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Agriculture

Time to End Supply Management

Published

6 months ago

8 minute read

From the Frontier Centre for Public Policy

By Marco Navarro-Génie

According to a 2021 report from the Montreal Economic Institute, Canadian families pay up to $600 more per year on dairy products alone due to supply management.

The New Democrats and the Liberals have pledged to tackle inflation, curb price gouging, and address child poverty. Leaders like Jagmeet Singh have railed against corporate greed while Prime Minister Justin Trudeau’s government has introduced programs claiming to feed your children.

But despite these announcements, food affordability remains a serious problem in Canada. If our political leaders are truly committed to making nutritious food accessible for all Canadians, they must confront the largely ignored factor: Canada’s supply management system.

Supply Management Hurts Families

Supply management, which governs the production and pricing of dairy, eggs, and poultry in Canada, was designed  to stabilize farmers’ incomes. However, it now acts as an unnecessary burden on consumers, artificially inflating the cost of essential food items. Farmers are given strict quotas on how much they can produce, and sky-high tariffs—often more than 200%—are imposed on imports.

This creates a closed market that keeps prices far higher than in a free-market system. According to a 2021 report from the Montreal Economic Institute, Canadian families pay up to $600 more per year on dairy products alone due to supply management. This is no small sum to households already feeling the pinch.

To put it in perspective, a litre of milk in Canada costs between $1.50-$2.50, compared to USD 1.00 (around $1.35 CAD) in the United States, where such market controls don’t exist. The cost of other staples, such as eggs and chicken, follows the same pattern, with Canadians paying significantly more than their American counterparts.

These artificially high prices disproportionately affect families struggling. As inflation continues to drive up the cost of housing, fuel, and other essentials, paying extra for basic food becomes the tipping point between having three meals a day or skipping meals to cover rent or bills.

The Conservative Opportunity: Free Markets and Family Values

The Conservative Party has historically championed free markets and policies promoting family well-being, but they also support the food cartels.

In a genuinely free market, prices are determined by supply and demand, leading to lower consumer costs and more production efficiency. Ending supply management would achieve both goals.

While Conservatives have long supported free markets, they have been reluctant to challenge supply management, largely due to political concerns in Quebec, where the system is popular among producers. Being pro-trade and supporting supply management are incongruous political positions.

However, with the Conservatives drawing closer to forming government, potentially without significant electoral support from Quebec, now is the time for a strategic shift. Shedding the protectionist policies would be a bold and forward-thinking move to distinguish the party as serious about free markets and family welfare.

It would also send a powerful message to voters across the country, particularly in regions where food insecurity is rising. Conservatives could frame the policy change as a direct effort to reduce food prices, ease the burden on low-income families, and protect Canadian consumers from the high costs supply management imposes.

The Ethical Case: Dumping Food While Canadians Go Hungry

Perhaps the most shocking aspect of supply management is the appalling waste it produces. To keep prices high, in 2023 alone, tens of millions of litres of milk were discarded—wasted food that could have gone to Canadians in need. This is an unconscionable practice in a country where nearly 2 million people rely on food banks to survive. How can wasting food while so many families struggle to afford basic groceries be justified?

This waste flies in the face of compassion and fairness, and contradicts the principles of a free market.

The Bloc Quebecois’ Game

Given that the significant dairy industry in Quebec benefits immensely from supply management, the Bloc Quebecois is seeking to leverage the weakness of the Trudeau minority in exchange for a Bloc bill, Bill C-282, that would shield supply management from future changes.  The Bloc Québécois Bill C-282 wants to amend the Trade and Development Act. Reportedly, it has support from all parties in Parliament.

One of the key setbacks is the restriction supply management places on open market access. It hinders the ability to fully embrace free trade agreements. A primary objectives of Bill C-282 is to prevent the Canadian government from making concessions in international trade agreements that could undermine the supply management system. This is particularly relevant in trade negotiations where foreign countries often seek increased access to Canada’s agricultural markets.

Consequently, this limits the potential for growth in agricultural exports. Central Canada benefits the most from supply management, and although its trade reverberations hurt everyone, they seem to hurt Western producers the most.

A Call to Action for All Parties

For New Democrats and Liberals, the solution to supporting families and children through food affordability lies  in targeting alleged corporate greed and expanding social programs. But if they are serious about addressing child poverty and food insecurity, they would confront supply management. Likewise, for Conservatives, ending supply management is a natural extension of their free-market impetus and commitment to family values.

The time for change is now. Regardless of party, all political leaders should recognize that dismantling supply management would be a direct, meaningful step toward making food more affordable for all Canadians, as well as maximizing agricultural chances to expand Canada’s exports. With the rising cost of living pushing more families into food insecurity, we cannot afford to let outdated policies continue to inflate prices, immorally perpetuate waste, and curtail chances for greater growth in Agrifoods.

Dismantling supply management would offer tangible relief to millions of Canadian consumers, particularly low-income families.  All other parties should start by killing Bill C-282.

Marco Navarro-Génie is the Vice President of Research at the Frontier Centre for Public Policy

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Agriculture

Liberal win puts Canada’s farmers and food supply at risk

Published on May 1, 2025

By

This article supplied by Troy Media.

By Sylvain Charlebois 

A fourth Liberal term means higher carbon taxes and trade risks. Could Canada’s farmers and food security be on the line?

The Liberal Party, now led by Mark Carney, has secured a fourth consecutive term, albeit once again with a minority mandate. This time, however, the Liberals have a stronger hand, as they can rely not only on the NDP but also the Bloc Québécois to maintain power.

This broader base of parliamentary support could provide much-needed political stability at a crucial time, particularly as Canada prepares for a new round of trade negotiations with the United States and Mexico.

For the agri-food sector, the implications are significant. From carbon taxes to trade rules, federal decisions play a decisive role in shaping the costs and risks Canadian farmers face.

First and foremost, carbon pricing will remain a central issue. Carney has made it clear that the industrial carbon tax will stay—a policy that continues to erode the competitiveness of Canada’s agri-food sector, where fuel, fertilizer and transportation costs are especially sensitive to carbon pricing. The tax, currently set at $95 per metric tonne, is scheduled to climb to $170 by 2030.

While consumers may not see this tax directly, businesses certainly do. More concerning is the Liberals’ intention to introduce a border carbon adjustment for imports from countries without equivalent carbon pricing regimes. While this could theoretically protect Canadian industry, it also risks making food even more expensive for Canadian consumers, particularly if the U.S., our largest trading partner, remains uninterested in adopting similar carbon measures. Acting alone risks undermining both our food security and our global competitiveness.

Another looming issue is supply management. Although all parties pledged during the campaign not to alter Canada’s system for dairy, poultry and eggs, this framework—built on quotas and high import tariffs—is increasingly outdated. It is almost certain to come under pressure during trade negotiations. The American dairy lobby, in particular, will continue to demand greater access to Canadian markets. The Liberals have a chance to chart a more forward-looking path. Modernizing supply management could lead to a more competitive, resilient industry while providing consumers with greater choice and better prices.

The previous Parliament’s passage of Bill C-282, which sought to shield supply managed sectors from all future trade negotiations, was a deeply flawed move.

Fortunately, the new parliamentary makeup should make it far less likely that such protectionist legislation will survive. A more pragmatic approach to trade policy appears possible.

On the domestic front, there are reasons for cautious optimism. The Liberals have promised to eliminate remaining federal barriers to interprovincial trade and to improve labour mobility, longstanding obstacles to the efficient movement of agri-food products across Canada. For example, differing provincial rules often prevent products like cheese, meat or wine from being sold freely across provinces, frustrating farmers and limiting consumer choice. Momentum was building before the election, and it must continue if we are serious about building a stronger domestic food economy.

Infrastructure investment is another bright spot. The Liberals pledged more than $5 billion through a Trade Diversification Corridor Fund to upgrade Canada’s severely undercapitalized export infrastructure. Strategic investment in trade gateways is overdue and critical for agri-food exporters looking to reduce reliance on the United States and expand into global markets.

Finally, the Liberal platform was alone in explicitly committing to support food processing in Canada, a crucial pillar of domestic food security. An increased focus on manufacturing will not only create jobs but also reduce reliance on imported food products, making Canada more resilient in the face of global disruptions.

Farmers have long felt sidelined by urban-centric Liberal governments. The past four years were marked by regulatory and trade clashes that deepened that divide. The hope now is that with greater political stability and a clearer focus on  competitiveness, the next four years will bring a more constructive relationship between Ottawa and Canada’s agri-food sector.

If the Liberals are serious about food security and economic growth, now is the time to reset the relationship with Canada’s farmers, not ignore them yet again.

Dr. Sylvain Charlebois is a Canadian professor and researcher in food distribution and policy. He is senior director of the Agri-Food Analytics Lab at Dalhousie University and co-host of The Food Professor Podcast. He is frequently cited in the media for his insights on food prices, agricultural trends, and the global food supply chain.

Troy Media empowers Canadian community news outlets by providing independent, insightful analysis and commentary. Our mission is to support local media in helping Canadians stay informed and engaged by delivering reliable content that strengthens community connections and deepens understanding across the country.

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Agriculture

It’s time to end supply management

Published on March 23, 2025

By

From the Frontier Centre for Public Policy

By Ian Madsen

Ending Canada’s dairy supply management system would lower costs, boost exports, and create greater economic opportunities.

The Trump administration’s trade warfare is not all bad. Aside from spurring overdue interprovincial trade barrier elimination and the removal of obstacles to energy corridors, it has also spotlighted Canada’s dairy supply management system.

The existing marketing board structure is a major hindrance to Canada’s efforts to increase non-U.S. trade and improve its dismal productivity growth rate—crucial to reviving stagnant living standards. Ending it would lower consumer costs, make dairy farming more dynamic, innovative and export-oriented, and create opportunities for overseas trade deals.

Politicians sold supply management to Canadians to ensure affordable milk and dairy products for consumers without costing taxpayers anything—while avoiding unsightly dumping surplus milk or sudden price spikes. While the government has not paid dairy farmers directly, consumers have paid more at the supermarket than their U.S. neighbours for decades.

An October 2023 C.D. Howe Institute analysis showed that, over five years, the Canadian price for four litres of partly skimmed milk generally exceeded the U.S. price (converted to Canadian dollars) by more than a dollar, sometimes significantly more, and rarely less.

A 2014 study conducted by the University of Manitoba, published in 2015, found that lower-income households bore an extra burden of 2.3 per cent of their income above the estimated cost for free-market-determined dairy and poultry products (i.e., vs. non-supply management), amounting to $339 in 2014 dollars ($435 in current dollars). Higher-income households paid an additional 0.5 per cent of their income, or $554 annually in 2014 dollars ($712 today).

One of the pillars of the current system is production control, enforced by production quotas for every dairy farm. These quotas only gradually rise annually, despite abundant production capacity. As a result, millions of litres of milk are dumped in some years, according to a 2022 article by the Montreal Economic Institute.

Beyond production control, minimum price enforcement further entrenches inefficiency. Prices are set based on estimated production costs rather than market forces, keeping consumer costs high and limiting competition.

Import restrictions are the final pillar. They ensure foreign producers do not undercut domestic ones. Jaime Castaneda, executive vice-president of the U.S. National Milk Producers Federation, complained that the official 2.86 per cent non-tariffed Canadian import limit was not reached due to non-tariff barriers. Canadian tariffs of over 250 per cent apply to imports exceeding quotas from the European Union, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and the Canada-United States-Mexico Agreement (CUSMA, or USMCA).

Dairy import protection obstructs efforts to reach more trade deals. Defending this system forces Canada to extend protection to foreign partners’ favoured industries. Affected sectors include several where Canada is competitive, such as machinery and devices, chemicals and plastics, and pharmaceuticals and medical products. This impedes efforts to increase non-U.S. exports of goods and services. Diverse and growing overseas exports are essential to reducing vulnerability to hostile U.S. trade policy.

It may require paying dairy farmers several billion dollars to transition from supply management—though this cartel-determined “market” value is dubious, as the current inflation-adjusted book value is much lower—but the cost to consumers and the economy is greater. New Zealand successfully evolved from a similar import-protected dairy industry into a vast global exporter. Canada must transform to excel. The current system limits Canada’s freedom to find greener pastures.

Ian Madsen is the Senior Policy Analyst at the Frontier Centre for Public Policy.

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