overproduction and keeping imports at bay (Barber 2018).”

225 The average number of cows on American farms (Conway 2018).

11,000 Number of dairy farms in Canada  (Conway 2018).

41,800 Number of dairy farms in the United States  (Conway 2018).

0 Canadian political parties have ever opposed the supply management system (Panetta 2017).”

3 The number of milk processors in Canada who control 80% of production. Montreal-based Saputo Inc, Agropur Cooperative, and Parmalat Canada Inc.

10 10%, By 2014, Montreal-based Saputo Inc controlled 10% of the American market by 2014 (Marowits 2014).

$100 million The value of small deals Saputo made in Canada compared to the “larger growth prospects for the dairy” in the “fragmented United States”, Australia and Brazil (Marowits 2014).

7 or 8 The number of players controlling  90 to 95% of the dairy industry in Australia in 2014 (Marowits 2014).

1 billion litres The volume of milk processed in Argentina in 2014 compared to 400 million litres in 2003 (Marowits 2014).

5% The percentile growth targeted in US Dairy Export Council (USDEC)‘s September 2017 new strategic plan “The Next 5%” where they aim to “increase their dairy export market by 5% by 2021 by ensuring access to the Canadian market by fighting “Canada’s actions to block U.S. dairy exports (Shoup 2017).”

15 USD15 $15 per hundredweight The amount the the price of conventional milk dropped in the U.S. by March 2018.

25 USD25 The price per hundredweight at which the price of conventional milk peaked in 2014 (Kilgannon 2018).”

Overview

The American dairy invested in building processors along the Canadian-U.S. border to produce milk protein concentrates (MPC), such as ultrafiltered milk or diafiltered milk. MPC, whose origins can be traced to research in France in 1969, became very popular in the late 2000s. The Global Dairy Ingredients Market (lactose, milk powder, casein & caseinates, MPC & MPI and whey ingredients) is a booming market with predicted growth expected to reach USD 86.97 billion by 2024, up from 13.7 million tons in 2015. The growing interest in MPC and ultrafiltered milk is partly because of greater consumption of healthier foods globally. The increased production of MPC was a huge boost to the American dairy industry as they were faced with a milk glut (global milk prices were low, their herds were too large, they were overproducing – stockpiles were even purchased by the American government). Canada had no facilities for producing ultrafiltered milk so all the MPC was imported. Since the commercial production of MPC was invented post-NAFTA, it is not subject to the WTO’s tariff rate quota (TRQ) that capped the amount of product allowed in (AGCanada 2016).” That’s meant the American dairy industry has had complete and unfettered access to the Canadian market place for diafiltered milk for several years. (Diafiltered milk is not used by American dairy processors.)  To complicate the issue, MPC also created a “bureaucratic problem since Canada’s border agency treats the proteins differently than its food inspection agency, resulting in tariff-free access (Nickel, 2016).

This changed in April, 2016 when Ontario’s dairy farmers set a new price Class Six for MPC to compete with U.S. MPC. As a result, Canadian dairy co-operative Agropur stopped importing U.S. proteins and began to use Canadian milk to make cheese. With this abrupt change, one Wisconsin facility claimed they lost $30 million overnight.

Bloomberg claimed, “Again and again, Trump has assailed Canada’s 270 percent tariff on U.S. milk. But the reason he’s worried about milk exports to Canada is a non-tariff measure. Deterred from exporting whole milk to Canada by the tariff, the U.S. dairy industry began selling so-called ultrafiltered milk, a protein-rich product used in the making of cheese that wasn’t subject to the tariff. U.S. exporters did great until last year, when a regulation pushed through by Canadian dairy farmers priced local milk product ingredients at below international market prices, hurting the viability of U.S. imports. Canada still buys more dairy products from the U.S. than the other way round. If it were to cancel its 270 percent tariff, it can still protect its farmers through moves similar to the National Ingredient Strategy, which created a new milk product class (Bershidsky 2018).”

In September 2017, the US Dairy Export Council (USDEC)  introduced a new strategic plan called “The Next 5%” to “increase their dairy export market by 5% by 2021 by ensuring access to the Canadian market by fighting “Canada’s actions to block U.S. dairy exports (Shoup 2017).”

The Canadian Dairy Supply Management system is a “labyrinth of intertwined regulations and a symbiotic relationship between the Federal and Provincial governments. While it is true that some things are in the direct control of the Provinces, it is generally the case that a Province could not effectively maintain these controls without the Federal system and sanction (FactCheckNovakovic 2017).”

My interest was really piqued by John Barber’s June 9, 2018 article “Why Canadian milk infuriates Donald Trump.” Barber observed that the “entire trade in dairy products between the two countries is worth less than US$600 million (Barber 2018).” The article also quoted a Canadian professor who had visited the States and interviewed the Wisconsin Farmers Union and reported that they “really want” a supply managed system like the Canadian dairy industry (Barber 2018).

The issue that the U.S. negotiators bring to the table is that Canada has placed a new 300% tariff on American dairy products through its Class Seven program introduced in 2017 (as a follow up to Ontario’s Class Six), which the U.S. claims is devastating the dairy industry particularly in the states of Wisconsin and New York.  The “United States and other countries are allowed to export a certain amount of dairy to Canada duty-free” based on “quotas set by the World Trade Organization (Orol 2018).” “Once the threshold is reached, Canada imposes huge tariffs — usually between 200 and 300 percent — on imports of certain dairy products, essentially restricting their entry (Orol 2018).”

To be continued…

A selected timeline of related events in reverse chronological order

June 15, 2018 In an interview on CBC’s Island Morning, Agriculture Secretary Sonny Perdue Yarr, who was meeting with Canadian Agriculture Minister Lawrence MacAulay on Prince Edward Island  on June 15, 2018, “denied any U.S. plan to end supply management (Yarr 2018).” Perdue said, “The United States is not about trying to get Canada to ditch its supply management system. What we are saying is if you’re going to have a supply management system, you’ve got to manage the supply, and not over-produce and not over-quota where you dump milk solids on the world market and depress prices from our producers south of the border (Yarr 2018).” MacAulay added, “Regarding Canadian over-supply, MacAulay said Canada produces about one per cent of the world milk solid supply (Yarr 2018).”

2018 “There has been a spate of suicides in the state [of New York] as the dairy industry has nose-dived, resulting in the closing of hundreds of small farms…Whatever the prevalence of suicides, there is no doubt about the widespread hopelessness afflicting the industry…. While the dairy industry nationwide is in the grip of an economic crisis — fueled by decreasing demand as customers turn to milk alternatives…New York is the third largest milk-producing state in the country and low milk prices have not only devastated farmers financially — most are selling milk for less than it costs to produce — but also emotionally….There are about 4,500 dairy farms across the state of New York (Kilgannon 2018). “Those working in farming, fishing and forestry were 3.4 times more likely than other American workers to commit suicide on the job, according to a 2016 study by the federal Centers for Disease Control and Prevention (Kilgannon 2018).”

June 9, 2018 In Quebec, Canada “the dairy industry is thriving like never before – and like none other in the developed world. Family farms milking an average of 80 cows each have prospered under a heavily regulated system that supports prices at sustainable levels by restricting domestic overproduction and keeping imports at bay (Barber 2018).”

June 8, 2018. President Donald Trump tweeted, “Canada charges the U.S. a 270% tariff on Dairy Products! They didn’t tell you that, did they? Not fair to our farmers!”

June 5, 2018. PRS Newswire reported that “The Global Dairy Ingredients is extremely competitive with a huge number of companies trying to capture the market.” “The Global Dairy Ingredients Market size was estimated at 13.7 million tons in 2015 and is expected to reach USD 86.97 billion by 2024. Factors such as population starting to age, increased health issues, better awareness about the benefits of food products rich in nutrition, better production and sluggish lifestyle are expected to benefit the overall market. A shift in food habits, from customary food to nutritional food has been observed. The industry is extremely competitive with a huge number of companies trying to capture the market (PRS Newswire 2018). “High concentrate ingredients such as …milk protein isolates are majorly found in developed countries like the U.S., Germany, and France…Skim Milk Powder (SMP) is gaining popularity in the market. The United States and The European Union are the major SMP producers worldwide. They produce above half of the world’s supply of SMP. In 2013, the U.S. had the foremost share signifying 28% of exports. Whereas, the E.U. exhibited around 21% of the total exports in the same year. Industry participants are investing in R&D and new production sites to come up with innovative production techniques to cater to the existing hindrances in the market. Major industry participants include Euroserum (France), Dairy Farmers of America (U.S.), Murray Goulburn Co-Operative Co. Limited (Australia), Saputo Inc. (Canada), Arla Foods. (Denmark), Volac International Limited (U.K.), Fonterra Co-Operative Group (New Zealand), Groupe Lactalis (Germany), FrieslandCampina (The Netherlands) and Glanbia Plc. (Ireland)(PRS Newswire 2018).” “On the basis of type, the dairy ingredient is segmented into lactose, milk powder, casein & caseinates, MPC & MPI and whey ingredients (PRS Newswire 2018).”

June 2, 2018. Trudeau indicated on NBC’s “Meet the Press” that the government was open to relaxing the system as part of a new NAFTA deal (Todd 2018).”

May 2018. According to their May 2016 report,  Research and Markets predict that the Global Dairy Ingredients Market would “register a Compound Annual Growth Rate CAGR of 5.2% during the forecast period 2018-2023 (Mordor Intelligence. Research and Markets 2018.”

April 17, 2018. Chuck Schumer (D-NY) called for an end to Canadian program hurting upstate dairy farmers (Magnarelli 2017 ).

March 2018 The price of conventional milk dropped “below $15 per hundredweight from its peak of over $25 in 2014 (Kilgannon 2018).”

January 2018 StatsCan reported a domestic herd of dairy cattle “increase of 2.7 percent, with 1.4 million cows and heifers on Canadian operations (StatsCan 2018).”

January 23 – 19, 2018 NAFTA negotiators were to meet in Montreal for the sixth set of renegotiations talks (Orol 2018).

October 15, 2017 Unexpectedly, near the end of a week-long round of NAFTA negotiations, the U.S. called for an end to Canada’s “supply management system for dairy, chicken, eggs and turkey within the next decade…with an initial phase-in period of five per cent more market access per year, leading to total duty-free, quota-free trade in protected supply-managed areas within 10 years (Panetta 2017).” “The supply management request follows an earlier request for a de-facto veto over Canadian milk-classification decisions, which in the case of diafiltered cheese-making products has advantaged Canadian producers  (Panetta 2017).”

2017 ” ultrafiltered milk and other protein-rich dairy ingredients used to make dairy products such as cheese and yogurt in Canada was imported from the US to the tune of $133-million last year…”

2017 Serge Riendeau, President of Agropur Cooperative from 2002 to 2017, was appointed CEO of the Ottawa-based Crown corporation, the Canadian Dairy Commission (CDC). (Agropur 2017)

September 2017 The US Dairy Export Council (USDEC)  introduced a new strategic plan called “The Next 5%” to “increase their dairy export market by 5% by 2021 (Shoup 2017).” The aim of the USDEC is to USDEC also aims to ensure “access to key international markets such as the EU and Canada where they have faced the most resistance.” The USDEC continues to “fight European Union efforts to restrict the use of common cheese names and Canada’s actions to block U.S. dairy exports, and to preserve the trade framework with Mexico that has delivered tremendous U.S. dairy export growth (Shoup 2017).”
August 2, 2017 While, Sagging global prices for milk are now forcing farms around the world out of business. Not so in Canada (McGregor 2017).” A Chinese corporation, Feihe International, Inc., a “manufacturer with over 50 years of experience and keen to expand to North America”, is constructing a state-of-the-art baby formula plant a “40-acre site in Kingston, Ontario” which will open in 2019. It will “employ over 200 people in manufacturing and research jobs” and about 1,000 in construction.  It represents “unprecedented $225 million investment” in eastern Ontario. One of the major reasons is Canada’s supply management. As China phases out its one-child policy, the country will need baby formula and therefore cow and goat milk. About “Roughly 85 per cent of the powdered formula” will be sent back to China. Many Chinese distrust Chinese dairy products following the 2008 incident when hundreds of thousands of babies became ill and six died after drinking baby formula tainted with melamine. “New Zealand’s dominant dairy cooperative was a minority shareholder in Sanlu, the company at the heart of the melamine scandal“, so the Chinese could not invest in the New Zealand dairy industry (McGregor 2017).  The New Zealand dairy cooperative Fonterra owned a 43% stake in Sanlu (Lee 2008, Ritchie 2009).

August 1, 2017 Then-Canadian Trade Minister François-Philippe Champagne announced that Canada’s newly revised allocated tariff rate quota (TRQ) on European cheeses coming into Canada, as part of the new Comprehensive Economic and Trade Agreement (CETA), would be “for 16,000 tonnes of fine cheese and 1,700 tonnes of industrial cheese.” This disappointed Canada’s dairy industry concerned about the influx of c. 18,000 tonnes of European cheeses will be imported once the Canada-EU trade deal takes effect in September, [2017] (McGregor 2017-08-01). Canadian negotiators initially planned on giving 60 per cent of this quota (TRQ) to the Canadian “domestic dairy industry, to compensate for market share it’s about to lose” but further negotiations resulted in half the new quota going to the “domestic industry’s cheese makers while the other half is allocated to distributors and end retailers” (McGregor 2017-08-01). “Small and medium-sized businesses will receive the majority of the quota in each half, helping artisanal cheese makers and independent vendors. The Liberal government wants to help smaller enterprises realize the economic benefits of future free trade agreements (McGregor 2017-08-01)…Under Canada’s supply management system for dairy products, imports are severely limited in order to manage domestic market prices. Few European cheeses come into Canada duty-free, with enormous tariffs applied to all others to discourage high volumes of imports. Canada will nearly double the amount of EU cheese it imports duty-free. It’s the first time it has awarded new cheese quota since the 1970s (McGregor 2017-08-01).”

May 2017 “The U.S. ha[d] more than 800 million pounds of American cheese in reserve, the most since 1984, according to the USDA. The amount of butter in reserve [totaled] 272 million pounds, the most since 1994. Some U.S. farmers [were] dumping millions of pounds of excess milk onto fields. In the Midwest and Northeast, nearly 78 million gallons of milk [were dumped by May 2017], up 86% from the same period [in 2016] (Haddon 2017).”

March, April 2017 The U.S. dairy industry “embarked on a fierce letter writing and lobbying campaign in the spring of 2017, both at the state and federal level, to urge their representatives to retaliate” against Canada’s new milk class Class 7 for protein concentrates, skim milk and whole milk powder

First week in April 2017 Grassland Dairy Products of Greenwood “notified about 75 Wisconsin farms that as of May 1, it is canceling their contracts because it has lost its Canadian business (Barrett 2017).”  Stewart-Peterson’s Bryan Doherty said, “75 farmers in Wisconsin, there are 9,200 dairy producers, it’s a small percentage, but the big part is it’s a big anxiety for all producers (Morgan 2017).” Commodity Risk Management Group ‘s Mike North said, “This is a very different situation, because it has more to do with politics and less to do with markets or bad financial situations that are broader than agriculture itself. They really didn’t change their position, they just cleaned up some of the loose ends that existed since that position was first taken. Ultimately, I wouldn’t blame them, so to speak, but at the same time, their action is what quickly caused this scenario. If this whole affair wouldn’t have taken place in April but rather in July, none of this conversation would have been had (Morgan 2017).” North called the situation “unprecedented”.

In their c. April 7, 2017 statement, “Blame Canada” the Dairy Farmers of Canada (DFC), “The truth is, both the U.S. and world dairy markets are currently over-saturated, which has led to low prices at the farm-gate and a lower price received by the processors. Simply put, in the U.S, and around the world, too much milk is being produced. In the U.S, the oversupply of milk is exacerbated in an environment where processing capacity is lacking. When too much milk is produced, prices crash and there is no incentive to invest in increased processing capacities. The end result is job loss, loss of income for farmers, and in some cases, farmers having to shut down their farms. By contrast, in Canada, supply management (literally matching supply with demand) avoids overproduction, and reduces the impact of devastating market fluctuations, such as those that the U.S is currently experiencing. We know that dairy producers in the U.S are going through tough times; however, incorrectly laying the blame on an unrelated Canadian domestic policy will not improve their situation. To further put things into perspective, Canada only has a population of approximately 36 million people – less than the state of California. No matter how one views the situation, exports to a comparatively small Canadian market – one that is already filled with Canadian milk – are a drop in the bucket that will not solve the problems currently impacting the U.S dairy industry. It is wrong to use Canada as a scapegoat for the situation in the U.S (DFC Blame Canada 2017).”

April 2017 Grassland Dairy’s Goedhart Westers learned that “their Canadian market was gone, a destination worth 1 million pounds of milk a day (Morgan 2017).”

April 1, 2017 Cayuga Milk Ingredients in Auburn, New York, which produces powered milk mainly for export to developing countries, claimed they lost $30 million in export sales when Canada implemented their pricing program in 2016 through which Canada stopped purchasing ultra-filtered milk (Nickel, 2016).”

April 2017 United States dairy farmers are producing too much milk, and the price of milk dropped just as milk product importers cut back their purchases which “may pose one of the biggest challenges yet to the U.S. dairy industry. Milk product importers, such as China, Russia, Venezuela cut back on their dairy purchases since c. 2015. “The European Union…greatly increased its dairy production after lifting 30-year-old quotas in 2015.”  There is a “world-wide surge in agricultural production that has pushed down prices for grains and meat as well as for dairy (Haddon 2017).

2017 “Though about 550 dairy farms closed in the state from 2012 to 2017, the number of dairy cows has increased to 625,000, up from 610,000 (Kilgannon 2018).”

March 2017 By 2017 there was a “very heavy demand for butterfat in Canada” which resulted in “a surplus of ‘non-fat solids’”. To deal with the surplus of ‘non-fat solids’, the “Canadian dairy industry created a new milk class in March (Class 7) “, backdated to February 1, to “price milk ingredients like protein concentrates, skim milk and whole milk powder .” It was “one part of a National Ingredient Strategy [under negotiation in 2017] between Canada’s dairy farmers and its dairy processors

March 2017 By March 2017, “there were 9.4 million commercial dairy cows in the U.S., a 20-year high, according to the Agriculture Department (Haddon 2017).

October 28, 2016 In their October 2016  Research and Markets @researchmarkets report, they announced that Dairy Ingredients Market was “projected to grow significantly from an estimated value of USD 45.55 billion in 2015 to USD 66.11 billion by 2022 at a Compound Annual Growth Rate (CAGR) of 5.61% ).”

June, 2016 There was pressure from Canadian dairy farmers as the demand for domestic milk was decreasing faced with “$150 million worth of U.S. milk protein isolates (ultrafiltered milk or diafiltered milk) used to make cheese and yogurt (Mussell 2006:1, Nickel, 2016). “Canadian imports of U.S. milk protein isolates have jumped 10 times by volume over five years to 2,700 tonnes in January 2016, according to Farm Credit Canada. The proteins are a cheap alternative to skim milk for Canadian processors such as Saputo Inc and Parmalat Canada Inc, who must meet federal standards for milk and protein content in cheese…A move toward consuming more butterfat, through butter and cheese, and less milk, is partly behind Canada’s problem. The trend has already generated a surplus of domestic skim milk…It’s also a bureaucratic problem since Canada’s border agency treats the proteins differently than its food inspection agency, resulting in tariff-free access…Ontario’s dairy farmers set a new price for certain milk ingredients in April to compete with U.S. proteins. As a result, Canadian dairy co-operative Agropur has stopped importing U.S. proteins and uses Canadian milk to make cheese… The U.S. dairy industry has noticed a drop in demand from Canada since the Ontario farmers’ move, and is also wary of government action, according to Wisconsin-based Grassland Dairy Products Inc, which exports the proteins (Nickel, 2016).”

April 1, 2016, the Ontario Class Six regulation changed the pricing for milk proteins, including ultra-filtered milk, and this year most of the other provincial boards followed suit (Cuomo 2016)  Class Six included milk ingredients like protein concentrates, skim milk and whole milk powder. “The Americans, Australians and New Zealanders insist the new pricing class has effectively pushed them out of the Canadian dairy market. They want the new pricing regulations challenged at the World Trade Organization

March 2016 Saputo Inc, with a  revenue of C$11.2 billion in 2017announced they were closing their plant in Sydney, Nova Scotia and they were laying off 230 people, some of whom had worked there for over three decades. The plant made “milk, sour cream, coffee cream, ice cream mix and plastic milk jugs (Shannon 2016).” Saputo has been closing plants in the U.S. and Canada since at least 2014. They closed a facility in Princeville, Que., in August, 2016 and a third facility in Ottawa in December 2017 “to cut costs and boost efficiency (Shannon 2016).” Saputo’s facility in Montreal consolidates its distribution activities (Shannon 2016).

May 1, 2016 The Canadian Milk Supply Management Committee (CMSMC) set a “stop-gap” interim national program effective from May 1 to July 31, 2016 by modifying the “prices paid in milk class 4(m) for milk protein concentrates (MPC) to “support access to Canadian ingredients at competitive prices.” By subsidizing the use of Canadian dairy ingredients it made it easier for milk processors to end their imports of diafiltered milk from the United States. Agropur Co-operative, was the first Agropur becomes the “first major national processor” in Canada to halt its use of diafiltered milk. It halted their purchase of U.S. diafiltered milk immediately (AGCanada 2016).” “The CDC said the change was put in place to level the playing field among Canadian cheese makers after Dairy Farmers of Ontario implemented a new class 6 in that province. DFO’s new class, the commission said, gave a “competitive advantage” to Ontario cheesemakers compared to those in other provinces  (AGCanada 2016).”

April 12, 2016 “Pierre Paradis, Quebec Minister of Agriculture, Food and Fisheries, Marcel Groleau, President of the Union des producteurs agricoles (UPA), Bruno Letendre, Chair of Les Producteurs de lait du Québec”, and Riendeau, then-President of Agropur cooperative, now CDF President, backed by 59 Quebec dairy processing companies, demanded that the federal government “enforce cheese compositional standards (Agropur 2016)”.  “Milk producers claimed that the federal government was “not enforcing its own regulations and treating diafiltered milk as what it really is: a milk ingredient whose use in cheese is limited (Agropur 2016)”. In 2015 Justin Trudeau had promised during his federal election campaign that the Liberals were “formally committed to review the standards, rules and practices regarding food product imports, particularly milk proteins (Agropur 2016)”.  Bruno Letendre, Chair of Les Producteurs de lait du Québec, added “The exponential increase in imported diafiltered milk destabilizes supply management and has a very negative impact on producer income. If nothing is done soon, this breach, in addition to Canada’s major concessions in the free trade agreements with the European Union and the member countries of the Trans-Pacific Partnership (TPP), clearly threatens the sustainability of Canadian agricultural policy in the dairy sector. And while our sector generates major economic benefits for the Canadian economy, these benefits are now at risk (Agropur 2016).”

February 5, 2016  In a February 5 email from Canadian Minister Lawrence MacAulay, he wrote that,  “We are aware of the industry’s concerns about the use of diafiltered milk in cheese production. Under the cheese compositional standards, the intention was never for diafilitered milk to be used instead of milk. We are working to make sure that the rules are clear for everyone. Canada recognizes the importance of effective import control measures and manages its imports in accordance with its international trade obligations” [translation](Agropur 2016)”. MacAulay, stated that he was working on clarifying the rules for everyone (Agropur 2016)”.

2016  In every year from 2005-2016, farmers in the United States have operated at a loss, with the cost of production “higher than what they earn from the marketplace.” represents a loss to the farmer (Grey, Clark, Shih and Associates 2018).” The American government provides heavy subsidies to dairy farmers (Grey, Clark, Shih and Associates 2018).”

2016 Dairy  was a “significant contributor to the New Zealand economy” and is currently New Zealand’s “most valuable export commodity…In New Zealand, dairy is the biggest exporter earner; 95% of dairy products are exported to over 150 countries, generating roughly $14 billion a year  (Gambling 2016:7).”

2015 In 2015 Justin Trudeau promised during his federal election campaign that the Liberals were “formally committed to review the standards, rules and practices regarding food product imports, particularly milk proteins (Agropur 2016)”.

2015 In 2015, “Canadian producers lost a total of over $220 million” due to the “exponential increase” in imported diafiltered milk (Agropur 2016).

2015 Brothers, Luke and Matt Gartman are the seventh generation to run a Wisconsin dairy farm, milking more than 100 head of cows a day. In 2015 their processor Sheboygan gave them 3 months notice that they would not be pruchasing their milk but directed them to Grassland Dairy Products. In the first week of April 2017, they learned on Facebook that Grassland would no longer purchase their milk (Morgan 2017).”

December 2015 The World Trade Organization’s “Nairobi Package,”  adopted in Nairobi, Kenya in December 2015, contained a “Ministerial Decisions on agriculture, cotton and issues related to least-developed countries (LDCs).” including an agreement to “eliminate agricultural export subsidies in all developed countries”. Under the Nairobi Agreement, “Canadian subsidized exports of dairy products will need to stop by 2021.” “Milk currently marketed in Class 5(d) will need to cease by 2021.”

2014 “Supply management quota systems restrict the amount of dairy Canada can export internationally; in 2014, Canada exported 95.3 million kg dairy products (Canadian Dairy Information Centre [CDIC] 2014a), generating CAD$281 million in revenue (Gambling 2016:7).”

2014 Beginning in 2014, dairy farmers in the United States, “aggressively expanded” their herds “when milk prices were driven up by growing demand from middle-class consumers in North America, Asia and other markets (Haddon 2017).”

2014 The price of conventional milk peaked at over $25 per hundredweight (Kilgannon 2018).

June 5, 2014 Saputo Inc,  with its headquarters in Montreal, Canada’s “largest cheese and dairy processor” sought “more global acquisitions.” For Saputo, the deals in Canada at c. $100-million are small compared to the “larger growth prospects for the dairy” in the “fragmented United States”, Australia and Brazil. Milk consumption increased in Brazil. By 2014, Saputo controlled 10% of the American market (Marowits 2014). Saputo acquired Warrnambool Cheese & Butter (WCB), toldest dairy in Australia for $450-million in 2014. In Australia at that time there were only “seven or eight players control[ling] 90 to 95 per cent of the industry  (Marowits 2014).” In Argentina, where Saputo also made acquisitions, the volume of milk processed “more than doubled”, from  400 million litres in 2003 to over one billion litres by 2014 (Marowits 2014). In 2014, the price of higher block cheese was higher in the U.S. and the Canadian dollar was low. Saputo made profits from “ncreased international volumes and prices, which offset higher costs in Canada (Marowits 2014).”

2014 “Major diafiltered milk production plants have been built in recent years along the Canada-U.S. border in states like New York and Wisconsin to service Canadian demand. Because of an ongoing oversupply of milk – and its ingredients – within the United States, the American dairy industry has been exporting the product in liquid form to Canadian processors. The Canadian Border Services Agency considers it to be a protein ingredient and therefore it is not subject to Canada’s high dairy tariffs…Further, because the product was invented post-NAFTA, Canadian officials have been told that they are not allowed to subject American diafiltered milk imports to what’s known as a tariff rate quota (TRQ) – that cap the amount of product allowed in. That’s meant the American dairy industry has had complete and unfettered access to the Canadian market place for diafiltered milk for several years. (Diafiltered milk is not used by American dairy processors.)  “Riendeau and Agropur have previously criticized a loophole in Canadian import rules that allows diafiltered milk to enter the country as a “protein substance” ingredient while still considered “milk” by the Canadian Food Inspection Agency for the purposes of Canadian processing  (AGCanada 2016).”

2013 “Butter perceived as healthier than trans fat after a 2013 announcement by the U.S. Food and Drug Administration (FDA): Trans fat no longer “generally regarded as safe (Cessna 2017).”

October 8, 2012 Canada formally joined the TPP

May 12, 2012 Reuters reported that “U.S. business groups… say agriculture and intellectual property rights protection for Canada” were the main issues that had to be resolves before Canada could join the TPP.

December 2011 Canada expressed interest in joining the TPP during the Asia Pacific Economic Cooperation (APEC) trade ministers meeting.

2012 The Canadian government was participating in the Trans-Pacific Partnership (TPP) trade negotiations.

2011 By 2011 Milk Protein Isolates (MPI) imports were under the Import for Re-Export Program (IREP) program (Doyle 2011). In accordance with the World Trade Organization (WTO) requirements, the Canadian Tariff Rate Quota (TRQ) allows a predetermined quantity of dairy imports controlled under the Import for Re-Export Program (IREP) at a lower rate of duty. Above that cap, imports are subject to a higher duty.

By 2011, the three processors, the Toronto-based, Parmalat Canada, Montreal-based Saputo Inc and Agropur, controlled 80% of all milk production in Canada. From 1990 to 2000 there were many Canadian acquisitions; from 2000 to 2010 there were not many more (Doyle 2011).

November 10, 2010 Canada, under the Premiership of Stephen Harper became an observer  at the Trans-Pacific Partnership (TPP)  talks, and expressed interest in officially joining (CBC News 2010). Under the tenure of President Trump, the United States withdrew from TPP on January 23, 2017. BBC. 2017. “Trump executive order pulls out of TPP trade deal. 

October 2010 Against the backdrop of the TPP talks, David E.  Bond, the retired chief economist of HSBC Bank of Canada, published an opinion piece in the Globe and Mail which was “highly critical of milk supply management (Doyon 2011:12)”. Bond wrote that the “government sanctioned” National Dairy Policy resulted in a “wealth transfer of more than $2.4-billion annually from consumers and food processors to diary farmers. That’s more than $175,000 for each dairy farmer (Bond 2010).” Ed Mussell of the George Morris Centre (Mussell 2010)  and Maurice Doyon of the Cirano Centre described the series of articles and their counter arguments from supporters of supply management, as “a great deal of rhetoric, simplistic arguments and invalid and untested assumptions (Doyon 2011:12)”.

March 11, 2010. Idaho Senators Mike Crapo and Jim Risch and other U.S. senators representing dairy farmers called on President Obama to be wary of proposed “one-sided dairy provisions” in the Trans Pacific Partnership to be negotiated with Australia, Brunei, Chile, New Zealand, Peru, Singapore, Vietnam and possibly additional countries (Crapo 2010).” They were particularly concerned about “anti-competitive practices in New Zealand’s dairy industry could greatly harm U.S. dairy farmers…[They were concerned that “losses to U.S. dairy producers may total up to $20 billion over the first decade of the agreement if U.S. dairy restrictions on exports from New Zealand are fully phased out in the TPP…Despite New Zealand’s small size, its dairy industry is a global power. New Zealand’s dairy industry is dominated by one company that operates as a virtual monopoly in controlling more than 90 percent of the country’ milk production and approximately 40 percent of trade in key internationally traded dairy commodities. In light of this market power, the Administration should consider whether genuine competition is possible as it proceeds with the TPP….New Zealand has demonstrated its capacity to funnel product to the U.S. market as evidenced by the sizable quantities of milk protein concentrates (MPCs) and casein imported each year into the U.S. from New Zealand. MPC and casein imports enter the U.S. virtually tariff-free and with no volume quotas unlike imported nonfat dry milk, butterfat or most cheeses (Crapo 2010).”

2010 There was a very strong demand for Milk Protein Isolates (MPI)  in Canada (Doyle 2011).

2009 There was a very strong demand for Milk Protein Isolates (MPI)  in Canada (Doyle 2011).

October 2008  “In 2008, Canada undertook an Article XXVII action to create a new TRQ for milk protein included in chapter 35 of the Harmonize Trade Schedule (Howard 2017?).” According to the Department of Agriculture and Agri-Food (AAFC), the Tariff Rate Quota (TRQ) that caps the amount of Milk Protein Isolates (MPI) allowed into Canada, has been in place since October 2008 (Doyle 2011).

A 2008 OECD “report found that the price of dairy products in Canada [was] more than double the market price  (Lee 2011).”

2008 In their 2008 article, “Sensory properties of dairy proteins“, Drake and Wright described milk protein concentrates (MPCs) and isolates (MPIs) as a “newer category of dried dairy ingredients that are rapidly gaining in popularity. These products are manufactured by concentrating milk proteins (whey proteins and caseins) from fluid milk by membrane processing followed by spray drying. Recent work in the primary author’s laboratory has addressed the sensory properties of milk proteins across increasing protein concentration (Drake and Wright 2008).”

2005 “Canada had the chance in 2005 to join the nascent [TPP], but chose not to (Dawson 2012). ”

2003 “U.S. powdered-milk stockpile has grown to a record 1.28 billion pounds (Webb 2003).

December 18, 2002. The FDA wrote a warning letter to Kraft Foods North America, Inc. concerned a violation of the violation of Section 403(g)(1) of the Act. “The use of milk protein concentrate (MPC) in these products constitutes a violation of Section 403(g)(1) of the Act because the products are represented as foods for which standards of identity have been prescribed by regulation and the use of milk protein concentrate in these products does not conform to the standards (FDA 2002).”

2001 ” Most Economic Cooperation and Development (OECD) countries, including Canada and the United States maintained “large dairy trade barriers” with the exception of “New Zealand, and to a lesser extent Australia”. Trade barriers are used with
significant intervention in the domestic market to achieve a variety of policy
objectives including income support, producer equity, price enhancement and
price/income stability (Cox, Le Roy, Goddard 2001:254).”

2000 “On 23 December 1999, Canada, the United States, and New Zealand
jointly announced the terms under which Canada’s subsidized exports of dairy
products will be reduced. Under the agreement, Canada will immediately
comply with its WTO export subsidy commitments on butter, skimmed milk
powder, and other dairy products. Moreover, Canada has committed to reduce
substantially the amount of milk made available to cheese producers during the
remainder of the current marketing year (ending July 30, 2000) and to cease
issuing permits for such milk on 31 March 2000. Beginning in the 2000/01
marketing year (Aug./July), Canada will not be able to export more than 9,076
tons of cheese. This total is less than half of the volume exported in recent
years (Cox, Le Roy, Goddard 2001:254).”

1997 The Canadian unit of Parmalat SpA of Italy, which is a subsidiary of Lactalis, was established in Canada with the acquisition of of Beatrice Foods Canada and Ault Foods (Wikipedia. “Parmalat Canada”).

By 2011, the three processors, the Toronto-based, Parmalat Canada, Montreal-based Saputo Inc and Agropur, controlled 80% of all milk production in Canada. From 1990 to 2000 there were many Canadian acquisitions; from 2000 to 2010 there were not many more (Doyle 2011).

January 1, 1995  The World Trade Organization (WTO) was established.

January 1, 1994 The North American Free Trade Agreement (NAFTA) was signed. American milk protein isolates (MPI), also known as milk protein concentrates (MPC) such as ultrafiltered milk or diafiltered milk, was invented post-NAFTA. “Canadian officials have been told that they are not allowed to subject American diafiltered milk imports to what’s known as a tariff rate quota (TRQ) – that cap the amount of product allowed in. That’s meant the American dairy industry has had complete and unfettered access to the Canadian market place for diafiltered milk for several years. (Diafiltered milk is not used by American dairy processors.) 

1990s  Commodity Risk Management Group ‘s Mike North, “says this dates back to General Agreement on Trade in Services (GATT) from the 1990s when Canada decided to take a protective stance on its dairy industry, creating a quota system. North says Canada isn’t necessarily to blame…This is a very different situation, because it has more to do with politics and less to do with markets or bad financial situations that are broader than agriculture itself. They really didn’t change their position, they just cleaned up some of the loose ends that existed since that position was first taken. Ultimately, I wouldn’t blame them, so to speak, but at the same time, their action is what quickly caused this scenario. If this whole affair wouldn’t have taken place in April but rather in July, none of this conversation would have been had (Morgan 2017).” North called the situation “unprecedented”.

March, 1992 “In March of 1992, the FDA Division of Regulatory Guidance issued an opinion letter after 18 months of study [1990-1992], that a product “made by the removal of non-protein components such as lactose, water, and minerals from skim milk by the ultrafiltration procedure, thereby concentrating the protein components to higher levels” could be called a milk protein concentrate…FDA supplied a further description by stating that the milk protein concentrate should contain protein representative “of all the fractions of milk proteins in the same ratio as they are found naturally occurring in milk.” Although there is no official, legal identity for a milk protein concentrate in the Code of Federal Regulations, the above definition is the FDA’s intention for an identity of MPC. There are some MPC’s being offered in the USA today that do not fit within the identity stated above. There are MPC’s being offered today that are mixtures of caseinates and whey protein concentrates. There are also mixtures of caseinates and skim milk that are being offered as MPC. Be very careful to ensure that your ingredient is true, filtered MPC within the spirit of the FDA opinion (Idaho Milk Products 1992).”

1989 Canada joined The Asia-Pacific Economic Cooperation (APEC) forum at its inception.

1980s  “Considering its small size, NZ has become a disproportionately large player on the international stage since the 1980s, trading with over 150 countries and possessing one of the most open economies amongst Organisation for Economic Co-operation and Development [OECD] countries (Patman & Rudd, 2005 cited in Gambling 2016:6).”

1975 Maubois, J.L., Mocquot, G. (July 1975). Application of Membrane Ultrafiltration to Preparation of Various Types of Cheese“. Journal of Dairy Science. Volume 58. Issue 7. , Pages 1001-1007. https://doi.org/10.3168/jds.S0022-0302(75)84672-8 Abstract: “A liquid product with the same composition as a cheese can be obtained by ultrafiltration of milk under appropriate conditions. After rennetting and addition of starter, soft fresh or ripened cheeses have successfully been prepared from the pre-cheese. Both cows’ and goats’ milk have been used as starting material. Preparation of a liquid pre-cheese offers advantages compared to the standard process in which rennet is added to cheese milk. These include an increase in yield due to retention of soluble proteins in the curd, better adjustment of the weight of each cheese, use of much less rennet, less space for equipment and handling, and whey with a lower biological oxygen demand than normal whey. Other possible applications of ultrafiltration in the cheese making field are presented.”

1971 Federal legislation was enacted to establish supply management in its current form under the tenure of then-Prime Minister, Pierre Trudeau, (Liberal). Trudeau has expressed support for the system since 1949 when he was as an assistant to Robert Gordon Robertson (Geddes 2011). Supply Management was “implemented in its current form” in Canada “to ensure a fair return for farmers and price stability for processors and consumers (Findlay 2012:3).”

1969 Maubois, J.L., Mocquot, G. and Vassal, L., 1969, Procédé de traitement du lait et de ses sous-produits laitiers, Brevet Français 2 052 121.

1966 “Supply management started under the Pearson government with the establishment of the Canadian Dairy Commission in 1966 and was expanded to cover eggs, chickens and turkeys during the Pierre Trudeau and Brian Mulroney years (Lee 2011).

1960s “Since its inception in the 1960s, Canadian supply management has been a contentious policy framework. Both the overarching concept and regulatory details of supply management have been debated extensively amongst political, industry and civil society groups; in recent years, supply management has garnered particular attention during the development of international trade negotiations ( Gambling 2016:5).”

1949 Pierre Elliott Trudeau, then assistant to head of the Privy Council Office’s economics division wrote in a memo that, “Price support is only a means; the end we seek should be a livable income for every citizen. And as a means, price support cannot be used systematically; for it naturally tends to prevent equilibrium of demand and supply (Trudeau cited in (Geddes 2011).”

1948 Many countries signed the General Agreement on Tariffs and Trade (GATT) to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas.

1938 Canada and the United States signed the Reciprocal Tariff Act that combined with the 1936 agreement, “made it easier to export commodities such as fish, lumber, cattle, dairy products and potatoes, as well as machinery and equipment to the US, while Canada reduced some of its barriers to imports (Crane 2009-2015).”

1938 During the economic crisis of the 1930s, the Saint-Hubert, Québec-based Agropur Cooperative, was established in 1938, along with hundreds of other dairy cooperatives at that time. By 2011 it was one of three major players in the Canadian dairy industry controlling 80% of milk production. Agropur has 8,300 employees in 39 plants and many distribution centres in both Canada and the United States, and works with roughly 3,290 dairy farmers.  Agropur “processes more than 6 billion litres of milk annually”. )Agropur Canada Wikipidia).

1936 A Canada–US agreement in 1936 “marked the beginning of an economic relationship that over time led to steadily declining tariffs and other trade barriers (Crane 2009-2015).”

1934 President Franklin Delano Roosevelt obtained “the authority from Congress, through the 1934 Reciprocal Tariff Act, to lower or raise tariffs up to 50 per cent from existing levels in bilateral negations with other countries (Crane 2009-2015).”

1930 “The origins of current dairy trade disputes stem in part from the desire
to prevent a repeat of the trade wars during the 1930s and the World War that
followed. The collapse of world trade during the 1930s made a lasting impact
on the negotiators of multilateral trade agreements following the War
(Cox, Le Roy, Goddard 2001:254).” “President Franklin Delano Roosevelt and, yes, Prime Minister Mackenzie King “began crafting the first agreements to liberalize trade relations (Mihm 2018)”

1930 “In 1930, the US enacted the Tariff Act of 1930 — the Smoot-Hawley Tariff — which took US tariffs to record levels, not only dealing an immediate and devastating blow to the Canadian economy but precipitating competitive rounds of protectionism worldwide, making the Great Depression much worse. In 1930, Canadian exports to the US totalled $515 million; by 1932 they had fallen to $235 million. Canada responded quickly, raising tariffs twice, in its 1930 and 1931 budgets. For example, tariffs on “luxury” cars from the US were raised to 40 per cent (Crane 2009-2015).”

Supply management system regulations

There were 5 classes of milk prior to 2016: Class 1 included fluid liquid products; Class 2 included yogurt, ice cream, soft products; Class 3 included Cheese; Class 4 included butter, milk powders and Class 5 included exports under access, permits 5(d) subsidized exports. In April 2016 Ontario began to implement a new milk price (Class 6) and Manitoba did the same in August 2016 (Mussell 2006:1).

Canada’s dairy industry compared to New Zealand’s

Comparisons with New Zealand’s dairy industry from a table by  (Gambling 2016:8).”

Human population Canada: 35.99 million  New Zealand 4.65 million
Number of dairy farms Canada: 11,683 New Zealand 11,927
Number of milk cows Canada: 953,200 New Zealand 4.92 million
Average herd size Canada: 77 New Zealand 413
Milk produced Canada: 7.83 billion litres New Zealand 20.7 billion litres
Cows/capita Canada: 0.03 New Zealand 1.06
Litres milk/capita Canada: 217.6 New Zealand 4451.6
Gross Domestic Product (GDP) (direct) of dairy production (year; % national GDP)
CAD $5.6 billion (2013; 0.35%) NZD $5 billion (2010; 2.8%)

Value of international dairy exports
CAD $281 million  NZD $14-18 billion

Critics of Canada’s dairy

“The system’s critics of Canada’s supply management system “say the tightly controlled program stifles innovation, bars Canadian companies from selling onto international markets, limits choice at the grocery store and saddles Canadian consumers with higher prices (Panetta 2017). Critics of Canada’s dairy include:

  • President Donald Trump on behalf of the American dairy industry.
  • US Senate minority leader, Chuck Schumer (D-NY) who called for an end to Canadian program hurting upstate dairy farmers on April 17, 2018 (Magnarelli 2017 ).
  • New Zealand, often cited as a dairy-industry success story that followed the neoliberal model and therefore compared and contrasted with Canada’s supply management policies. See (Gambling 2016). New Zealand rejected Canada’s entry into the TPP because of its SM policies.
  • Maxime Bernier (PC) who posted his chapter on June 5, 2018 on supply management (April 2018) from a book he is writing entitled Doing Politics Differently: My Vision for Canada.
  • “Montreal Economic Institute, a free-market think tank in Montreal, urged Canadian policy-makers to seize the opportunity to dismantle a system that it says costs Canadian families an extra $339 a year in grocery bills (Panetta 2017).”
  • Martha Hall Findlay Why the dairy industry’s defence of supply management is so flawed Findlay, Martha Hall. (May 14, 2014). “The evidence against supply management is overwhelming. What are politicians waiting for?Macleans. (Findlay 2014)

  • In general, free traders disagree with supply management system because it is a subsidy, not directly through government but indirectly through higher consumer prices. The political challenge is that it is very difficult to remove any subsidy to an industry once it is in place. It is difficult to mobilize voters enough just because they pay a little more for their cheese. It is quite easy to mobilize dairy farmers and the dairy industry to vocalize their concerns to all levels of government through the media to insist on the need to keep the system in place. Politicians at all levels of governance will not want to antagonize the dairy industry.

to be continued

Webliography

AgroPur Cooperative. (2017). “Serge Riendeau to head Canadian Dairy Commission.” Serge Riendeau, President of Agropur Cooperative from 2002 to 2017, was “appointed CEO of the Canadian Dairy Commission (CDC).” (Agropur 2017)

As CEO of the Ottawa-based Crown corporation, CDC Riendeau is responsible for “cooperating and negotiating with dairy industry stakeholders to reconcile their interests and maintain compliance with the supply management system”. Riendeau was a farmer and dairy producer before becoming President of Agropur Cooperative in 1992. He advocates for the “supply management system” and “was instrumental in the establishment of a national strategy to promote the use of Canadian dairy ingrédients (Agropur 2017)“.

Agropur Dairy Cooperative. (April 12, 2016). “Imported diafiltered milk : a common front by the dairy industry to get Ottawa to act.” Montreal. (Agropur 2016)

Anderson, Bruce, Coletto,  David . (April 25, 2017) “Trade, Trump & Milk: How Canadians React To Tough Talk.” Abacus Data. (Anderson and Coletto 2017)

Barber, John. (June 9, 2018). “Why Canadian milk infuriates Donald Trump” The Guardian (UK). (Barber 2018)

Barrett, Rick. (April 11, 2017) “Canada says don’t blame it for Wisconsin dairy woes.”

Berthiaume, Lee. (June 11, 2018). “Canadian dairy farmers accuse Trump of trying to drive them out of business.” CTV News. (Berthiaume 2018)

Bond, David E. (October 21, 2010). “How dairy farmers milk Canada’s taxpayers“. The Globe and Mail. (Bond 2010)

CBC News. (November 10, 2010). “Tories consider joining TransPacific trade group”.

Cessna, Jerry. (2017). “Situation and Outlook for the U.S. Dairy Industry USDA Agricultural Outlook Forum.” (Cessna 2017)

Alberta Dairy Farmers Stand Up Against President Trump.” Alberta Milk. (Conway 2018)

Council of Canadians. (November 20, 2017). “Factsheet: NAFTA and Farming“. Ottawa, Ontario. (Council of Canadians 2017).

“Given the subsidized U.S. industrialized farming industry, allowing U.S. farms more market access would mean Canadian small farmers would be in competition with larger industrialized U.S. farms. The market would expand to include milk from U.S. farms that may have bovine growth hormone (BGH) in it, unlike the milk here in Canada, which doesn’t allow BGH.”

Cox, Tom L., Le Roy, Danny G., Goddard, and Ellen W. (2001). “Dairy Disputes in North America: a Case Study.” NAFTA – Report Card on Agriculture. AgCon Research in Agricultural & Applied Economics.

Crane, David. (2009-2015) “Canada–US Economic Relations: Economic relations between Canada and the US are of paramount importance to Canada“. Historica Canada. (Crane 2009-2015).

Crapo, Mike. (March 11, 2010). “Crapo, Risch fight for fair trade agreement for U.S. dairy farmers: bipartisan group raises concern over anti-competitive practices in New Zealand’s dairy industry”.

Cuomo, Andrew. (October 2016). Correspondence to PM Trudeau (regarding milk supplies).

Dawson, Laura. (February 12, 2012). “Can Canada Join the Trans-Pacific Partnership? Why just wanting it is not enough“. PDF.

“The expanding Trans-Pacific Partnership trade agreement could eventually account for half of global output and 40 percent of world trade. How can Canada get a seat at the negotiating table?” 

Doyle, Pierre; Asgarali, Aamir;  Beaulieu-Charbonneau, Olivier. “Canada’s Dairy Industry s Dairy Industry: Position for the future.” Department of Agriculture and Agri-Food (AAFC). (Doyle 2011)

Drake, M.A., Wright, J.M. (2008). “Sensory properties of dairy proteins Milk Proteins. Abstract: “Milk protein concentrates (MPCs) and isolates (MPIs) represent a newer category of dried dairy ingredients that are rapidly gaining in popularity. These products are manufactured by concentrating milk proteins (whey proteins and caseins) from fluid milk by membrane processing followed by spray drying.” 

Gambling, Samantha Jane. (2016). “Canadian supply management : a food sovereignty policy? : British Columbia and New Zealand industry stakeholder” MSc Thesis. Integrated Studies in Land and Food Systems Vancouver: University of British Columbia Library.

“[Gambling] conducted 27 in-depth interviews with stakeholders from the BC dairy sector as well as textual analyses of industry reports. I also conducted interviews with 10 stakeholders from the New Zealand (NZ) dairy sector as a comparative case study of producer perspectives on dairy production in a liberalized policy environment. Results suggest that supply management in the BC dairy industry is more conducive to food sovereignty than the neoliberal and neo-cooperative organization of the NZ dairy industry.” 

The Economist. (June 14, 2018). “Breaking a few eggs: Donald Trump stomps on Canada’s economy: To avoid further damage, Justin Trudeau may have to stop coddling farmers.” Ottawa, Ontario.

Findlay, Martha Hall. (June 2012).  “Supply Management: Problems, Politics and Possibilities”. Volume 5. Issue 19. SPP Papers. The School of Public Policy. University of Calgary.

Hall makes the “case for liberalizing the Canadian dairy industry” and argues that the supply management system is in effect, a cartel.

Findlay, Martha Hall. (May 14, 2014). “The evidence against supply management is overwhelming. What are politicians waiting for?Macleans. (Findlay 2014)

Food and Drug Administration (FDA). (December 18, 2002). “Warning Letter CHI-6-03“. U.S. Department of Health and Human Services. Chicago, Illinois.

Foreign Affairs and International Trade Canada. (December 3, 2012).   “Canada Joins TransPacific Partnership Round.”

Geddes, John. (November 15, 2011). “A novice bureaucrat (and future PM) on supply management.” Macleans.

Grey, Clark, Shih and Associates Limited. (February 8, 2018). “American dairy farmers depend on government subsidies.” (Grey, Clark, Shih and Associates 2018)

Haddon, Heather. (May 21, 2017). “Got Milk? Too much of it, say U.S. dairy farmers.” Market Watch. (Haddon 2017)

Howard, Fran. “NAFTA provides unfettered access to Canadian market for U.S. high-protein milk ingredients—at least for now.” (Howard 2017?)

Idaho Milk Products. (1992) “What is Milk Protein Concentrate (MPC)?” (Idaho Milk Products 1992)

Inside Trade. (January 28, 2012). “TPP Countries Say Canada Not Ready To Join Talks, Press Vietnam To Decide.” Paywall.

Johnson, Kelsey. (April 22, 2017). “Dairy 101: The Canada-U.S. milk spat explained”. ipolitics.ca.

Kilgannon, Corey. (March 19, 2018). When the Death of a Family Farm Leads to Suicide The New York Times. Eaton, N.Y.

Laca, Anna-Lisa. (May 3, 2018). “Will NAFTA 2.0 Kill Canada’s Class 7?” Farm Journal & MILK Magazine. The target audience of this magazine are large-dairy producers—those with 500 or more cows.

Lee, Ian. (November 21, 2011). “The milking of Canadians“. The Star. Toronto. (Lee 2011)

Lee, Klaudia. (September 16, 2008) “NZ alerted China to tainted milk, PM saysSouth China Morning PostHong Kongpage A1 (Lee 2008)

Magnarelli, Tony. (April 17, 2018). “Schumer calls for an end to Canadian program hurting upstate dairy farmers.” WRVO Public Media.

Saputo seeks global acquisitions to offset Canadian competition.” The Globe and Mail. Montreal.

Maubois, J.L., Mocquot, G. and Vassal, L., 1969, Procédé de traitement du lait et de ses sous-produits laitiers, Brevet Français 2 052 121.

Maubois, J.L., Mocquot, G. (July 1975). Application of Membrane Ultrafiltration to Preparation of Various Types of Cheese“. Journal of Dairy Science. Volume 58. Issue 7. , Pages 1001-1007. https://doi.org/10.3168/jds.S0022-0302(75)84672-8 Abstract: “A liquid product with the same composition as a cheese can be obtained by ultrafiltration of milk under appropriate conditions. After rennetting and addition of starter, soft fresh or ripened cheeses have successfully been prepared from the pre-cheese. Both cows’ and goats’ milk have been used as starting material. Preparation of a liquid pre-cheese offers advantages compared to the standard process in which rennet is added to cheese milk. These include an increase in yield due to retention of soluble proteins in the curd, better adjustment of the weight of each cheese, use of much less rennet, less space for equipment and handling, and whey with a lower biological oxygen demand than normal whey. Other possible applications of ultrafiltration in the cheese making field are presented.”

Maubois, J.L., Tareck A., 1981. “Ultrafiltration-thermisation du lait à la production: aspects bactériologiques”.

McGregor, Janyce. (August 2, 2017). “A winning formula? China invests in Canadian dairy to help feed its baby boom: Feihe International investing $225 million to build infant formula plant in Kingston, Ont.” CBC News.

Mordor Intelligence. (May 2018).  “Global Dairy Ingredients Market – Growth, Trends, and Forecast (2018 – 2023).” Research and Markets. ID: 4402743. 110 pages. Mordor Intelligence.

Mihm, Stephen. (June 14, 2018). “Trade War History Is Not on Justin Trudeau’s Side: Tariffs could batter the U.S. economy, embolden Canadian nationalists and enrich China. Bloomberg. (Mihm 2018)

Morgan, Tyne. (April 25, 2017)”Grassland Dairy Dump: Is Canada Really to Blame?” US Farm Report. Ag Web. (Morgan 2017)

Mussell, Al. (May 2016). “Understanding the Dynamics of Milk Pricing and Revenue in a Time of Change.” Independent Agri-Food Policy Note. Agri-Food Economic Systems Newsletter. Guelph Ontario. (Mussell 2016)

Mussell, Al. (2010). “Making Sense out of a Stale Debate: Milk Supply Management in Canada.” George Morris Centre. (Mussell 2010)

“The debate surrounding supply management has frequently involved a great deal of rhetoric, simplistic arguments and invalid and untested assumptions as highlighted in a recent paper by the George Morris Centre (Doyon 2011:12)”. Doyon, Maurice. (October 2011). “Canada’s Dairy Supply Management: Comprehensive Review and Outlook for the Future.” (Doyon 2011:12)

Nickel, Rod. (June 7, 2016). “Canada weighs options as farmers spar over U.S. milk.” Reuters.

FactCheck.org (April 2017) Email correspondence with Andrew Novakovic.

“The Canadian system is a labyrinth of intertwined regulations and a symbiotic relationship between the Federal and Provincial governments. While it is true that some things are in the direct control of the Provinces, it is generally the case that a Province could not effectively maintain these controls without the Federal system and sanction (Novakovic 2017).”

Orol, Ronald. (January 23, 2018). “NAFTA’s Dairy Divide: Canadian and American dairy sectors don’t agree on trade data.” The Centre for International Governance Innovation. Waterloo, Ontario. (Orol 2018)

Palmer, Doug. (May 13, 2012). “Some secrecy needed in trade talks: Ron Kirk.” Reuters.

Panetta, Alexander. (October 16, 2017). “The final NAFTA bombshell: U.S. demands Canada end supply management for dairy, poultry, eggs: With that demand, the U.S. has now adopted a highly aggressive posture on virtually all the key issues expected to arise in the current NAFTA talks.” National Post. (Panetta 2017)

PR Newswire. (June 5, 2018). “Dairy Ingredients Market to Grow Swiftly Due to Rising Awareness About Benefits of Healthy & Nutritious Diet Till 2024.” Million Insights. Felton, California.

Ritchie, Kerri. (December 28, 2009). “Fonterra denies advocating melamine use in milk scandal“.  New Zealand. ABC. (Ritchie 2009)

Robertson, Lori. (April 28, 2017). “The U.S.-Canada Dairy Dispute.” FactCheck.org. A Project of The Annenberg Public Policy Center.

“The Canadian system is a labyrinth of intertwined regulations and a symbiotic relationship between the Federal and Provincial governments. While it is true that some things are in the direct control of the Provinces, it is generally the case that a Province could not effectively maintain these controls without the Federal system and sanction.”

Workers ‘in shock’ over Sydney dairy closure.”

Shoup, Mary Ellen. (September 7, 2017). “USDEC ushers in strategic plan to grow US dairy exports market by 5%“. Daily Reporter. (Shoup 2017)http://bit.ly/USDECNext5Percent

Smith, Wally (May 4, 2016). “What is diafiltered milk?”dairyfarmers.ca.

Stats Canada. “Canadian farmers had 11.6 million cattle on their farms.” (March 6, 2018). Livestock estimates, January 1, 2018. The Daily. (StatsCan 2018)

Todd, Chuck. “Full Trudeau: Canada and U.S. most successful alliance ‘in the history of the modern world’.Meet the Press. NBC News. (Todd 2018)

Trudeau, Pierre Elliott. 1949. “On Price Support for Commodity Surpluses.” Memo to Gordon Robertson, the head of the Privy Council Office’s economics division cited in (Geddes 2011).

Verboven, Will. (June 16, 2018). “It’s hard to believe dairy farmers hold the key to NAFTA.” The Calgary Herald.

Watson, William. (June 12, 2018) “How should Canada respond to the Trump-quake? By not being stupid: Trade with the rich folk who live just down the road will always be best for Canada. Without the U.S., this country would be worse off“. Financial Post. (Watson 2018) Watson argued that Canada should “Keep our trade and investment policies liberal and get rid of policy stupidities such as supply management (i.e., legislated high prices for essential foodstuffs). Australia did it in 2000, almost 20 years ago now. We aren’t as smart as Australians?” [“In Australia, large producers paid milk producers $1.00 Australian – about 99 cents Canadian – for a litre of milk, which was less than what it cost to produce. Many farmers abandoned farming. Because of this, Australia provided more that $555 million in farming subsidies  (Council of Canadians 2017).”] In the comments section of “How should Canada respond to the Trump-quake?  (Watson 2018), this response: Supply management ” is a very excellent system that controls production and guarantees a steady supply and fair return for the producer. Most family farms in the US have been taken over by big operations because of slim margins. Those family farms still operating are being subsidized by off farm income. They are hoping just to last another year until things improve. The cost of quota in Canada,( the tool to manage supply, ) is not used in calculation of the milk price, producers get. It is the best system out there to date.
Chicken farms have been taken over by big companies in the US and farmers have now become just hired hands for feeding and taking care of the big companies animals. This same thing is happening in Canada to hog farms. …Why destroy a system that works and replace it with one that does not?” Another added: “Supply management is the best alternative to subsidies. American dairy producers are subsidized to the tune of over 70 percent of market returns. This drives the massive overproduction of dairy and they constantly need to find export markets to dump that surplus. As long as the Americans continue their own indefensible system of supporting agriculture, we’d be fools to open up our markets for dairy. A third said, “Canadian dairies are subsidized just about the same amount but it is the consumers that pay that subsidy in the form of higher prices. A fourth added, “Overall the US has a 1.5 billion surplus with Canada in overall dairy trade.” A fifth wrote, “But there are significant differences between our two systems that lead to very different market results. US dairy farmers have used government subsidies to continue to ramp up production, resulting in a massive market glut. Because dairy farming is now so unprofitable, these farmers have become more reliant on subsidies. It’s a vicious cycle based on the conceit that increasing production is always best. Supply management was designed to prevent this exact scenario from happen. It provides the discipline that US dairy is sorely lacking. It’s not a perfect system. IMO, we should be lowering tariffs for specialty products that meet our standards. But the real danger to opening up the issue is from the American producers who desperately want to dump their surplus and keep their broken system going.” Another contributed, ” I just happen to think that co-operative supply management is a superior system to government subsidizing a free-for-all of production.” Another clarified that “The 270% is NOT an across the board tariff. The tariff is ONLY applied when a relatively high level of dairy is has already been imported. And Canada imported in the range of 130 million worth of dairy from the USA and exported about 30 million. Whose trade is imbalanced?” And another, “Does everyone understand that the tariff only kicks in once we buy more then 10% of all our milk from the US. This is to protect our farmers and consumers from the us dumping crappy growth hormoned milk into our economy.” And again, “Yes, certain food industries are protected in Canada mainly because they aren’t the mega-operations in the USA and because they can’t be competitive given the seasons and price of feed. If we allow those industries to be controlled by another country, how do we ever stand up to a bully who then controls our food supply.” And, “countries like Australia put an end to it, but that has not turned out well for any of them – they are all suffering now. Good for Canada for protecting their own. The US made bad choices to deregulate in the 80s and 90s – they can’t go whining about other countries bullying them 30 years later. Trump needs to get some supply regulations in his own country instead of threatening Canada.”And, “Yes, the Australian’s dumped supply management nearly 20 years ago and earned a better deal in trade relations. However, New Zealand got rid of supply management and other farm subsidies in the late 1980’s, under a socialist government, no less and wacked the hell out of most other countries in agricultural products, and are still doing it to a large extent. New Zealand lamb in the store, cheaper by far, than local lamb, as just one example.”(Watson 2018).”

Webb, Tom. (August 20, 2003). “Growing Powdered-Milk Surplus Is Blamed on Price Support Policy

Womach, Jasper. (June 16, 2005). “Agriculture: A Glossary of Terms, Programs, and Laws, 2005 edition.” US Congressional Research Service (CRS) Report for Congress. The Library of Congress.

Yarr, Kevin. (June 15, 2018). “U.S. isn’t trying to get Canada to end supply management, its agriculture secretary says: ‘You dump milk solids on the world market and depress prices from our producers,’ Sonny Perdue says.” CBC News. (Yarr 2018)

Appendix

Who’s Who

Organizations

Agriculture and Agri-Food Canada (AAFC)

American Dairy Association (ADA) [www.ilovecheese.com/default.htm].

British Columbia Dairy Association (BCDA)

British Columbia Farm Industry Review Board (BCFIRB)

British Columbia Milk Marketing Board (BCMMB)

British Columbia Ministry of Agriculture (BCMA)

Canadian Border Services Agency import rules considered American U.S. milk protein isolates, also known as milk protein concentrates (MPC) such as ultrafiltered milk or diafiltered milk, to be a protein ingredient, which is “not subject to Canada’s high dairy tariffs …Further, because the product was invented post-NAFTA, Canadian officials have been told that they are not allowed to subject American diafiltered milk imports to what’s known as a tariff rate quota (TRQ) – that cap the amount of product allowed in. That’s meant the American dairy industry has had complete and unfettered access to the Canadian market place for diafiltered milk for several years. (Diafiltered milk is not used by American dairy processors.)  “Riendeau and Agropur have previously criticized a loophole in Canadian import rules that allows diafiltered milk to enter the country as a “protein substance” ingredient while still considered “milk” by the Canadian Food Inspection Agency for the purposes of Canadian processing  (AGCanada 2016).”

Center for Dairy Profitability at the University of Wisconsin-Madison. Director, Mark Stephenson, says “To cope, [American] farmers need to stop expanding their herds (Haddon 2017).”

Canadian Dairy Commission (CDC) is a “Crown corporation that supervises, supports and regulates the dairy industry, serving the interests of farmers, processors and consumers. Among other things, it administers the supply management system, manages programs that target the industry, upholds milk quality standards and supports Canadians working in the dairy industry (Agropur 2017).”

Canadian Dairy Information Centre (CDIC)

Canadian Milk Supply Management Committee (CMSMC), “chaired by the Canadian Dairy Commission (CDC), is a permanent body created by the provincial signatories to the National Milk Marketing Plan (NMMP) and is responsible for policy determination and supervision of the provisions of the NMMP. The CDC acts as the national facilitator and mediator in helping build consensus between all parties (Canadian Dairy Commission CMSMC).”

CoBank Acb, an agriculture cooperative bank

Dairy Industry Restructuring Act (DIRA)

Dairy Farmers of Canada (DFC) is a well-funded lobby group, considered by some to be Canada’s most powerful lobby. The DFC spends an estimated $80 to $100 million each year (Findlay 2014). The Dairy Farmers of Canada’s Isabelle Bouchard responded, “We don’t feel good about U.S. farms going out of business. But you know what? It’s not our responsibility. It’s your own responsibility, as a country, to manage your production,” …We are a nation of 36 million people, less than the population of California. How do you expect us to (consume) your over-supply of milk when we already produce milk for our market?” (Barrett 2017

Food Secure Canada (FSC)

International Dairy Foods Association (IDFA), Washington, DC. Michael Dykes, CEO, claims that “Class 7 is top of mind for the Trump Administration and they understand the short and long-term impacts Class 7 is having on American dairy farms…I believe dairy will be probably one of the last things addressed, but I remain optimistic we’ll get something done on Class 7 (Laca 2018).”

National Farmers Union (NFU) “Jan Slomp, President of the National Farmers’ Union, a grassroots group of small farmers says, “We need Canada to stand firm against any temptation to negotiate away supply management. Our system ensures farmers are paid the cost of production, processing plants are able to run at full capacity, and consumers have a reliable, wholesome and affordable supply of dairy, poultry and eggs – all without any government subsidies (Council of Canadians 2017).”

National Milk Producers Federation U.S.

New Zealand Dairy Board (NZDB)

Organization for Economic Co-operation and Development (OECD )

University of British Columbia (UBC)

U.S. Dairy Export Council

Individuals

Dawson, Laura. Dr. Laura Dawson is a “member of the C.D. Howe Institute International Economic Policy Advisory Council and president of Dawson Strategic. Dr. Dawson is former Senior Economic Specialist at the US Embassy in Ottawa.”

Lighthizer, Robert U.S. Trade Representative Robert Lighthizer

Twitter

The Guardian (UK).

Canada and the US “remain implacably opposed on the comparatively minor matter of milk,” The entire trade in dairy products between Canada & US is worth less than US$600m Dairying is a “key economic support of traditional rural life throughout central Canada”

75% of Canadians support even greater government efforts to defend the industry in the face of current US demands.” “Supply management enjoys strong government support It obviates the need to subsidize farmers directly”

“Dairy deregulation has spread hardship” in the US In 2017 “US farmers dumped almost 100m gallons of surplus milk” because of overproduction There has been a surge in dairy-farmer suicides in the US because of a widespread hopelessness in the dairy industry In Canada they prosper

Working definitions of key terms

Dairy Price Support Program The United States “federal program that maintains a minimum farm price for milk used in the manufacture of dairy products. USDA indirectly assures a minimum price for milk by purchasing any cheddar cheese, nonfat dry milk, and butter offered to it by dairy processors at stated prices. These purchase prices are set high enough to enable dairy processors to pay farmers at least the support price for the milk they use in manufacturing these products. The 2002 farm bill (P.L. 107-171, Sec. 1501) mandated a support price of $9.90/cwt, effective through December 31, 2007, when the program by law is scheduled to expire. Also, the farm bill established a Milk Income Loss Contract (MILC) program that makes direct payments to participating dairy farmers whenever the minimum monthly market price for farm milk used for fluid consumption in Boston falls below $16.94 per hundredweight (cwt.). The MILC program expires September 30, 2005 (Womach CRS 2005:71) .”

Dairy Export Incentive Program (DEIP) — A program in the United States that offered “subsidies to exporters of U.S. dairy products to help them compete with other nations. USDA pays cash to exporters as bonuses to help them sell certain U.S. dairy products at prices below the exporter’s cost of acquiring them. The program was originally authorized by the Food Security Act of 1985 (P.L. 99-198) and extended by the 1990 farm bill (P.L. 101-624) and the Uruguay Round Agreements Act of 1994 (P.L. 103-465). The total tonnage and dollar amounts of these and other export subsidies have been limited by the Uruguay Round Agreement on Agriculture. The 2002 farm bill (P.L. 107-171) extended the program through 2007 (Womach CRS 2005:71) .”

Global Dairy Ingredients Market Dairy ingredients market include Whey Ingredients Milk Powder, Milk Protein Isolates & Milk Protein Concentrates, Casein & Caseinates, Lactose, and Others.

Milk protein concentrate (MPC) “Any type of concentrated milk that contains 40-90%
milk protein. In addition to ultrafiltered milk products, the MPC classification includes
concentrates made through other processes, such as blending nonfat dry milk with highly concentrated proteins, such as casein. Currently, almost all MPC used in the U.S. is
imported and is not subject to a tariff rate quota. Many dairy producer groups are
concerned that foreign manufacturers are using nonfat dry milk in the production of MPC, and hence circumventing existing quotas on nonfat dry milk (Womach CRS 2005:165) .”

The Canadian Dairy Farmers lobby “contends that milk protein substances with 85 percent or more protein are diafiltered milk, and products made with diafiltered milk are prohibited under the Canadian compositional standards for cheese making.” Diafiltration is a process used in conjunction with ultrafiltration in which water is added back into ultrafiltered milk. The resulting substance is then dried to a power. Dried milk protein concentrate (MPC) can be made using a combination of ultrafiltration and diafiltration. Other products are also made using a combination of these techniques. For example, production of lactose-free, sugar-free or low-carbohydrate ice cream can also be made using ultrafiltration in conjunction with diafiltration to remove up to 96 percent of the lactose normally found in milk (Howard 2017?).”

Neoliberalism “values market logic and aims to re-orient the state to adopt market mechanisms. This is generally achieved through deregulation, trade liberalization, and privatization of public services (Bockman, 2013). Neoliberalism is also reflected in individual and community ideals of efficiency, competition, profitability, and selfhelp
(Bockman, 2013; Hamann, 2009 cited in Gambling 2016:3).”

Supply Management is a “system of controlled markets that applies in Canada to dairy, poultry (chicken and turkey), and eggs (both table eggs and hatching eggs). It evolved over time, implemented in its current form in the 1970s, primarily to ensure a fair return for farmers and price stability for processors and consumers (Findlay 2012:3).”

“The Institute for Supply Management broadly defines supply management as ‘the identification, acquisition, access, positioning, management of resources and related capabilities the organization needs or potentially needs in the attainment of its strategic objectives’. It involves an integration of multiple components such as inventory
control, distribution, procurement, quality and materials management, and manufacturing supervision (Cavinato, 2010 cited in Gambling 2016:5).”

“Supply management is a system in which the Canadian government produces licences that allow farmers to produce quotas of dairy, poultry or eggs. It also controls the price and taxes of imports into Canada. This process guarantees a sustainable living for farmers, and ensures that local, small farms are not flooded by agriculture from large mega farms (Council of Canadians 2017).”

And unlike the European Union or the United States, which have high subsidies for farming, Canada has not had to subsidize its farmers.

Wikipedia categories

Agriculture in Canada
Dairy farming in Canada
Poultry farming in Canada
Anti-competitive behaviour
Cartels

Wikipedia: Related articles

Supply management (Canada)
Dairy farming in Canada
Agriculture in Canada

Random notes

The subtitle of a June 9, 2018 article “Why Canadian milk infuriates Donald Trump” by Toronto-based freelance journalist, John Barber, published in The Guardian (UK), read “Trump’s latest trade war target is Canada’s protected dairy industry. But Canadians have no intention of abandoning it – because it works.”

Barber reported that the Wisconsin Farmers Union “really want” a supply managed system like the Canadian dairy industry.

He also noted that Canada imports 10% of its dairy consumption which represents 5 times more than the U.S. He also noted that the “U.S. restricts dairy imports to 3% of domestic consumption.”

Not that long ago, I had watched an informative documentary comparing the American and Canadian dairy industries but I was unable to find it.

I still have a lot of questions so I am looking for some answers.

As a veteran Wikipedia editor, my third step was to check what my fellow editors have to say. Not surprisingly there was a maintenance template on the Wikipedia article Supply management (Canada),  warning that the “neutrality of this article is disputed”. On the article’s talk page, one editor argued that too much of the article’s content comes from University of Calgary’s, School of Public Policy  Executive Fellow,  Martha Hall Findlay‘s 2012 article  “Supply Management: Problems, Politics and Possibilities.

On the Wikipedia talk page a user noted that what was missing in the article were, “The difficulties of deregulation (costs, effects, requirement of federal and provincial support), food sovereignty/market centralization, milk quality issues (in particular hormone use in the US, which likely contributes to their milk being cheaper), the Canadian public’s general support for supply management, and dumping as it associates with deregulation.”

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