Milk quotas and more

In the summer of 1965 I was a 16-year-old farm lad working in building construction during the day and helping with farm chores before and after work. All of eastern Ontario was suffering from three very dry summers and many farmers had expensive hay shipped in from southern Ontario.

That August the Ontario Milk Marketing Board was created – now the Dairy Farmers of Ontario. I remember it well. Bill Stewart, the Ontario Minister of Agriculture from 1961 to 1975, was the most influential person involved. Many farmers milking a small herd quit as they didn’t like the idea of a marketing board and quota. My father wasn’t happy either. The milk quota was based on the previous 12 months of shipping milk. But because 1963 and ‘64 were very dry summers, pastures were dried up early, hay was scarce and milk production suffered. The quota we were issued meant my father had to sell cows and heifers at depressed prices. Prices were very low due to the drought. There were a few lean years.

However, prior to 1965 there was a lot of chaos for milk shippers. Most farmers will agree that the creation and existence of the Ontario Milk Marketing Board has been the salvation of all milk producers in Ontario.

Supply systems

In 1970 my father and I bought a bigger farm that had a fluid (table milk) contract. I quit the construction job and farmed full time, expanding the operation to 400 tillable acres. Buying milk quota turned out to be an excellent investment. I ran the dairy farm until retiring from it in 1998.

In 1970, the National Milk Marketing Plan came into effect to control supply, with the federal government and the governments of Ontario and Quebec signing on. By 1974 every province except Newfoundland had joined. Following dairy, a national supply management system was implemented for eggs in 1972, turkey in 1974, chicken in 1978 and chicken hatching eggs in 1986.

Supply management is the mechanism by which milk, poultry, turkey and egg farmers in Canada adjust their production (done by the board) in order to meet consumer needs. Products are mainly intended for the domestic market and not as exports.

De-regulation

Supply management has been given a bad rap by some academics and politicians. Prime Minister Trudeau said it well in a recent interview after President Trump’s attack on supply management: “Every country protects its agricultural industries. We have a supply management system that works well here in Canada. The Americans and other countries choose to subsidize to the tune of millions of dollars, if not billions, their agriculture industries, including their dairy.”

Conservative MP Maxime Bthinks that milk, eggs and chicken will be much cheaper for consumers if Canada get rids of the supply-managed sector.

Large supermarkets in the U.S. sell milk as a loss-leader, especially in the border areas to attract Canadian shoppers. The U.S. is awash in milk but it’s not going at bargain prices elsewhere.

If Canada does ever scrap its supply-managed system, which isn’t likely, and dairy farmers can produce all the milk they want, the stores would simply charge what the consumer would pay. And it wouldn’t matter what the farmers were paid for their product. Isn’t that the way it goes with beef and pork that are not supply managed?

Bernier said supply management could be wound down with a multi-year phase-out of the quota system and the import restrictions that protect it.

He said a “temporary levy” on food products could be used to raise funds to compensate farmers for the cost of their lost quota. A levy would increase the store price of milk.

France, Germany, Belgium, Australia, New Zealand, Ireland, Iceland have all de-regulated and right now they are all giving money to their farmers to preserve their national dairy industry, according to Isabelle Bouchard, a spokesperson for the Dairy Farmers of Canada.

Happy Canada Day! Hurrah for Canada’s supply managed system.