How Canada’s zany dairy system affects daily life, from cheese bandits to dessert-starved Newfoundlanders

Price fixing is illegal in every other Canadian industry, but with milk, and eggs it’s the law.

Starting in the 1970s, Canada’s milk, poultry and eggs has been subject to what is called “supply management.” Every year, industry marketing boards decide how much of each product is going to be sold in Canada, and then they fix a minimum price. Meanwhile, Ottawa keeps the borders tightly sealed to ensure that foreign competition can’t screw this whole system up — that’s why you can only take 20 kg of back into Canada after a trip to the U.S.

The idea is to shield Canada’s milk, egg and poultry farmers from fluctuations. Grain and mustard farmers have “bad years,” but not milk farmers. For them, a consistent base of customers paying a profitable price for their product is guaranteed by federal writ.

There are several well-known critiques of supply management: That it’s adding $300 per year to the average Canadian grocery bill, that it’s cursed our country with clunky, uncompetitive farms or that the whole system is basically a giant government-backed cartel to benefit a small cadre of surprisingly rich farmers.

But Canada’s 40-year supply-management experiment is also affecting daily life in all sorts of other bizarre ways. Keep reading, and read our totally biased take on a world of  bandits, dessert-starved and oceans of perfectly good milk being flushed down the toilet.

We have a cheese black market
Go to the United States right now, fill up the trunk of your Tercel with bricks of and then sneak back across the border. If you aren’t killed in a hail of bullets from Canadian Border Services, then congratulations: You just made $1000. Cheese in the non-supply-managed United States is dramatically cheaper than in Canada, with a $200 CDN case of from Detroit fetching as much as $300 CDN across the border in Windsor. Part of this is due to the price-raising nature of artificially limiting supply. While some blame is also due to the United States’ bad habit for dairy subsidies. But whatever the , when a compact, easily transportable good can yield a massive return just by schlepping it over an undefended border, the result is a cottage industry of smugglers. A Niagara police officer went to jail last year for smuggling thousands of dollars of cheese and chicken wings. In 2013, a Burnaby importer was caught hiding thousands of dollars of contraband cheese in cross-border shipments of grape juice. In Vancouver, the police term for illicit dairy is apparently “offshore cheese,” and it’s been slipping into the city by sea for decades

Newfoundland is constantly short of its favourite dessert
The Newfoundland love for canned goods is legendary. But while the island is never allowed to run short of Pineapple Crush or Purity Salt Fish, it’s a different story when it comes to Fussell’s Thick Cream. A beloved topping for pies and berries, Fussell’s Thick Cream is known for its fickle irregularity — on shelves for a couple of days, and then gone for months at a time. Die-hard Fussell’s fans, therefore, are forced to act like East Germans and fanatically hoard any can of the stuff they can get their hands on. The reason for all this? Fussell’s is a dairy product made in the U.K. To protect Canadian producers from foreign competition, only 394,000 kg of foreign-made “specialty creams” are allowed into Canada each year. Per Canadian, that’s about two good spoonfuls’ worth.

Paula Roberts
Paula RobertsFussell's Thick Cream in its natural habitat.

Everybody hates us for this
Canada is usually all about globalization. Whether it’s Liberal or Conservative governments, we’re always on the lookout for a new market to sell our trees, oil and over-budget streetcars. Thus, on the frequent occasion that Canada is negotiating a new free trade deal, our diplomats have to tell other countries “oh, by the way, you can’t touch the milk and chickens.” This really bugs the countries that are better at making milk than Canada. Paul Ryan, speaker of the U.S. House of Representatives, once held aloft a wedge of Wisconsin cheese while defiantly lamenting to his fellow lawmakers that “Canada won’t negotiate.” New Zealand and Australia, who have both abolished their own similar supply management systems, have been particularly vocal about their stubborn Commonwealth cousin. “Everyone said at the time, ‘what a disaster, the sky is falling in,’ but if you stand back and look at it now after 30 years, our industry … is nearly four times the size it was then,” New Zealand farmer Earl Rattray told Reuters in 2015.

Chicken farmers don’t want any of your grain-fed nonsense
Although the brand is virtually unknown outside Quebec, St.-Hubert is Canada’s 14th-largest restaurant chain and one of the country’s largest buyers of chicken. And recently departed St-Hubert CEO Jean-Pierre Léger loved talking about how lazy his damned chicken suppliers are. Specifically, Léger kept hammering on Quebec poultry farmers to produce a better class of chicken that he can sell to discerning diners; antibiotic free, grain-fed, air-chilled. But the producers dragged their feet on it for years. After all, it’s not like Léger could have purchased chicken somewhere else — and they don’t have to worry about some new upstart eating their lunch with a shiny new grain-fed chicken operation. It took “several years and the cast-iron determination of our CEO, Jean-Pierre Léger, before we were able to satisfy our clients and offer a 100% grain-fed, air-chilled chicken,” a company representative told a Quebec government commission in 2008. “It’s ridiculous that it would take so much time and be so arduous.”

Almond, soy and rice milk are doing great
Thanks to vegans, health nuts and the lactose intolerant, the world market for almond milk and other alternatives is expanding everywhere. But in Canada, the almond milk sector has a leg up because it’s more price competitive with actual milk. A carton of Almond Breeze is about the same price in the U.S. and Canada. But in the U.S., premium-priced almond milk is sharing a shelf with conventional milk that can be as cheap as $2.40 for a four-litre jug. Compare that to a Canadian Wal-Mart where a $3.19 carton of Almond Breeze is just down the aisle from the same quantity of cow milk for $2.47. With only 74 cents on the line, it’s a bit easier to get the average Canadian on the almond train. In Alberta — conservative, farmer-friendly Alberta — the demand for non-dairy alternatives to milk surged by an incredible 225 per cent between 2011 and 2014.

Goat milk’s doing great too!
Imagine you’re a young, brash farmer looking to get into the liquids trade. You can try your hand at starting a cow farm, but first you’ll have to get your hands on a quota. And assuming you can find one for sale, it’s going to cost you as much as $30,000 per cow. Or, you just start milking goats: No marketing board, no quotas and you can export wherever you want. Canada’s goat sector is still dwarfed by the cow milk market, but it’s fair to say that the goat trade is benefiting from a brain drain of dairy enthusiasts looking for a low-barrier way to start making livestock juice. “Ontario really is positioned as the North American leader for goat milk production,” said Jennifer Haley, executive director with the industry association Ontario Goat. “I can tell you there’s a lot less gray hair in the room when we have our meetings.”

Chad Steeves
Chad Steeves No quota to milk this thing.

You may not have noticed, but there was a pretty severe last year
“Butter is back and people want to enjoy it again,” Chef Susie Reading at Toronto’s George Brown College told the National Post. And butter consumption is indeed surging in Canada. And while this would normally be good news for an industry that makes the stuff, it was an utter fiasco last year. The Canadian Dairy Commission’s supply targets were not nearly enough to anticipate Canada’s hunger for butter. So, with Canada on the verge of a shortage that could have ground bakeries to a halt, the agency was forced to obtain emergency permission to bring in a one-time only bailout of 8.8 million pounds of butter from New Zealand, Ireland, Belgium and Uruguay. “The Canadian Dairy Commission has dropped the ball,” Greg Nogler with the Stirling Creamery said at the time. “If you have supply management, it’s up to them to ensure that there is supply.” Under conventional circumstances, this butter shortage would have worked itself out: The price of butter would have simply gone up and legions of milk producers from around the world would be busting down our doors to unload their butter at premium rates. It’s the same reason Canada never has “avocado shortages” — there are just times of the year when avocados are more expensive.

Swimming pools of perfectly good milk are getting dumped down the sewer
In the summer of 2015, an oversupply of skim milk forced dairy producers to dump 80,000 liters — enough milk for 43 truck loads. So yes, while the rest of the world was topping up our larders with butter, Canada was simultaneously dumping vast quantities of skim milk into pigstys or sewer drains. If milk was a normal product, this wouldn’t have happened on the same scale: There simply would have been a nationwide blowout sale of $1 jugs of skim milk and all of Canada would have spent a couple weeks eating punch bowls of breakfast cereal to use it up. But supply management doesn’t work that way — it’s designed to shield farmers from the need to ever discount their product. If a litre of skim milk can’t fetch the minimum price set by the marketing board, it goes to the pigs.

Miguel Riopamiguel
Miguel Riopamiguel This photo is from Portugal, but that's what it looks like when a lot of milk is wasted.

Good luck finding some romano cheese, paisan
It is indeed legal to foreign dairy products into Canada. But just as the farmer needs a pricey quota to milk their cows, the importer needs a pricey quota to ship in their Wensleydale. With only a few quotas to go around, there are only 90 companies in possession of a quota allowing them to ship cheese to Canada. Everybody else — including the neighbourhood specialty store near you — has to put their names on an ever-lengthening quota wait list. And in the meantime, they have to buy their imported cheese from the 90 quota holders. So there are two factors here conspiring against Canada’s epicures. First, just as it is with Fussell’s Thick Cream, Canadian import quotas are rarely enough to meet the country’s surging demand for foreign cheese. And second, most of Canada’s ethnic food suppliers are at the mercy of The Ninety. If the local quota holder wants to sell all its bocconcini to Sobey’s, then you’re out of luck, Little Italy Grocery Store. The National Post did a quick survey of some small-scale Italian grocers to find out which cheeses they had the hardest time keeping on shelves. Right now, it’s romano, mascarpone and gouda.

Canadian chefs are skimping on the dairy
Don’t panic; poutine is still being piled high with curds and double-doubles at Tim Hortons are still getting their requisite shots of cream. Nevertheless, in the tight-margined world of the Canadian restaurant sector, it’s inevitable that less variety and higher prices on dairy products is having an effect on how chefs plan their ingredient lists. Any good chef would relish the challenge, of course. But Serge Jost, the French-born executive chef for Edmonton’s posh Hotel Macdonald, provided one example of how his own cooking changed in cheese-scarce Canada. In France, he would top a potato dish with melted cheese for texture. But in Canada, where cheese is too expensive to be used as mere texture, he’ll substitute herbs or bacon. “Here, you have to be smarter about it,” he said. The industry group Restaurants Canada, not a big fan of supply management, told the National Post in a statement, “with some flexibility on pricing, chefs would use more cheese, develop innovative new menu items, and grow the market for Canadian dairy products.”

It’s not actually saving the family farm
The whole point of a giant, government-controlled system to seal off whole industrial sectors from the outside world was to protect Canadian farms. As the Liberal MP Maurice Foster summed it up in 1992, “this is what we have to have in order to maintain rural Canada [and] the family farm.” In 1970, Canada had about 123,000 dairy farms. At last count, the number was just 11,280. Supply management might be slowing down the decline of the family dairy farm, but it didn’t stop 90 per cent of them from disappearing.

Despite being Canada’s most Soviet-style industry, Canadian dairy brought down the Soviet Union (really)
Poultry, eggs and dairy are basically the only Canadian industries that follow the “command economy” model once used by the former Soviet Union. Every year, Canada’s various supply management boards sit down and plot out how much milk, poultry and eggs they’re going to sell to that year. Similarly, the Soviet Union based their entire economy on having rooms of men figuring out how many Ladas, nesting dolls and AK-47s they should make. But still, it was to be an Alberta dairy farm where, in 1983, a young Politburo member named Mikhail Gorbachev would see the intrinsic error of the Worker’s Paradise. The Alberta cows each yielded 4,700 kg of milk annually. Back home, a Soviet cow could only manage 2,258 kg. “Canada offered Gorbachev a prosperous counterpoint to Soviet agricultural failure,” states the Pulitzer Prize-winning book The Dead Hand. The image of the superior capitalist heifers never left the future Soviet leader. As he and associates would later relate, it ultimately inspired the reform measures of Glasnost and Perestroika and, eventually, the fall of the Soviet Union. 

Windsor Star
Windsor StarGorbachev, during his world-changing Canadian visit, shakes the hand of former agriculture minister Eugene Whelan. Whelan, famously, was pelted with milk by dairy farmers in 1976 when he refused to approve industry subsidies.

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