New domestic market opportunities for Canada’s dairy farmers
Whilst it seems incredulous, historic and substantial trade barriers exist between Canadian provinces, negatively affecting the dairy sector and all other sectors. However, action is now finally underway to remove these barriers.
Meanwhile, US tariffs on Canadian dairy exports have just been applied, national supply management dairy production looms as a major issue in coming US-Canada trade re-negotiations and Canadian parliament is still prorogued.
Trade barriers abound
Interprovincial trade barriers stifle sales and competition in the dairy sector and other sectors. Goods like milk and meat similarly produced and regulated in one province are not treated the same as products produced in another and are therefore subject to additional inspection fees and/or testing.
It’s become an issue discussed by politicians seeking to be the next Canadian prime minister, but action was taken in one province on 26 February. The premier of Nova Scotia introduced a bill where similarly-regulated goods from other provinces will be treated the same as goods produced there.
However, Canada’s supply management system, wherein the supply and pricing of dairy, eggs, chicken and turkey is tightly controlled, still lies in the way. Supply management “makes it difficult for producers from one province to sell in another,” as explained recently in the National Post newspaper. “For instance, a dairy farmer in Quebec will have to get over hurdles to sell milk to processors in Ontario.”
Indeed, Dr Sylvain Charlebois, director of the Dalhousie University Agri-Food Lab and Canada’s most-prominent critic of supply management, recently described supply management as “a structural roadblock” to interprovincial trade.
He wrote recently in the Sun newspaper chain that “provincial boards, backed by quota allocations and regulatory power, hold significant sway over the dairy industry, reinforcing regional monopolies that make real change virtually impossible. This is why, despite political rhetoric, meaningful progress on interprovincial trade barriers remains elusive. Dismantling these barriers would require a complete overhaul of how supply management operates, something few [provincial] governments have the appetite to pursue.”
Dairy in US-Canada trade
Meanwhile, the Canadian dairy market may be severely disrupted by US tariff and trade manoeuvres this year and next year. While it’s not a huge volume, some Canadian dairy products are exported to the US and are now subject to the 25% US tariff that started being applied to all Canadian imports since 4 March.
At the same time, a memo from the Trump administration issued recently directs the impacts of the US Mexico-Canada Agreement (USMCA) on US agriculture to be studied, along with and other industries. New federal commerce department secretary Howard Lutnick has suggested that when the USMCA comes up for review in 2026, the US would seek more access to Canada’s dairy market. “Canada…treats our dairy farmers horribly,” he said. “That’s got to end.”
