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Examining Canada’s Supply Management Dairy Policy, Identifying Challenges and Proposing Need for Reform | Part 3

Third Policy Paper in Dairy Supply Management Series Suggests Evolution of Dairy Supply Management Policy

By , Farms.com

The George Morris Centre released its third policy paper in a series that seeks to examine Canada’s Supply Management system for dairy. The first two papers were commissioned by the Conference Board of Canada.  The paper entitled “Canada’s Supply-Managed Dairy Policy: Challenges and Need for Evolution” identifies some of the key challenges facing the Canadian dairy market and provides some insight on some of the current and future tensions that face the dairy industry.

The paper explains how the Canadian dairy market can be understood in two segments – fluid beverage milk and industrial milk. Fluid beverage milk is defined by Provincial product regulations while industrial milk can be defined by federal regulations, with markets that are set at the national level. While both markets are mature, they are also considered slow in terms of growth with fluid milk experiencing the slowest growth. However, it’s important to note that growth trend indicators are complex due to the large variety of dairy product offerings. For example, production of certain speciality cheeses has seen rapid growth, while other dairy products such as yogurt have experienced solid growth patterns.

The policy paper goes on to highlight the growing gap with dairy products and trade, noting that trade challenges have played a major role in shaping the evolution of dairy supply management policy in Canada. The paper suggests it will be important for supply management system to address the threat of future imports on dairy products and the slow domestic market growth.

Looking to consumption of dairy products demonstrates complex trends. As noted earlier, some products are experiencing growth, such as cheeses and yogurt, while products such as ice cream and butter have seen a decline. These trends are important observations when looking for evidence of some of the changes that are occurring in dairy markets. This suggests that innovations are happening at the retail level when it comes to dairy.

One of the other components that the paper examines is the relationship between milk allocation to plant by provincial marketing boards, suggesting that this relationship is often bureaucratic and in some cases - even lack transparency. The authors of the paper suggest that the mechanisms of supply management act as barriers for manufacturing plants and are often inflexible. The paper also notes that it’s crucial that supply management advocates not lose sight of the importance that innovation and competition plays in dairy products, as this oversight could mean risking the viability of processing facilities in Canada.

While this paper highlights some important tensions facing the dairy industry, it doesn’t suggest eliminating supply management all together.  What the authors do suggest is a series of reforms to address some of the inefficiencies in the dairy sector.  The link to the full policy paper can be found at http://www.georgemorris.org/publications/file.aspx?id=151f45f1-4ea2-4c86-bf12-0d7ad926a8de

The fourth and final paper in the series that will be released sometime in the near future will look at innovation, growth and vitality of the dairy industry. The following are some articles relating to the two other policy papers that have been released in the series:

How Did Canada’s Supply Management Policy Come to be? | Part 1
Comparative Analysis on Canada’s Dairy Supply Management System | Part 2


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