Canada's oft-derided supply management system—a persistent irritant in many of the country's trade relationships—is less focused on price stability, as Ottawa claims, but rather on protecting the dairy sector in one Canadian province. Canada's future trade negotiations with the United States—or any other country with which it wishes to maintain a free trade agreement, for that matter—will likely put a spotlight on this issue.
In Canada, small, inefficient Quebec-based dairy operations are the primary beneficiaries of the antiquated mid-20th-century supply management strategy that remains in force north of the border.
This system once served an economic purpose. In the 1960s and 1970s, agricultural supply chains differed greatly from today. A lack of international trade rules and frequent use of tariffs significantly and adversely impacted the agricultural industry. At this time, governments around the world legislated to control production, seeking to stabilize domestic prices and farm income for some agricultural sectors—specifically the production of dairy, egg, and poultry products.
