Everyone’s Suddenly a Supply Management Expert—But Few Understand It

Supply management needs to change—but for the right reasons. Trump’s threats and the illusion of lower retail prices aren’t among them.

In recent days, nearly everyone has weighed in on supply management, especially after former U.S. President Donald Trump reiterated his longstanding opposition to the policy. In a letter to Prime Minister Mark Carney, he threatened to impose new tariffs of up to 35% by August 1, reigniting old debates. In response, the media has scrambled to feature a range of voices—many of whom lack any real understanding of the policy’s complexities. Some of the most misleading statements have come from high-profile commentators and political figures who have never seriously studied the system.

Supply management in Canada governs the production of dairy, poultry, and eggs. It operates through production quotas, provincially allocated, and is supported by high tariffs on imports to maintain a delicate balance between domestic supply and demand. Of all three sectors, dairy is by far the most protected, accounting for about 80% of the total quota system. It is also the least competitive and most vulnerable.

One of the most common—and erroneous—claims circulating in recent interviews is that dismantling supply management would automatically lower retail dairy prices. That’s simply false. In countries where similar systems were abolished, prices often increased, not decreased. Like carbon pricing, retail food prices are shaped by numerous factors, including labor, logistics, and input costs—not just farmgate prices. While dairy products in Canada are relatively expensive, they are also remarkably stable in price, largely due to supply management. However, industrial milk and butterfat prices in Canada are among the highest globally, and this should be addressed.

Another misconception is that Trump isn’t really targeting Canada’s dairy sector. He absolutely is—but not because the U.S. dairy industry is desperate to access the Canadian market. In truth, our market is too small to move the needle for most U.S. producers. Rather, Trump is using the issue as a wedge—leveraging a politically sensitive topic to extract concessions elsewhere. He understands, better than many Canadians, how politically explosive this issue is for our 9,500 quota-holding dairy farmers, many of whom are among the most well-resourced in the country.

Dairy Farmers of Canada spend an estimated $5 to $8 per Canadian annually on advertising—one of the highest marketing spends in the country. Their presence is ubiquitous, from online platforms to Maple Leaf hockey jerseys. Unsurprisingly, this shapes how the media covers the issue. Over the years, media outlets have frequently featured voices sympathetic to supply management, often excluding more critical, informed or independent perspectives. That trend has only worsened recently.

Marketing boards and quota systems are complex and dismantling them would be politically and financially costly. Unless every province agrees—and Ottawa is willing to spend upwards of $48 billion to buy back all outstanding quotas—abolishing supply management is virtually impossible. Even then, doing so abruptly would likely devastate a sector that is already struggling to stay economically relevant.

What’s needed is not abolition but reform—what one might call Supply Management 2.0. This would require a coordinated national strategy over 15 to 20 years. Key steps include:

• Quota Buyback Pathways: A gradual, voluntary buyback program to help farmers who do not wish to compete in a more liberalized system transition out.

• National Quota Allocation: New quota allocations should be overseen nationally, rather than provincially, to improve efficiency and equity.

• Reform the Canadian Dairy Commission: This Crown corporation must become more transparent, particularly in how it sets prices for industrial milk. Benchmarks should be used to reduce production costs and improve competitiveness. In parallel, tariffs should progressively decline over a 20-year period to encourage efficiency and prepare the sector for a more open market.

• Create Export Quotas: By 2030, global demand for dairy is expected to be three to five times greater than Canada’s current total production, presenting a significant opportunity for our sector to grow and compete internationally.

At present, the sector is shrinking, with no clear vision to regain economic relevance. Retail prices and Trump’s rhetoric are the wrong reasons to dismantle supply management. But a smart, forward-looking policy overhaul—anchored in data, transparency, and market realities—is overdue.