Honourable senators, I rise today to speak to Bill C-282, An Act to amend the Department of Foreign Affairs, Trade and Development Act (supply management). I would like to thank Senator Gerba for sponsoring this very important bill.

Colleagues, I would like to begin by repeating part of her speech because it bears repeating. In her remarks, Senator Gerba stated:

Honourable senators, Bill C-282 is about protecting the supply management system. It is very simple. The bill amends section 10 of the Department of Foreign Affairs, Trade and Development Act to safeguard the system by making it a ministerial responsibility. It adds supply management to the list of directives that the minister must adhere to in conducting Canada’s external affairs, specifically during free trade agreement negotiations. The minister responsible for international trade won’t be able to do anything that would hurt supply management. It can no longer be used as a bargaining chip. Taking supply management off the table in international negotiations will preserve it forever.

Supply management in dairy, eggs and poultry has been a polarizing topic both nationally and internationally. What are the rifts that exist between those who support and those who oppose the system? In a 2017 article entitled “’Milk is Milk’: Marketing Milk in Ontario and the Origins of Supply Management,” author Jodey Nurse-Gupta examines the divisions between industry stakeholders during the implementation of the Ontario Milk Marketing Board, or OMMB, in order to better understand why some saw the board’s plan as rational and fair while others believed that OMMB policies infringed on their freedom and retarded the rationalization of the Ontario dairy industry.

Before the OMMB was established, chronic oversupply of milk resulted in devastatingly low milk prices. The divisions that existed between dairy producers were based on the differing purposes of milk production — those who produced fluid milk for the consumer; those who produced milk for cheese making; those who separated cream on the farm for butter making; and those who supplied industrial milk for manufacturing items like powdered or condensed milk — resulted in conflict between producers when milk prices were low. The OMMB was formed in 1965 to ensure that all producers received the same, fair price for their milk.

The reaction to pooling milk was met with anger among those producers who had held advantages in the dairy industry but who were now forced to participate in what they called:

. . . nothing more than a socialist grab of the money paid to some producers, so that other producers can get paid for their milk. . . .

William Macpherson, the OMMB’s director of finance, responded by saying:

. . . no question at all that we are taking from the rich and giving to the poor. That’s what we’re here for. . . .

. . . milk is milk, and it deserves a price based on the total market.

Others had reservations about a system of controlled production and marketing that did not allow for individuals to act independently in the market. Marketing boards in general had a history of being criticized for their interference with the laws of supply and demand and forced producer participation. By definition, a marketing board is a system of compulsory cooperation. Marketing boards require all producers of a certain product in a specified region to be compelled by law to adhere to the regulations of a marketing plan, which typically has the approval of the majority of producers of the product. The main objective was to maintain or increase, stabilize and equalize the income of producers.

Honourable senators, while milk is not the only supply-managed commodity in Canada — eggs and poultry are also supply managed — the dairy industry is most criticized because it holds significant market opportunities for dairy-exporting nations like the United States, New Zealand and states of the European Union.

Dairy producers elsewhere in the world have struggled in recent years to receive milk prices that cover their cost of production. Add in the issue of power asymmetry between producer and processor and/or supermarket and the result is a volatile mix. This contrasts with the Canadian system, suggesting that the stability Canada’s industry has in terms of reducing chronic milk surpluses and providing stable income for farmers will allow supply management to survive calls for it to be repealed.

The system of supply management as it exists today has undergone transformation over the decades. The basic pillars of the system — import controls, producer pricing and production discipline — were established in the 1960s and 1970s under the direction of provincial marketing boards with national coordination. Senator Gerba spoke articulately on these pillars in her speech. The creation of the OMMB was a significant catalyst in the development of supply management nationally.

Honourable senators, there were conflicts over market intervention. Some saw marketing board plans as rational and fair; others demonized the board for infringing on their freedom. Those who supported the OMMB included most of the provinces’ dairy producers who were suffering financial hardship; farmer representatives who witnessed the unfairness and instability inherent in previous dairy policies; and politicians and bureaucrats who were well aware of the social and economic costs of chronic overproduction. They recognized the necessity of controlling the milk supply and instituting fair farmer pricing in order to provide some balance within the historically unstable industry.

Those in opposition were fluid milk producers who believed they would lose market share to other dairy producers under the new system; dairy processors who resisted any interference in their ability to bargain for milk at the lowest possible cost; and consumers who were told by media outlets that they would be forced to pay more for their milk and other dairy products. Critics of controlled marketing also charged that such systems supported small-scale farmers at the expense of more modern, efficient and large-scale operations.

Opponents reinforced the idea that the OMMB’s policies were misguided by labelling such regulation as undemocratic and contrary to a free market system. The OMMB and their supporters defended the board’s policies as beginning the process of bringing rationality and stability to an industry where none had existed before.

Why was the supply system created? Why has it been maintained despite the proliferation of neo-liberal policies that dominate the discourse on international agricultural trade?

Colleagues, marketing boards first became popular in Canada after World War I because of the wartime grain price stabilization through the Canadian Wheat Board. The attraction for farmers and government was peace in the industry and reasonable pricing not subject to wild market fluctuations as well as a sense of fair play.

In 1929, during the Great Depression, marketing adjustments were sought by farmers in an effort to resist declining incomes. The result was the passage of two acts in 1927 and 1929 which were later repealed by the Supreme Court of Canada in 1931. However, they encouraged farmers to organize and demand orderly marketing from their governments.

Between 1929 and 1934, Ontario farm incomes had declined by over 40%. Dairy farmers were hit hard when dairy processors lost significant export contracts to Britain for items like cheese and domestic milk prices plummeted because of the “milk wars” between competing dairy processors and distributors.

While consumers benefited from the resulting cheap milk, price wars devastated the producers. Producers urged the government to pass legislation that would allow farmers more bargaining power to secure their “fair share of the consumer’s dollar.”

In 1934, the Milk Control Board, MCB, was established:

. . . to “bring some order out of the chaos” that the dairy industry had become. The MCB was given jurisdiction to “inquire into any matter relating to the producing, supplying, processing, handling, distributing, or sale of milk.”

Many governments around the world with valuable dairy industries retained more control over the dairy business after the war than before and moved to enact new regulations governing dairy production and trade.

Britain, New Zealand, Australia, Sweden, Denmark, Germany, Switzerland and Austria all introduced new legislation in the postwar period that enabled some sort of dairy support measures, including import restrictions, export subsidies, equalization schemes and price supports.

In the 1940s and 1950s, dairy exports declined in spite of increasing production. As stated by Nurse-Gupta:

Dairy farmers and their representatives insisted that more marketing control was needed to stabilize the industry and provide fair pricing for farm products. Critics insisted, however, that farmers had to “help themselves,” specifically by becoming modern and efficient producers.

Honourable senators, surplus dairy products continued to plague the industry in the 1960s. The federal subsidies for export dairy products such as butter, cheese, condensed milk and powdered milk caused overproduction.

It was the division of responsibility between the two governments based on the idea that fluid milk was a domestic issue, while other dairy products fell under export and trade responsibilities that was artificial and needed to be resolved.

While dairy processors had benefitted from oversupplies of milk through depressed prices, many farmers and farm leaders realized that the asymmetrical power relationships that existed between producers and processors in the dairy industry meant that farmers were price takers with little ability to negotiate fair terms individually. While critics of marketing schemes charged that marketing plans were dictatorial and socialist, supporters employed the language of exploitation and injustice to defend increased regulation in the industry.

The OMMB was able to establish the first milk pool in northern Ontario. It involved 342 farmers in the Nipissing, Sudbury and Manitoulin districts and served as a testing ground before the board began a milk pool for fluid shippers in southern Ontario in 1968. The pool was ultimately effective in raising milk producers’ incomes, and the response from area farmers was generally positive.

As the author of “Milk is Milk” writes:

Supply management was, and continues to be, a divisive topic because it challenges elements of neoliberal policies that are central to the discourse of international trade.

Increasingly, scholars and policy-makers are acknowledging that neoliberal policies:

. . . have been unable to secure healthy and sustainable returns for producers and have had serious consequences on animal welfare, the environment, agricultural workers, and food security and sovereignty.

In the 2014 article “Crying over Spilt Milk: The History of Dairy Supply Management and Its Role in Recent Trade Negotiations” —

Can I have two minutes?

Thank you.

Bruce Muirhead states:

To date, Canadian governments have committed themselves to maintaining the system. . . . To lose it, however, would be a tragedy — it has served dairy farmers, consumers and processors well over the years, providing cost-effective, safe and secure dairy products in a world where those realities are increasingly difficult to guarantee.

Honourable senators, I urge you to support this bill.

Kinanâskomitinâwâw.

Thank you.