phil mount Says YES
National Farmers Union VP of policy
Canada’s supply management system supports viable family-scale farming and has had widespread support from Canadian consumers for my entire lifetime. Yet lately it has faced a stream of ideologically motivated criticism bent on tearing the system apart. Mostly these critics try to convince Canadians that we should value the abstract, ephemeral concept of “free trade” over a stable supply of perishable staple foods from local farms.
Rather than “Should Canada keep agricultural supply management?” the question should be “Why would anyone ever consider dismantling supply management?” For 50 years, supply management in Canada—a system of production quotas, cost-of-production pricing and import controls—has proven, time and again, to be the envy of family-scale farmers around the world. It’s also the envy of consumers in countries where essentials such as milk and eggs are subject to price volatility, erratic supplies and seasonal shortages. And in this time of US threats, supply management is a shining example of real Canadian food sovereignty in action.
Supply management allows family farms to earn a modest, reasonable livelihood, retaining a fair proportion of the farm-gate price—unlike most other agricultural sectors in Canada, where, for 30 years, the farmer’s share of food prices has been declining dramatically. The latest National Farmers Union research shows that—outside of supply-managed sectors—the trend has only worsened since COVID. But under supply management, the farmer’s share is based on their cost of production, which delivers a fair return that allows farms to plan and invest in the future. New entrant programs in each of Canada’s supply-managed sectors (dairy, poultry, eggs) attract young farmers to the industry and support farm succession.
Supply management protects farms from consolidation and bankruptcy far better than the “free market” does—and without the need for significant direct annual subsidies. This stability allows our farms to remain family-scaled, against global trends. The average dairy farm in Canada has 105 cows; prairie provinces average 190. Today two-thirds of all milk production in the US is on farms with more than 1,000 cows. The scale of these massive farms, in endless pursuit of efficiency, brings its own problems, including heavy reliance on low-paid migrant labour, vast amounts of animal waste to be managed, and bigger impacts from animal health issues. Culling large US flocks in response to avian influenza, for example, limited the supply and more than doubled the price of eggs in the US in early 2023, and again in early 2025.
With Canadian farmers invested in providing safe, secure, local products, the supply management system ensures that critical perishable staples are constantly available to consumers at reasonable prices, well regulated, and produced with ever-improving environmental and animal welfare outcomes. And above all, the system provides stability for farm families and communities. This uniquely Canadian system has delivered a resilient food supply for half a century. It is the solution. So why are some people trying to make it into a problem?
danny le roy Says No
University of Lethbridge associate professor of economics
For its advocates, supply management isn’t about economic rationality. Its purpose is to use the apparatus of the state to control production, marketing and trade for advocates’ own self-benefit.
For decades, supply management has meant rising prices and incomes in Canada for producers of milk, poultry and eggs. But it comes with costs that compound with time. Supply management stifles individual Canadians from realizing their self-interest as consumers—eggs, poultry and dairy products cost more, and smaller amounts are available than would be without supply management. Many agribusinesses now depend financially on supply management. These issues prompt nasty conflicts—among farmers, consumers, even around the dinner table.
Supply management is a hindrance to trade (in the widest sense of the word). It limits Canadians who want to import dairy, poultry or egg products from abroad. As it reduces the volume of trade, it increases costs to the importer and reduces the return to the exporter. This doesn’t make people richer; it makes them poorer—here in Canada and elsewhere.
High domestic prices for dairy, poultry and eggs hurt Canadians, particularly the poor, who spend a larger portion of their income on food. Lower-income consumers consequently spend less on everything else. Purveyors of other goods and services sell less than they would otherwise, or sell at lower prices, or both, and generate lower revenues.
Production quotas that restrict supply—a key pillar of supply management—hinder new producers wanting to enter the industry, as well as existing producers, who must purchase additional quota to expand their enterprise. There’s no larger financial barrier to expanding an agri-business than the cost of quota. And producers forgo the benefit of using productive assets they otherwise would have acquired.
Supply restrictions are also a hindrance to producers wishing to differentiate their output to satisfy specific consumers. The sale of raw milk to any buyer but a provincial milk marketing board, for example, is a federal crime punishable by up to three years in prison. While it’s legal to drink raw milk, Canada is the only G7 country that prohibits its private distribution and sale. In Europe raw milk can be bought at a vending machine.
phil mount responds to danny le roy
For three decades I’ve been responding to the harshest critics of supply management—almost all of them with no farm background, and motivated by ideology. This experience has proven useful especially as “truthiness” has become an inescapable part of the media landscape. What does truthiness look like? It can be a suggestion that two things are related, or that one directly causes the other, when in fact it isn’t so. Something said with such certainty that it sounds like it should make sense—until you learn the facts.
Take, for example, “The sale of raw milk to any buyer but a provincial milk marketing board… is a federal crime punishable by up to three years in prison.” Prohibitions on the sale of raw milk have a long history in Canada, due to concerns over food-borne illnesses. In 1938 Ontario was first to implement compulsory milk pasteurization. This was a quarter-century before that province brought in supply management. The federal government mandated pasteurization in 1991. The regulation of raw milk remains under the purview of Health Canada. All of this holds true with or without supply management. The point is therefore irrelevant.
Then there’s this: “For decades, supply management has meant rising prices and incomes in Canada for producers of milk, poultry and eggs.” In fact, for decades inflation has contributed to “rising prices and incomes” for farmers, and this is true whether or not these farmers are in supply-managed sectors. Meanwhile the costs of production (seed, electricity, equipment, interest payments) have also risen for decades. Under supply management, farmers have rationally agreed to carefully control their production of essential perishable staple foods, and, in exchange, the rest of us agree that those farmers should receive a price that mirrors the rising costs of production, based on a continually updated survey of farms across the country. Incredibly fair.
We get a stable supply of important perishable staple foods in exchange for a fair return to farmers.
Agricultural producers in other sectors in Canada don’t have the protection of supply management, and for them the last 50 years have been a tale of market booms and busts, “price-taking” from fewer and fewer buyers, and a never-ending treadmill of expansion and more debt. At the same time, rising prices from input and service suppliers add to the costs of production, swallowing an ever-greater share of these farmers’ gross incomes, adding to even more farm debt, forcing farmers to rely on off-farm income and driving most of their children out of farming. None of this is hypothetical. It is well documented. And has been for decades.
Jurisdictions that did away with supply management, as Australia did with dairy in 2000, have learned the real costs of “free trade.” The latest USDA Global Agricultural Information Network report on Australia shows that “between 2002 and 2024, the national milking herd shrank by 39 per cent… the number of dairy farms declined by 71 per cent, … milk production fell by 25 per cent … [and] average herd size increased by about 70 per cent.” The hypothetical benefits of “free trade” continue to shimmer on the horizon. But with “dairy deserts” now appearing in Australia, feed costs spiking due to drought, global oversupply depressing international dairy commodity prices, and Australian processors choosing to rely on cheap imports, the hypothesis is floundering.
The last 30 years in the US have seen a dramatic loss of small and mid-sized farms, and concentration of chickens, eggs and dairy onto megafarms. Research shows more dairy megafarms are injecting their cows with synthetic hormones, and more consistently receive government subsidies. A catastrophic 2023 crash in milk prices led to $1.3-billion in direct government payments to US dairy farmers. The “free market” boom-bust-subsidy model works just fine for megafarms in the US.
The bottom line is supply management in Canada is an agreement that continues to provide a stable supply of perishable staple foods to all of us, in all regions, in exchange for a fair return to farmers, with no government payments required. To protect that guaranteed, stable, high-quality supply, we’ve agreed to keep strong controls on the massive volumes that would spill over our borders. These consumer and farmer protections are more important than ever, as megafarms decimate mid-sized farms (that’s all we have in Canada!) and increase strain on water, volatility of domestic and global markets, and the reliance on precarious migrant farm workers.
Fortunately, Canadian consumers, farmers, legislators and policymakers continue to ignore the criticisms from an ideologically motivated elite with no skin in the game, and continue their reasonable and rational support of our uniquely Canadian pledge to protect food sovereignty: supply management.
Danny le roy responds to phil mount
I’m grateful for the CHANCE to answer the question “Why would anyone ever consider dismantling supply management?” This system of production quotas, import controls and high prices not only fails to achieve its intended outcome, it harms everyone in Canada, including the people it purports to help. Supply management has created and compounded inefficiencies, increased the cost of food to Canadians and spawned a litany of unintended consequences.
Policy reforms elsewhere are illustrative. In the 1980s Australia began to address the negative effects of supply management. In 2000 the program was deregulated. State authorities that had set prices and managed supply were abolished. Consumer milk prices fell while raw milk prices rose from the efficiency gains throughout the industry. More recently, deregulation has driven productivity gains in the UK and EU as well.
Canadians, however, continue to be deprived of the benefits conferred by unfettered competition. The number of farms governed by supply management here has fallen faster than those that aren’t. In 1971 supply management was implemented for milk first in Ontario and Quebec and then in other provinces. That year, 145,318 farms reported dairy cattle out of 366,128 farms. Of the 189,900 farms in Canada today, only 9,048 reported milk shipments last year. Egg and poultry farms total 4,500. Less than 8 per cent of farms in Canada produce supply-managed commodities. Almost without exception, the only entrants in supply-managed industries are now family inheritors or people who sold farms in Europe and bought farms here. Supply management hasn’t prevented concentration of primary production; it has encouraged it.
Supply management not only fails to achieve its intended outcome, it harms people it aims to help.
Some critics of supply management are indeed ideologically motivated. But correctly identifying the logical implications of government policy isn’t a product of ideology but of deductive reasoning.
Free trade among people isn’t an abstract concept. It’s the crux of our daily existence, and it can be impeded. We constantly sacrifice things we value to obtain things we value more. Each person aims to improve their situation; otherwise trade can’t occur peacefully for mutual benefit.
With this in mind, one wonders which consumers are “envious” of supply management. The policy purposefully restricts production. Manufactured scarcity then increases prices. Consumers have less access to local goods and services and those from other jurisdictions. Trump-era tariffs do likewise. The higher prices US importers must pay compromises their productivity. The cascading impacts reveal the complexity and interconnectedness of the agrifood system and the consequences of disrupting the spontaneous order and creative power of free markets.
Trump’s tariffs expose the importance of individual freedom, voluntary co-operation and the division of labour in driving prosperity. The most cogent response for us, then, would be to remove all trade barriers in Canada, from regulations limiting movement of products between provinces to, yes, import taxes on supply-managed goods.
Farmers’ falling share of the consumer dollar has nothing to do with supply management. It’s the result of all the value-added activity in transforming commodities into consumer goods. Farmers don’t produce food; they produce a primary product which after transportation, processing, storing, wholesaling, advertising, retailing, preparing and serving ultimately becomes food. The farmer’s share has fallen as consumers get wealthier and spend less of their disposable income on food. Not having to spend so much on food is a sign of prosperity, as it allows more consumption of every other good or service.
It’s often argued supply management is needed because milk, poultry and eggs are perishable. Not only does this fail to describe why supply management for these commodities isn’t legislated in all other countries, it fails to explain why it doesn’t exist for products that are even more perishable. Consider freshly cut flowers. Not one petal on this planet is produced and marketed through a national supply management policy.
And if production quotas, pricing based on production costs, and trade restrictions are so great, why limit them to a few commodities? Why not expand them to all goods and services? Supply management for every person! Restrict production of every good and service. Set prices for everything and enforce them by administrative dictate. A policy causing more poverty is difficult to conceive.
Canada’s supply management model is not the envy of family-scale farmers around the world, nor of consumers. The evidence is overwhelming: supply management has no place in a free and prosperous society. The familiar blue cow logo on our dairy products isn’t innocuous. It is the mark of sanctioned oppression.
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