Photo via Storyblocks, licensed to Brian Zinchuk
For the past decade, Quebec’s political parties have been arguing over who hates oil and Western conservatives the most along with which party can claim bragging rights for being the best at extorting benefits from the rest of Canada.
The debate is running particularly hot just now. Quebecers go to the polls on sometime this year and the Coalition Avenir Quebec (CAQ) government is in trouble. There is a good chance the Parti Quebecois (PQ) will win. At the same time the Bloc Quebecois (BQ), the PQ’s allies in the House of Commons, have announced the price they will exact in exchange for keeping the Trudeau Liberals in office.
The Bloc’s policy demands include passage of a private members bill (C-319) that would increase Old Age Security payments for seniors between 65 and 74 years of age by 10%. But the demand that is raising hackles on the prairies is passage of the Bloc’s Bill C-282. This legislative gem would prevent future Canadian governments from surrendering supply management for dairy, poultry and egg producers in any future international trade negotiations. Canada’s supply management system guarantees farmers’ their cost of production and sets the prices that both farmers and retailers obtain when selling milk, eggs and poultry. It also prohibits the importation of most fluid milk and industrial milk products.
Mathieu Frigon, president of the Dairy Producers Association of Canada, lauded the proposed legislation stating it would ensure the principles of supply management are upheld in future trade negotiations. He noted that producers in the dairy sector had been disappointed by concessions made to European cheese exporters in the 2016 free trade agreement between Canada and the EU. Frigon said passage of C-282 would mean, “no other concessions, such as more access [for foreign milk and milk products], are made in future trade agreements that would negatively impact the Canadian dairy sector.”
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Lots of people would love to have a business with a guaranteed floor price that covers their costs of production. But if just anyone who wanted to could enter the dairy industry, Canada would be swimming in way more milk than consumers would be prepared to buy. To avoid having too much spilled milk and rotten eggs, entry into the managed industries and expansion of existing farms is limited by a quota system. For example, if a farmer wants to legally sell milk he can’t simply buy a cow and set up shop. They have to buy the cow plus a milk quota—which is the right to sell the milk the cow produces. Quotas become available when farmers retire or otherwise leave the industry, and in response to increases in Canada’s population and consumer demand. One of the few market driven facets of supply managed farming is the auction system used for buying and selling milk quota. Over the past 10 years dairy quotas have exceeded $40,000 per cow in some provinces. Clearly there are farmers who think it pays to be supply managed and are willing to pay a lot to play.
When the supply management system was established in the early 1970s, quotas were given out free of charge to existing dairy, egg or poultry farmers based loosely on their existing herd and flock sizes. It happens that there were a lot of small dairy farms in Quebec when the system was created.
Ensuring dairy farmers are protected by supply management is a cause célèbre for Quebec nationalists. Quebec has 4,384 dairy farmers –more than any other Canadian province. By way of comparison, British Columbia has just 437 dairy farms and there are 477 in Alberta. Quebec also has more dairy farmers per capita than any other province–one dairy farm for every 2,076 people. The combined populations of Alberta and BC total 10,488,723. The population of Quebec is 9,100,000. The number of dairies per capita for Alberta and BC combined is one dairy farm for every 11,475 people.
Quebec has a veritable lock on its dominant position. This is because the quota system limits the ability of dairy farmers in other provinces to catch up. This is the case even though the populations of provinces like BC and Alberta have increased significantly since the early 1970s. If an existing dairy producer or a prospective new entrant to the industry in British Columbia wants to obtain quota to supply milk for a single cow, the going rate is $40,000 or more. The average Canadian dairy farm has approximately 150 cows. To establish a 150 cow dairy farm in BC, a young couple would have to spend $6,000,000 on quota. They would still need to buy the actual cows, land, buildings, equipment, etc. required to operate a dairy farm. No worries, if the dairy farmers of BC and Alberta are unable to supply all the milk required to satisfy their own citizens, Quebec has more than enough extra milk and milk products to export to other provinces.
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Quebecers boast that their province’s farmers have been milking cows for over 300 years. While that might be correct, the size of the average dairy farm in Quebec hasn’t kept up with the herd expansion that has occurred in the other provinces. The average dairy farm in Saskatchewan milks 192 cows. In BC the average number of cows per farm is 183. In Newfoundland, there are only 23 dairy farms but the average size of their herds is 226 cows. The workload on the average Quebec dairy farm is far less intense. There are only 82 cows to milk each day on the average dairy farm in Quebec. Statistically, this means the average dairy farmer in Quebec is 57% less productive than a dairy farmer in Saskatchewan. A rural chauvinist from the prairies might boast with some legitimacy that dairy farmers in Quebec lack the work ethic of dairy farmers in the west including those on the Hutterian Brethren colonies that operate many of dairy farms on the prairies.
A reasonable case can be made to the effect that the federal Liberals’ support of supply management (on behalf of securing votes in Quebec) has adversely impacted western Canada’s petroleum industry. Around the time the Biden administration was contemplating the cancellation of the Keystone XL pipeline, the US, Mexico, Canada trade agreement was being negotiated. One of the major sticking points holding up the trade deal was Canada’s refusal to dismantle supply management in the dairy sector. At the same time the Trudeau government claimed it supported completion of the US portion of the Keystone XL pipeline. The claim seemed disingenuous to oil producers on the prairies given the Trudeau government’s efforts to thwart new pipeline development here in Canada.
When the newly inaugurated Biden administration killed the Keystone XL pipeline in 2020, the prime minister registered his disappointment with Washington, and pledged to lobby Biden to reconsider the decision. At the same time the Liberal government was fighting tooth and nail to preserve supply management. Ottawa was prepared to frustrate and possibly derail a trade deal with our most important trading partner on behalf of supply management. A cynic might reasonably speculate that Canada’s negotiators saved supply management by indicating they would roll over when it came to other cross-border irritants such as buy American provisions built into the US government’s economic stimulus programs and the cancellation of Keystone XL.
Admittedly, smoking gun evidence is lacking which shows that Ottawa sold out the Keystone XL. However, the Canadian beef sector’s opposition to the Bloc’s Bill C-282, is also based on the proposition that support for supply management endangers trade between Canada and the US in other commodities besides milk.
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On October 8, 2024, officials representing beef and pork producers sent a letter to Matt Jones, Alberta’s minister of jobs, the economy and trade, expressing their deep concern over the ramifications of C-282. The letter states, “This bill not only prioritizes the economic interests of one specific sector but has the potential to severely harm all other export-driven industries across Canada, especially here in Alberta.”
No surprise there. Western Canada’s ranchers are famously independent and self-reliant. They favour free markets and free trade. Back when the supply management system was being established the organizations representing the vast majority of beef cattle producers refused to participate.
Jones subsequently released a statement that stated if Bill C-282 was passed it would “hamper Canada’s ability to negotiate trade agreements that expand market access to benefit the broader agriculture industry … Canada is a trusted and principled trade partner and negotiator around the world. This bill would undermine Canada’s reputation as a reliable trading partner.”
Passage of the bill is assured. The Trudeau Liberals need the Bloc’s support to avoid an early election.
On October 10, around 200 hundred supporters of supply management held a demonstration on Parliament Hill in support of Bill C-282. They were joined by federal Agriculture and Agri-Food Minister Lawrence MacAulay and Bloc Québécois Leader Yves-François Blanchet. The fact both parties pledged their support at the demonstration adds credence to the claim that Canada is currently being governed by a quasi-coalition that includes MPs who are dedicated to leaving Confederation. National disharmony is now officially built into policy making at the federal level.
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