Canadian Dairy Commission

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Canadian Dairy Commission
Agency overview
Formed1966
Jurisdiction Government of Canada
Headquarters Ottawa, Ontario
Employees72 [1]
Minister responsible
Agency executives
  • Benoit Basillais, Chief Executive Officer [3]
  • Jennifer Hayes, Chair [3]
  • Shikha Jain, Commissioner [3]
Parent departmentAgriculture and Agri-Food Canada [4]
Website www.cdc-ccl.gc.ca

The Canadian Dairy Commission (CDC) (French : Commission canadienne du lait) is an Ottawa-based Government of Canada Crown Corporation that provides a framework for managing Canada's dairy industry. [5]

Contents

The CDC's mandate is to "ensure fair compensation to producers and provide consumers with access to a quality product." [6]

Canada's dairy industry operates under a supply management system, so among the most important roles of the CDC are to plan national production (including by the allocation of producer milk quotas), to set farmgate milk prices, and to control dairy imports. [7] The CDC also coordinates federal and provincial dairy policies. [5]

Milk for sale in Canada Bags of Milk (3806360204).jpg
Milk for sale in Canada

History

The Canadian federal government has been active in supporting the dairy industry since 1890, when the first Dominion Dairy Commissioner was appointed. [8]

In 1967 the government of Canada passed the Canadian Dairy Commission Act which established the Canadian Dairy Commission (CDC). [9] : 13 

The Canadian Milk Supply Management Committee, whose members include the CDC and representatives of provincial producer marketing boards, was set up in 1970 to administer the national Market Sharing Quota. [10] In 1972, the Farm Products Agencies Act authorized the establishment of supply management, which can restrict production by use of quotas. [11] [12] [13] : 8, 19, 31 

Mandate, implementation, and administration

The CDC's mandate is to "Provide efficient producers of milk and cream with the opportunity to obtain a fair return for their labour and investment" and to "Provide consumers of dairy products with a continuous and adequate supply of dairy products of high quality." [14] The CDC aims to avoid depending on government subsidies and the dumping of surpluses into third markets. [7]

To achieve its mandate to ensure efficient producers receive a sufficient return, the CDC (working with provincial marketing boards) sets a "support price" for milk producers. [5] This support price is high enough that some domestic and foreign producers are willing to supply dairy products at a lower price. Therefore, to prevent this additional supply from reaching the market, the CDC uses supply management. That is, it issues a limited quantity of quotas, which are a type of licence authorizing the quota-holder to sell a given volume of dairy products. [11] : 2–5  By restricting domestic supply and imports, the support price is maintained. [11] [15]

How the support price is determined

The CDC sets support prices for milk components (butterfat and skim milk). [5] Provincial marketing boards use the CDC-determined price as a benchmark to set prices in each province. [5] [16]

Milk support prices are changed typically once a year using a formula determined by the industry. [17] [18] [19] : 7  The price adjustment formula is based on the cost of milk production, as determined by a randomized and anonymous survey of roughly 200 farms. [19] The CDC formula includes cash costs, capital costs, and labour costs, but does not include the cost to purchase milk production quota. [17] [19] : 4 

In determining the support price, the CDC consults producers, processors, restauranteurs, retailers, and consumers. [7] The CDC can set aside the formula in "exceptional circumstances," which, as of 2022, it had done four times since 2017. [17] Exceptional circumstances criteria include if there is an unexpected event, which may arise given the lags in implementing price changes. (The price adjustment for 1 February 2022 was calculated in the fall of 2021 using 2020 data.) [20] [19] : 7–9 

The CDC regulates only the price of milk received by farmers, however, some provinces (such as Quebec) regulate the retail price of fluid milk. [21] [19] : 9 

Other roles

The CDC monitors production and demand for milk, and it adjusts the national milk production target as necessary. [5] When production exceeds demand, the CDC oversees the removal from the market of surplus butter and skim milk powder for export or later sale. [16]

The CDC promotes consumer awareness and programs to stimulate demand for Canadian dairy products. [5] In collaboration with the private sector, the CDC monitors the seasonal domestic supply of milk to maintain a balance between supply and demand. [5]

Issues and debates

Governance

Sylvain Charlebois, professor of food distribution and policy and the director of the Agri-Food Analytics Lab at Dalhousie University, expressed concern that the CDC, "owned by all Canadians, is controlled by three people, all with dairy connections. Processors, retailers and, most importantly, consumers, are not represented." [22] Restaurants Canada has long asked for a seat on the CDC board. [17]

Transparency

Calls to improve communication and increase transparency surrounding CDC activities were made by Restaurants Canada, the Retail Council of Canada, the Dairy Processors of Canada, and the Minister of Agriculture when the CDC initially refused to release data on employee bonuses. [17] These calls were prompted when the CDC received $4.7 million from taxpayers in 2020-21, a 21% increase from $3.9 million the previous year, which it used to fund "increased salary expenses." [17] Perhaps in response to public pressure, in 2022 the CDC was more open when it made a thorough presentation and responded to media questions alongside its annual price hike announcement. (In previous years it simply posted an abstract on its website announcing the price increase). [23]

In 2023 and 2024, the CDC was urged to provide more transparency on the extent of "milk dumping," a method used by some Canadian producers to dispose of over-quota milk supply. [24] [25] [26] [27] Between 2012 and 2021, the Canadian dairy industry discarded on farms an estimated 7% of all milk produced (over 6.8 billion liters of raw milk, valued at $6.7 billion). [28]

Product quality

Although Canadians pay high dairy prices, quality is not assured according to Dalhousie University professor Sylvain Charlebois. He pointed to Buttergate which revealed the practice of feeding cows with palmatite, an imported palm oil derivative, which affects butter's hardness. [29]

Milk price setting formula

After a 8.4% milk price increase in 2022 – the largest since the CDC was created in 1967 – a C.D. Howe Institute commentary said not only are such large price rises undesirable for consumers, but they could be detrimental to the dairy industry if they lead to more illegal milk entering the market from the United States. [22] The study said the CDC's price setting formula would benefit from having an external competent review. [22] [23]

Impact on family farms

The CDC uses quotas to limit the supply of milk entering the market, so the value of milk quota licences is high. The high cost of quotas means that it has become difficult for younger people to enter the industry. [30] [17] (The quota price was capped in 2010 in Ontario and Quebec at $25,000 per kilogram of butterfat per day – which is approximately the production of one cow. However, the price reached $58,000 in Alberta in 2022. The estimated national total quota was valued at $32.6 billion in 2014.) [17] [11] As a consequence, newspaper columnist Andrew Coyne says CDC policy was enacted "in the name of saving the family farm" but it has instead "led to its near extinction." [30] The number of dairy farms in Canada in 2024 was approximately 9,000, compared to more than 145,000 when the CDC was established in the early 1970s. [15]

The consumer cost of dairy products

The CDC limits the supply of milk entering the market, which keeps the price to consumers among the most expensive in the Western world. [31] [15] [32] Milk farmers are required to participate in the supply management price-fixing system, an arrangement that would be illegal in almost any other sector of the Canadian economy (the Competition Bureau in 2018 brought a case against retailers for fixing the price of bread). [33] [34] : 10 

Also, the high cost has a disproportionate impact on low-income Canadians, since a greater proportion of their incomes are spent on dairy products. [17] [32]

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References

  1. ↑ "Report of the Auditor General of Canada to the Board of Directors of the Canadian Dairy Commission – Special Examination Report – 2021". December 9, 2021.
  2. ↑ Government of Canada (June 7, 2024). "The Honourable Lawrence MacAulay, MP".
  3. 1 2 3 Canadian Dairy Commission (November 28, 2023). "Organizational Structure".
  4. ↑ Government of Canada (November 2, 2021). "Canadian Dairy Information Centre".
  5. 1 2 3 4 5 6 7 8 Canadian Dairy Commission (November 22, 2023). "What we do".
  6. ↑ The Canadian Dairy Commission (June 23, 2022). "The Canadian Dairy Commission" (PDF).
  7. 1 2 3 Government of Canada. "Fact sheets".
  8. ↑ "A Brief History of Supply Management in Canada: Evolution of the Canadian Dairy Commission" (PDF). Western Dairy Digest. 1999. p. 2. Archived from the original (PDF) on May 5, 2017. Retrieved August 17, 2018.
  9. ↑ Hedley, Douglas D. (2015). "The Evolution of Agricultural Support Policy in Canada" (PDF). CAES Fellows Paper. p. 38. Archived from the original (PDF) on July 19, 2018. Retrieved July 18, 2018.
  10. ↑ Canadian Dairy Commission (November 22, 2023). "National milk production target for Canada".
  11. 1 2 3 4 Heminthavong, Khamla (December 17, 2015). "Canada's Supply Management System". Library of Parliament Research Publications. Economics, Resources and International Affairs Division. Archived from the original on August 3, 2018. Retrieved June 21, 2018.
  12. ↑ "Supply management". CDC. nd. Retrieved August 17, 2018.
  13. ↑ Jean-Denis, Frechette; Rutherford, Sally (October 14, 1986). "National Dairy Policy". Backgrounder. Research Branch Library of Parliament. p. 39. Retrieved December 20, 2023.
  14. ↑ Canadian Dairy Commission (November 28, 2023). "Mission, Mandate and Values".
  15. 1 2 3 Manley, John; Goldenberg, Eddie (June 18, 2024). "As grocery prices soar, the dairy lobby's supply management has got to go". The Globe and Mail.
  16. 1 2 Mussell, Al (May 2016). "Understanding the Dynamics of Milk Pricing and Revenue in a Time of Change" (PDF). Independent Agri-Food Policy Note. Guelph, Ontario: Agri-Food Economic Systems Newsletter. Retrieved June 21, 2018.
  17. 1 2 3 4 5 6 7 8 9 Stewart, Ashleigh (October 22, 2022). "Milk mystery: As prices soar, dairy farmers plead poverty". Global News.
  18. ↑ Canadian Dairy Commission (November 1, 2023). "The adjustment to the farm gate price of milk is postponed to May 1, 2024".
  19. 1 2 3 4 5 Canadian Dairy Commission. "Process for the Annual Cost of Production Survey and Pricing Milk at the Farm Level" (PDF).
  20. ↑ Hartai, Katie (August 16, 2022). "Farmers defend milk price increase as commission reports a decline in production costs". CBC News.
  21. ↑ Stewart, Ashleigh (February 17, 2022). "Where milk costs the most in Canada – and why you might soon pay more for coffee and pizza". Global News.
  22. 1 2 3 Charlebois, Sylvain (February 3, 2022). "Canada's Dairy Machinery Strikes Again" (PDF). C.D. Howe Institute.
  23. 1 2 Charlebois, Sylvain (November 9, 2022). "Milking Canadians getting harder for the dairy commission".
  24. ↑ Charlebois, Sylvain (February 16, 2023). "Milk dumping in Canada". Shelburne Free Press.
  25. ↑ Maluske, Michelle (February 9, 2023). "'We can't do this anymore': Ontario dairy farmer launches petition to end 'milk dumping'". CTV News.
  26. ↑ McClearn, Matthew (October 16, 2024). "Canada's dairy farms dump 7 per cent of all milk produced, study contends". The Globe and Mail.
  27. ↑ The Editorial Board (October 22, 2024). "Spilled milk that's worth a political outcry". The Globe and Mail.
  28. ↑ Elliot, Thomas; Goldstein, Benjamin; Charlebois, Sylvain (January 2025). "Over 6 billion liters of Canadian milk wasted since 2012". Ecological Economics. doi: 10.1016/j.ecolecon.2024.108413 .
  29. ↑ Charlebois, Sylvain (November 3, 2021). "Canada's largest dairy rate increase highlights lack of transparency about how prices are set". The Globe and Mail.
  30. 1 2 Coyne, Andrew. "The $25,000 cow: That's the average value of a milk quota per cow under a supply-management system". Macleans.
  31. ↑ Charlebois, Sylvain (November 3, 2023). "Thank a dairy farmer, really: The challenge, however, lies in the fact that our dairy sector is not particularly competitive". Toronto Sun.
  32. 1 2 Schwanen, Daniel; Robson, William; Bafale, Mawakina (October 13, 2024). "Don't Let the Dairy Lobby Win this Fight". C.D. Howe Institute.
  33. ↑ Hopper, Tristin (February 3, 2023). "Dairy farmer decries mandatory 'milk dumping' to keep prices high". National Post.
  34. ↑ Robson, William; Drummond, Don; Laurin, Alexandre (February 2024). "Less for Ottawa, More for Canadians: The C.D. Howe Institute's 2024 Shadow Budget, Commentary No. 653" (PDF).
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