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World dairy chaos makes supply management a success

Farmer Andrew McCurdy works in the milking parlour of his dairy farm near Old Barns, N.S. in 2013. In much of the industrial world, dairy farming has been in cyclical crises for years.

Canada’s managed milk supply system has been under attack for so long, mainly by right-wing ideologues and their think tanks, that it has come to look like something backward, hopelessly out of whack with the modern way and destined to disappear. And now, of course, the half-mad king of Trumpistan wants it dead and has raised the greatest challenge yet.

But here’s some unfake news about all this that may surprise you. In much of the industrial world, dairy farming has been in cyclical crises for years, but none worse than now as milk prices collapse because of overproduction and dairy farms go bust — especially in the United States, where farmers dumped 100 million gallons of milk they couldn’t sell last year, and where there’s been a rash of bankruptcies and dairy farmer suicides.

There’s one notable exception to all this, a place where there’s peace in the cow pasture. If you haven’t noticed any cow crisis around you in recent years, you may have guessed that we’re talking about good old Canuckistan.

Britain’s The Guardian newspaper, in a June 9 report on the Trump-Canada dairy standoff, citing polls that show Canadians overwhelmingly in favour of keeping supply management, commented that “Canadians have no intention of abandoning it — because it works,”’ Canada being one of the few places in the developed world that has dairy stability.

Subsidies and state support

A respondent to the article noted that in Britain, milk quotas were ended by Margaret Thatcher in the 1980s with the standard result: overproduction, collapse of small farms, consolidation into megafarms and a spate of farmer suicides.

The European Union ended quotas three years ago, also with the same result — overproduction (Irish farmers went at it with a vengeance), collapsing prices, demands for more government support, etc.

But the real kicker in the Trump-Canada standoff is this: Whereas Canada is accused of subsidizing milk production (it’s not, mostly — it’s just regulating it) the U.S. dairy industry, according to studies on both sides of the border, is getting as much as $22 billion a year in support from the state and federal levels.

And to add to the Trumpian hypocrisy in this, a paltry three per cent of U.S. dairy consumption is imports. In Canada, despite the controls that go with supply management, it’s 10 per cent.

Other factors are involved in this overproduction.

In the chaos, the small ones go under and the big ones swell. Over a couple of decades, the number of dairy farms in the U.S. has declined by 60 per cent while production has increased by a third.

These big farms are not only more efficient, but cows have been genetically engineered to produce more milk (frankencows are another issue). Meanwhile, dietary trends away from high-fat dairy has meant lower consumption of dairy, more or less everywhere.

Where’s the scandal?

On this side of the border, the usual rap against supply management is that we’re paying too much for dairy products. Compared to what? The American subsidized stuff? Take away the U.S. subsidies and adjust for the difference in the dollar, and what’s left is mostly prissy ideological howling.

I just checked. A litre of milk costs $2.25 at my local store. You pay that much for a 591 ml bottle of soft drink or bottled water. Where’s the scandal? The fact that in the U.S. you pay a lot less for milk than for bottled water proves nothing except that, in dairy, the subsidy-and-monopoly system disguised as free market economics is broken.

In principle, when dealing with easily produced perishables — milk, eggs, poultry — nothing makes more sense than to match supply and demand. Where’s the sense in subsidy-driven surpluses that have to be dumped at huge economic and environmental cost?

A poll among U.S. dairy farmers last spring revealed that more than half of them, far from coveting the Canadian market as a place to dump their surplus, would like a Canadian-type system. Supply management may have its issues, notably that irksome feature which is bureaucratic control, but it’s actually far better than the alternative.

For the Canadian government the lesson is this: insist that any negotiations over dairy require a full accounting of American subsidies and the failures of the horror show they support. If that’s not forthcoming, defend supply management at any cost. It may well be a model for others, even Americans.



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