Dairy production system designed to manage supply and demand, but critics say it violates trade commitments
U.S President Donald Trump's speech railing against NAFTA on Tuesday specifically targeted Canada's dairy production system. But it's far from the first time Canadian milk has drawn American ire. What's this system that everyone keeps getting so upset about?
Canada has used a supply management system to control dairy production since the early 1970s. Essentially, the amount of milk and dairy products produced by farmers across the country is regulated by quotas meant to ensure the national supply matches the expected demand as closely as possible.
The Canadian Dairy Commission, which works with the provincial milk marketing boards to co-ordinate quotas and pricing, says the system helps to avoid surpluses as well as shortages.
In addition, Canada has recently changed its pricing policies on ultra-filtered milk, a protein liquid concentrate used to make cheese.
The U.S. dairy industry has complained that the ultra-filtered milk policy, as well as Canada's dairy supply management controls as a whole, are contrary to free-market principles and don't let U.S. farmers compete fairly.
In January, U.S. dairy and agricultural associations wrote to Trump asking him to take action against Canada's dairy practices, saying they were "resulting in lost revenues and jobs for dairy farmers and processors across the United States." They also accused Canada of violating its global trade obligations.
In a fiery speech to factory workers in Wisconsin on Tuesday, Trump vowed to "stand up for our dairy farmers" in the state. The president also called Canada's dairy system a "one-sided deal," saying the North American Free Trade Agreement rules between Canada and the U.S. were "a complete and total disaster" overall.
David MacNaughton, Canada's ambassador to the U.S., rejects the accusations.
"Canada does not accept the contention that Canada's dairy policies are the cause of financial loss for dairy farmers in the United States," MacNaughton wrote in a letter to the governors of Wisconsin and New York that was released Tuesday night, after Trump's criticism.
Earlier this month, Isabelle Bouchard, spokesperson for the Dairy Farmers of Canada, said Canada was being used as "a scapegoat" for the financial woes facing dairy farmers in the U.S.
In response to Trump's comments on Tuesday, Bouchard said her organization was "confident the Canadian government will continue to defend the Canadian dairy industry."
Last year, Conservative leadership candidate Maxime Bernier went as far as to call the supply management system "a government cartel" and "the opposite of free markets."
His statement contradicted his position as an MP and minister for small business and tourism while the Conservatives were in power. At that time, he repeatedly voiced support for the supply-managed farm sector.