Opinion: We needed to get rid of the dairy cartel, not sanctify it in law

A new supply management bill that protects the dairy industry from competition flies in the face of the federal Liberals' goals to open trade in Canada. Photo by Kâté Braydon //Telegraph-Journal

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By Lawrence L. Herman

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It never ends. On June 5, Yves-François Blanchet, the Bloc leader in Parliament, tabled Bill C-202, a private member’s bill that’s yet another regrettable effort to enshrine Canada’s Soviet-style supply management system in the statute books. It legislates against any increased imports of dairy products, eggs and poultry — sectors the system protects from foreign competition — under Canada’s current or future trade agreements. The Senate fast-tracked the bill, passing it on June 17 after it sailed through the House with virtually unanimous support. It’s an unprecedented piece of protectionist legislation that favours this one group of farmers.

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C-202 is virtually identical to Bill C-282, which a Bloc member tabled in 2021 during the past Parliament. It was passed by the Commons in June 2023 and was still being examined in the Senate last November when Donald Trump was elected. It had been stalled there for almost two years and — mercifully — died on the order paper when this spring’s election was called.

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As well as preventing imports, supply management is a quintessential barrier to internal trade, designed to protect local producers against out-of-province competition, whether in dairy, eggs or poultry. Under the influence of the well-financed dairy lobby, the Trudeau government and all the other parties supported Bill C-282 as it made its way through the House. This time round, however, it’s hard to see how the Liberals could have voted in favour of a blatantly protectionist bill completely at odds with the Carney government’s core policy of dismantling interprovincial trade barriers — and doing so before July 1, no less.

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While Blanchet and his Bloc colleagues have remained focused on currying favour with Quebec dairy farmers, there has been a sea change in the geopolitical context, most notably a dramatic deterioration in the Canada-U.S. relationship, with Trump targeting dairy import restrictions among the many trade assaults he’s been directing at Canada. For Parliament to raise this protectionist fence higher is downright foolish — as was emphasized by experts over and over again during the debate on C-282 — and would seriously jeopardize our relations with the U.S. at this very sensitive juncture.

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That alone should have consigned C-202 to the Parliamentary dustbin. But some other factors that are not always fully aired should outrage Canadians when the facts are better understood.

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Consider the dairy sector as an illustration.

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First, to make supply management work, over the past 50 years governments at both federal and provincial levels have layered complexities onto the system, creating a mind-numbing process run by vast bureaucracies from coast to coast. This newspaper explained it all in a report compiled by staff about a year ago.

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At the top of the structure is the Canadian Dairy Commission (CDC) and its Canadian Milk Supply Management Committee (CMSMC). Each year, the CMSMC sets the allowable production volume for Canada as whole and the Commission then divides this up among the provinces, who parcel out the quota to their own producers, distributors, processors and consumers.

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The CDC then sets the farm-gate price for milk under what’s called the National Pricing Formula. While consumers may think of milk as milk, under supply management milk is divided into five different classes and many sub-classes, based on what the milk is used for, whether as a consumer good or for further processing. The CDC applies the National Pricing Formula to set the annual farm-gate price in each class, with the price being different for each milk component — butter fat, proteins and solids. Provincial marketing boards then take all of this and, after even more consultations with industry players, determine who in their province is allowed to produce what, as well as where and to whom it can be sold, in what volume and at what price in that particular province. This goes on, year after year, involving scads of officials. Other industries, meanwhile, manage to decide prices and quantities without regulators’ help.