by Amanda Smith, Associate Editor
The U.S. and Canadian dairy industries face many of the same hurdles. A dwindling producer population and stagnant domestic fluid sales don't create a burgeoning dairy system. Yet, the U.S. has a competitive edge: we are readily poised to take advantage of growing international dairy demand. That's in part because the U.S. has cost structures more closely aligned to the world market.
The current Canadian export impact is incredibly minor. In 2012, the country was a net importer of dairy products, despite having $27 million in milk powder exports. Their world contributions for milk powder, cheese and butter stand at 0.02 percent, 0.29 percent and 0.01 percent, respectively.
According to a report from the Conference Board of Canada, the Canadian economy stands to gain $1.2 billion a year if the country ended its supply controls. The study further notes that the elimination of quota would create as many as 8,000 new dairy-related jobs if the industry were free to pursue the rapidly growing Asian and African markets.
The study concludes that the current system is costing dairy producers $1 billion a year in lost revenue, displaced by cheaper imported dairy ingredients and substitution from oil-based products. Relatively low shipping rates from west and east coast Canadian ports make exports to Asia a viable option should the current dairy policy be amended.
Dairy Farmers of Canada, on the other hand, refutes this conclusion. In a The Globe and Mail article on the topic, the organization's executive director, Richard Doyle, notes, "The cost of getting rid of supply management will always surpass by several folds the assumed benefits of allowing a few to compete in the most price-volatile market of all agricultural products."
In 1980, Canada produced 14 percent more milk per capita than the U.S. This trend has reversed as of late. In 2011, Canada produced 21 percent less.
