Nuanced. - 223. Why Milk Is a Trade War Issue in Canada

Episode Date: February 10, 2026

Chief Aaron Pete breaks down how milk pricing works, why dairy is protected, who benefits, who pays, and how trade deals like USMCA are forcing hard questions about affordability, fairness, and competition.Send a textSupport the shownuancedmedia.ca

Why is milk a culture war in a country that can't even agree on phone plans? Seriously, we can't unify on anything. Not housing, not immigration, not taxes, not whether the Leafs are psychologically capable of joy. But you bring up dairy. And suddenly, Canada transforms into a nation of constitutional scholars. Hands off our milk. Protect the farmers. Supply management is the backbone of civilization.

Meanwhile, the average Canadian is standing in the grocery aisle saying, I don't want cheese that requires a small business loan. Because here's the weird thing. Milk is not just about milk in Canada. Milk is politics. Milk is identity. Milk is, apparently, a national security file. And if you've ever heard someone call it the dairy cartel, that's not because Canadians think farmers are meeting in a dark barn somewhere wearing robes chanting over a wheel of cheddar. it's because the system looks cartel-like from the outside. Supply is controlled. Prices are managed,

imports are limited, entry into the market is difficult. Now, to be clear, this is not an illegal cartel. This is a legal structure government-authorized, regulated, and built for a reason. But here's the honest question. Can a system be legal and still function like a cartel? Because that's the difference between a free market and a polite market with a velvet rope. And that velvet rope matters, especially right now, because we're living in a cost-of-living era where groceries feel like they're priced in Bitcoin. And we're heading into a major trade moment.

Two, the Kuzma review year, which means while Canadians are debating what milk should cost, trade negotiators are debating what milk should cost. because when trade talks heat up, dairy becomes the sacred negotiating hostage, where Canada basically says you can't, you can have anything you want except the supply managed products. You can have our dignity, you can have our productivity, you can have the last functioning parts of our telecom system, but you cannot have our dairy. And that's where the conversation gets serious, because if you're going to defend a protected system, if you're going to limit trade, limit competition and keep barriers up, then it has to earn its legitimacy, not just inherit it from history. And tonight, I want to do something rare in Canadian politics. I want to actually understand the thing we're fighting about. I'm open to the stability arguments. I understand

why people want predictable farm incomes and predictable domestic supply. But we're going to follow the money? Who pays, who benefits, and who's locked out? And what does it cost us? In affordability, in competition, and in trade leverage, especially with the US staring at our dairy system, like it's a locked fridge at a house party. Because maybe the dairy system is a necessary pillar of Canadian food security. Or maybe it's an elegant, well-intentioned and framed work that's turned into a protected scarcity machine that we can't question without being accused of hating farmers. And if that's the case, then milk isn't just milk. It's a national policy choice, and it's time we treated it like one.

Where did this come from, and why did it stick? So how did we get here? Because supply management didn't just appear one day like a mysterious extra fee on your cell phone bill. It was built deliberately by politicians, who were staring at a problem. that never goes away in democracies. Markets can be volatile. Farmers can be organized, and politicians can be replaced. In the 1960s, dairy was still living with the classic commodity market headache, boom-bust cycles, surplus one year, shortage to the next, and farm income getting whiplashed by forces farmers don't control, global prices, domestic gluts, shifting demand. And it's important to say this

clearly. That problem was real. Milk is perishable. Dairy operations have massive fixed costs. Cows do not respond to price signals with the agility of a tech startup. You can't just tell a hard we're pivoting to profitability. So Ottawa starts building the federal architecture. According to federal historical summaries and the Canadian Dairy Commission's own background material in 1969, under Prime Minister Lester B. Pearson's liberal government, the Canadian Dairy Commission was created as a federal stabilization tool for the dairy sector. And this is where you can inject the first laugh while staying accurate. This is Canada at its most Canadian. Instead of saying let the market sort it out, we said, what if we built a federal institution to make milk less

stressful. But the 1960s is the foundation, the real lock-in moment, the thing that turns stabilization into a full national system, comes in the early 1970s. By then, Canada is in the Pierre-Eliate-Trudeau liberal era. The federal government is far from comfortable with big centralized policy frameworks. According to parliamentary records and the federal legislative histories, in 1972 in January, granted a royal assent to the Farm Products Marketing Agencies Act, which provided a legal framework for national marketing agencies. Essentially, the backbone that made coordinated supply management possible across provinces. And if you want a human name to attach to that period, according to the parliamentary debate and historical overviews from that era, the legislation is closely associated

with Bud Olson, who served as federal minister of agriculture around the time and is often referenced as a key figure in that policy push. Then, as the system matures through the 1970s, another liberal agriculture minister becomes synonymous with the supply management era, Eugene Wellen, a political personality who, according to multiple historical profiles and retrospectives, helped entrench the broader public-facing defense of supply management as part of Canada's agricultural identity. So, if you're asking which politicians built this, the short answer is liberal governments. In the Pearson-to-Trudeau corridor built the institutional and legal scaffolding, and liberal agricultural ministers of that period helped make it durable.

Now, here's a question. Why did it stick? This is where, we stop pretending politics is a philosophy seminar, and remember it's also a math problem. Supply management is a policy where the benefits are concentrated. Quota holders, local dairy ecosystems, rural communities tied to dairy. And the costs are dispersed. Every consumer pays a little bit more, and it's hidden inside a grocery receipt. That already looks like a ransom note. So for the people inside the system. This isn't abstract. It's livelihood. It's secession planning.

It's the difference between we can farm and we are selling the farm. For consumers, the real cost is right there on your receipt, but it doesn't arrive as one clean annual bill called congratulations. You contributed X to the dairy stability.

It arrives as a death by a thousand receipts. And politically, concentrated benefits beat dispersed costs almost every time because one side has a very strong incentive to defend that system and the other side has a mild

incentive to complain for 30 seconds and then go back to arguing about something else. Now add the ingredient that really makes this untouchable. Quota becomes an asset. Once quota has a financial value, once people

borrow against it, plan retirement, around it and build business models, assuming its stability, reform stops being policy adjustment and starts being balance sheet trauma. At that point, even modest change becomes politically radioactive because governments aren't just changing a rule, they're changing a system that people have treated like property. So Canada becomes protective, not just because we like farmers, but because the system got wrapped in a national narrative. We protect rural communities. We avoid farm crises.

We keep domestic control of a staple item. We don't want American-style volatility in one more part of our life. Those values, they aren't crazy. The question, the 2026 question, is whether the system is still the best tool to serve those values, or whether we're now defending it, partly because it's become a protected structure with powerful incumbents and political muscle,

which tease up the next section, because once you know why it was built, you have to ask, what does the thing actually do mechanically? And why does it, to outsiders, seem more like stability policy and more like a velvet rope around our milk. That's next. How the system actually works.

All right. Now that we've know why it was built, let's talk about what it actually does, because supply management sounds like a polite Canadian phrase, like traffic calming or enhanced user fees, until you realize it's basically a full economic operating system for milk. And the cleanest way to understand this is supply management runs on three major principles. If you understand these, you can understand why people call it stability and why critics call it a cartel with good manners.

So here's pillar one, production control. Quotas, according to the Canadian Dairy Commission and Provincial Marketing Board descriptions, Canada does not let dairy production float freely based on who wants to expand this year. Instead, the system sets out how much milk Canada should produce based on expected domestic demand. If Canadians are expected to consume X, the system targets roughly X, and it enforces that through Quota, a legal entitlement to produce a certain amount. Now, quota is the heart of everything. It's the mechanism that turns a volatile commodity into a managed domestic product. If you're inside the system, quota feels like stability.

If you're outside the system, quota feels like the velvet robe at a club you didn't even want to go to. Until you found out they're serving affordable cheese inside, because quota is limited, expensive, and difficult to access at scale. Which means entry is controlled and expansion is structured. That's where the cartel language begins, not because it's illegal, but because the outcomes are familiar. restricted supply, restricted entry, and a protected position for those already in. Pillar 2 is price setting or target returns. In most markets, prices are discovered through competition and chaos, and then everyone is mad at the outcome.

In supply management, prices are not left purely to world markets. According to federal and provincial policy descriptions, Canada uses a good administered pricing to support predictable producer returns, reflecting production costs, and designed to reduce the boom-bust income cycle. And this is where the public debate gets sloppy, because people hear administered price and assume the farmer is personally setting the price of their latte foam. And that's not how it works. And more importantly, it skips the biggest blind spot in the entire conversation.

The Missing Middle. Who's the missing middle? Processors and grocery giants between the farm and your fridge is an entire ecosystem, processors that turn raw milk into butter, cheese, yogurt, and ingredients. The distributors.

And retailers that decide what you actually pay at the shelf. And in a system where domestic production is stable and imports are constraints, the middle and end of the chain can benefit from a predictable market, especially if those sectors are concentrated. So when people ask who's making a racket off this system, the grown-up answer is it might not be a single villain twirling a mustache over a cheese wheel, but any protected market creates comfortable positions and comfortable positions attract players

who can capture margin. Here's the main beneficiaries worth naming, without turning it into a conspiracy. The first is processors. Processors can benefit from predictable domestic supply and a market that isn't easily undercut by a flood of lower-priced imports. In any industry, if an upstream is regulated

and the middle is concentrated, the middle can become a toll booth. The second are the grocery giants. Retailers set shall fall. prices based on strategy, margins, promotions, and what the market will bear. So even if Farmgate prices are administered, consumer prices can still be amplified by retail concentration and pricing power, which means you can criticize the system and still be fair to farmers.

You can defend farmers while still interrogating the retail end. The third are quota holders as a class. This is where Rackett gets closer to legitimate critique because quota isn't just permission to produce. It often behaves like a valuable asset. That means insiders can gain from the asset value and stability while newcomers face steep barriers. The fourth, the financing ecosystem. Once quota becomes valuable, it becomes financial. Banks and lenders don't run the system, but they do benefit from the system.

the stable, collateral-like assets that make lending safer. Stability makes the balance sheets reliable. The fifth are input suppliers and farm service businesses. If farm incomes are stable, farms invest more consistently in feed, equipment, construction, veterinary services, and technology, supporting a whole supplier ecosystem. So yes, there are businesses. the benefit from supply management. But the key point is structural.

Supply management doesn't just protect farmers. It shapes who has pricing power and who gets stable margins across an entire chain. And then we get to the third pillar, the one that turns this from a domestic policy into an international fight. Pillar three is import control. TRQs and tariff walls, according to government of Canada trade policy descriptions, Canada restricts imports of supply managed products through tariff rate quotas. A certain amount of imports can enter at lower tariffs. After that quota is filled, it can be extremely high, high enough that importing becomes un-economic. This is the wall. And if you're wondering why U.S. politicians, and the U.S. dairy industry keep targeting Canadian dairy. It's not because they have a deep moral concern for the price of Putin cheese. It is because the pillar is the enforcement mechanism that protects the domestic plan.

Quota and pricing only work if you stop the domestic market from being overwhelmed by outcome outside supply. So now, if you zoom out, you can see the full machine. We decide how much milk Canada needs. We limit production to match demand. We structure pricing to stabilize producer returns. We restrict imports so the domestic plan doesn't collapse. That's why defenders call it stability. But it also explains why critics call it cartel-like.

Supply is restricted. Entry is restricted. Competition from imports is restricted. And the system creates it valuable, protected positions for those already inside, which brings us to the honest framing. This is not an illegal cartel. It is a state-sanctioned coordination system that can produce cartel-like outcomes. And it creates a whole set of beneficiaries along.

the way. Farmers, yes, but also processors, retailers, quota holders, lenders, and suppliers. And that's a real debate. No, not is it legal, but is it legitimate? Because in a cost of living era and in a trade negotiation year, a protected system doesn't get to survive on traditional loan. It has to justify the tradeoffs. So next, we do what Canadian politics almost never does. We steal man the best case for supply management properly before we come back and press the hardest questions. That's next. The case for supply management. The case for supply management. All right. Before we sharpen the knives, we have to do this the right way. Because if you want to sound credible, if you want to sound like an adult, you don't start by mocking the people who defend a policy

that's been around for decades. You start by asking, what problem was this meant to solve and how does it solve it? And according to the federal agricultural policy summaries, dairy board explanations and the very long-running public defensive supply management from success of Canadian governments,

the best case for the system comes down to one word. Stability. So here's argument one. Stability isn't a luxury in dairy. It's the whole game. The core steel man is simple. Milk is not a product you can pause when prices drop. Dairy farms carry huge fixed costs.

Herds are long-term commitments. Production is continuous. And when markets go sideways, the people holding the bag aren't hedge funds, their families, with a mortgage, loans, employees, and a perishable product that doesn't care about your financial situation. According to the traditional policy rationale, supply-me, supply-me, management reduces the boom-bust cycle that can wipe out farms during prolonged low-price periods. And you can frame it like this. In Canada, we decided we'd rather manage supply than manage repeated farm bankruptcies. That's not a crazy value. It's a political choice. The second argument,

it's a form of risk insurance just embedded in the structure. Defenders will tell you supply management functions like a built-in insurance policy. Instead of relying on emergency bailouts every time a global price swings happens, or every time farmers hit a rough patch, the system creates a predictable environment. Predictable production volumes, predictable returns, predictable planning horizons. And the moral claim underneath that is, a country that eats dairy should be willing to maintain dairy. Not through chaos, through continuity. The third argument is we don't subsidize like them. The comparison argument. This is the line you'll hear constantly, and it's worth stating fairly.

Supporters argue that Canada's approach avoids the kind of large, visible, recurring direct payment subsidies you see in other jurisdictions, because the system is structured to generate stable returns through the marketplace design rather than annual checks. Now, critics will say yes, but consumers pay through higher prices, and we'll get to that later. But the steel man is at least its predictable system, not an endless cycle of political bailouts and farm crises headlines. And if you want a punchline that still respects the point, some countries subsidized farmers loudly with taxes.

Canada subsidizes quietly through structure and then argues about it forever. Argument four is food security and domestic capacity. A lot of defenders use food security language and it can sound melodramatic. So here's the responsible way to steal man it. It's not what that every Canada, it's not that Canada would starve without supply management. It's that domestic production capacity is a strategic asset. According to the system's public rationale, if you want reliable domestic policy, especially for staples, you have to decide whether you prefer full exposure to global volatility or a domestically managed baseline that doesn't collapse when global markets shift. Again, not a moral truth, a trade-off.

and in an era of supply chain disruptions, geopolitical shocks, and rising distrust, this argument has gained emotional power, even if it doesn't automatically win the economics. The fifth argument you'll hear is rural commodities, continuity, and political realism. The next steel man is rural Canada argument. According to decades of political messaging around the system, dairy is often framed as a stable employer, a stable anchor for processing activity, a stable buyer for inputs and services, a stabilizing force in rural economies. Now, you may roll your eyes at this because it can sound like a hallmark movie called Love in the Dairy Isle, but if you're steel manning honestly,

you have to admit the political reality. When Dairy collapses, it doesn't just hit one business. it hits a network, and politicians fear that kind of cascading rural decline, because it creates exactly the kind of social and political backlash the government's hate. Argument six. It prevents a race to the bottom consolidation. A key psychological driver behind supply management is the idea that Canada does not want an American-style model, where the market tends to reward relentless scale and consolidation. supporters of it will say, if you expose dairy fully to global pricing and free market, you invite a structural shakeout. Fewer farms, bigger farms, more concentration, more dependence on

export volatility and global price cycles. Now, to be clear, consolidation happens in Canada too. But the steel man is supply management is at least an attempt to preserve a middle class of farming. And you can land it like this. Canada's dairy system is basically a bet that moderate stability is better than maximum efficiency at any social cost. The best pro-supply management summary is this. If you're defending the system in good faith, supply management is a state-backed stability model designed for a sector where volatility is uniquely destructive. It helps maintain domestic supply, reduces the need for reoccurring bailouts, supports long-term planning and investment, and anchors rural economies. It reflects a Canadian preference for continuity

over chaos, even if that comes with trade-offs. And that's the point. It is not indefensible. It's not just farmers lobbying. It's a coherent policy philosophy, which is exactly why the criticism matters, because if the best case is to build, the real question becomes stability for who, at what cost, and is the cost still justifiable when affordability is breaking people's patience? So next we flip it. If you can steal man the best case, you can also press the hardest case against it, without caricature, without cheap shots, and without pretending the trade-offs don't exist.

That's next. The case against supply management. All right, we've still manned the best case. Now we do the grown-up part, the trade-offs, because the strongest part of this critique of supply management is not that it was created for no reason. It's that the system may now be solving yesterday's problem with today's pain, while quietly creating protected positions that are hard to justify in a cost of era. And before we get into the specific critiques, let me deal with the line that always shows up

in the comment section. The second you mentioned quota or administered pricing. This is communism. And look, if your definition of communism is the government is involved, then yes, by that standard, communism is also traffic lights. This isn't communism. Nobody nationalized dairy farms. The state isn't owning the cows. These are private businesses, taking private risks, making private investments, keeping private profits. What it is, if we're being precise, is state-sanctioned market coordination, a legal framework that limits supply, shapes pricing, and restricts imports to make the domestic plan work. So it's not communist. It's closer to managed capitalism. Or, if you feel and spicy, a protected market with a velvet rope.

And that distinction matters because it moves us from cheap insults to real trade-offs. Trade-offs Canadians are paying for whether we admit it or not. So here's the first critique. It's regressive in practice. Everyone pays. But not equally, according to mainstream economic critiques. Consumer advocates and repeated policy commentary over decades. The basic concern is this.

If a system raises the price of a staple good, even modestly, that cost lands hardest on lower income households. A policy that stabilizes one group's income by lifting baseline prices can function like a transfer that's invisible on paper but real at the checkout. If you want to run a system that costs the public money, at least do it in a way that shows up on the budget. so we can argue about it honestly. This one shows up on the receipt, which means everyone argues about it emotionally, forever. The second critique are barriers to entry. It can protect quota holders, not just farmers.

This is the critique that gives the cartel label, it's biked. According to agricultural finance commentary, and the way quota is discussed in industry and policy circles, quota doesn't behave like a simple license. It often behaves like an asset, something that can be bought, financed, and built into retirement planning. And that has two major consequences. New entrants face a wall if you want a young farmer, if you want young farmers, diverse ownership and new operations.

But the entry ticket is expensive and scarce. you've built a system that structurally prefers incumbents. Policy becomes property-like. Once people have paid for quota, reform becomes politically explosive because it touches net worth and collateral. So the sharpest question isn't, do you support farmers?

It's, does this system protect the dignity of farming or the value of quota? Because those aren't always the same thing. The third critique is it may reduce competitive pressure and slow innovation. According to many market-oriented critics, when a sector is insulated from competition, both from imports and from easy domestic entry, the competitive urgency declines. That can show up as slower cost discipline, less disruptive innovation, less incentive to build globally competitive markets,

and less consumer pressure to compete on price. So to be fair, Canada still has innovation in dairy, but the critique is about incentives. A protected market can make good enough feel safe, and you can put it in one clean thought. Competition is the gym, membership of capitalism. Nobody likes it, but it does prevent you from becoming complacent. The fourth critique is the missing middle can quietly profit while the public blames farmers.

Here's where we can look at this more thoughtfully and in a sophisticated way. According to a standard supply chain analysis, the price the consumer pays is not just the farm gate price. It's processing, capacity, distribution, packaging, marketing, and retail strategy. So when consumers feel squeezed, they often aim their frustration. at the most visible protected group. The farmers. But in reality, a protected market can create comfortable positions for other players, too. Processors who operate inside a stable, protected domestic ecosystem,

retailers who price strategically and hold shelf power, lenders, and the quota finance ecosystem that benefits from stable collateral. input suppliers who benefit from stable farm investment. You don't need to claim a conspiracy to make a serious point. If the system is structured to stabilize returns, you should expect downstream concentration and pricing power to matter a lot, which leads to a fairness test. If we're going to ask consumers to pay for stability,

we should be honest about who captures the margins across the chain, not just who produces the milk. The fifth critique is it limits Canada's trade flexibility. Dairy becomes a reoccurring hostage. According to trade reporting, official statements, and the repeated pattern of North American negotiation fights, supply management creates a predictable international reality because the system relies on import control.

It becomes a standing target in trade talks, especially with the United States, where dairy politics can be extremely aggressive. So every time Canada sits down to negotiate, dairy functions like a preloaded constraint. It narrows what Canada can offer. It forces Canada into a defensive posture. And it turns dairy into a bargaining chip that can crowd out other national priorities. And then we hit the paradox. According to the federal program descriptions and the public record around trade implementation,

Canada has compensated dairy producers when market access was conceded in trade agreements. So you get this weird political loop. We defend supply management as a system that avoids subsidies. Then we pay compensation when trade concessions impact it. That doesn't automatically mean the system is wrong, but it does mean the no public cost story is not the whole story. The sixth critique is transparency and legitimacy. Closed systems must overperform on accountability.

According to the government's best practices and repeated criticisms of quasi-regulated markets, a closed managed system has one non-negotiable requirement. Transparency. If the public is paying higher prices, they will demand credible answers to how targets are set, how costs and returns are calculated, how margins behave downstream, how entry is managed, and whether the system is serving the public interest, not just internal stakeholders. In a low trust era, opacity, becomes political gasoline. And you can say it like this.

if the system is legitimate, it should be explainable on a napkin. If it requires a 200-page briefing binder and a priest, the public is going to assume that they are being played. In a low-trust era, opacity becomes political gasoline. If the system is legitimate, it should be explainable on a napkin. If it requires a 200-page briefing binder and a priest, the public is going to assume they're being played. The seventh critique is the future is changing.

Substitutes and shifting diets test rigid structures. According to industry trends and consumer market realities, demand is changing. Lactose-free products are growing. Critique number seven, the future is changing. Substitutes and shifting diets test rigid structures. According to industry trends and consumer market realities, demand is changing. Lactose-free products, high-protein products, plant-based substitutes, changing consumption patterns. The critique here isn't moral.

It's just structural. A quota-based production framework is optimized for predictable demand. If demand shifts, the system has to adapt without creating distortions, surpluses, or new political fights over who absorbs the adjustment. So the question becomes, is the structure flexible enough for the future or is it built to defend the past? So the best critique of supply management is this. It can raise staple food costs in a way that disproportionately burdens lower income Canadians. It can entrench incumbents through quota barriers and turn policy into an asset class. It may reduce competitive pressure and innovation.

It can allow downstream concentration to capture margins while the public blames farmers, and it can repeatedly constrain Canada's leverage in trades, while still requiring compensation and political management when concessions occur. In a cost of living era, the legitimacy threshold is simply higher, and now we've earned the next section, because once you've given the best case for supply management and we have looked at arguments against it, you can finally move to ideology. My take. All right, so where do I land? I'm skeptical of the level of protection we've built around Derry, especially in a cost of living era, and especially heading into another round of trade pressure where Dairy becomes the reoccurring hostage, because Kuzma, isn't just some abstract treaty Canadians never read.

It has a built-in calendar, it has a built-in review, and it has a built-in incentive structure that turns sacred domestic files into bargaining chips. According to the U.S. Congressional Research Service, the Kuzma U.S.MCA joint review is scheduled for July 1st, 2026. And if the parties don't agree to extend the agreement, it can slide into annual reviews until extension happens, or the agreement expires. That matters because annual review isn't just policy.

It is leverage. It's uncertainty. It's a permanent invitation for every politically powerful industry to fight for its piece of the deal. And dairy is always near the front of the line because our system relies on import controls. And the U.S. dairy lobby has never treated Canadian market access as a small issue. And to that fact, according to official dispute records and reporting, Dairy TRQ administration has already been litigated under Kuzma dispute settlement. That means this isn't theoretical.

This is a live file. And live files come back to the table. So yes, heading into 2026, the question isn't will dairy matter and trade? The question is, how much negotiating oxygen are we willing to spend defending it? end what does the crowd, what does this crowd out? But I'm not going to do the lazy thing and pretend the answer is simply end it tomorrow, because if you're going to be serious about reform, you have to be serious about consequences. Rural balance sheets, family farms, processing jobs, and the fact that quota has been treated like a property for decades.

So here's my take, framed as tests. This is not a rant. So here's test one. Consumer fairness. If the public pays, the public deserves clarity. If the system raises the baseline price of stable goods, then the public deserves a clear, honest accounting of what the consumer cost is, what the stability benefit is and whether there are good ways to achieve the same goal.

Because right now, we've built a system that asks consumers to pay, but doesn't always show them the receipt for what they're buying. and in a low trust era, that's a political problem. My second test is competition and entry. Are we protecting farmers or protecting quota? If Canada wants dairy farming to be a viable career for the next generation, then entry has to be realistic. So the question becomes,

is the system designed to preserve farming or to preserve the value of quota? Because if the barrier is so high that the only incumbents and heirs can get in, then we've created a protected class, and that may be stable, but it's not defensible as a public interest policy forever. Test three is follow the chain. Don't scapegoat farmers,

while the missing middle cashes in. If we're going to talk about prices and fairness, we can't pretend the chain ends at the barn door. Processors, distributors, especially grocery giants. Matter. So my standard here is simple. If the public is paying more for stability, we should have serious transparency across the supply chain. We can see where margins are being captured and by whom, otherwise, we're just running a national argument where the public blames farmers while other players quietly profit from the structure.

My fourth test is trade leverage. Is this still worth what it costs us? at the table. This is where Kuzma makes the national interest question unavoidable. Because when you have a 2026 review date and a mechanism that can turn into repeated annual pressure if extension isn't agreed, dairy isn't just a policy. It becomes a reoccurring negotiation constraint. And according to federal program descriptions around trade implementation, Canada has compensated dairy producers following market access concessions tied to trade agreements. That creates the paradox Canadians deserve to see plainly.

We defend supply management as a system that avoids subsidies. Then we write a large check when trade concessions impacted. So I don't buy the idea that dairy should automatically override everything else Canada needs in trade. It protecting dairy repeatedly forces Canada into defensive posture. limits what we can offer and turns every negotiation into a dairy fight. Then at some point the question becomes, is this policy serving the national interest, or is the national interest being shaped around this policy?

And heading into 2026, Coosma Review, that question is not rhetorical. It is reality. My fifth test is reformability. If we keep it, it must earn legitimacy through transparency, and modernization. This is the part where I'm willing to be constructive. If Canadians decide supply management stays, fine.

But then it has to modernize. At minimum, a defensible version of this system should include radical transparency, clear public reporting on pricing inputs, margins across the chain, and consumer impact. A serious entry pathway. Policies that make it feasible for young farmers to enter without inhospheres. to enter without inheriting a fortune. Competition, where possible. Pressure to innovate, diversify products, and avoid complacency.

And trade realism, a clear national strategy for what we will and won't defend in Kuzma, and what compensation actually costs taxpayers when concessions happen. Because a protected market can exist, but it cannot exist as a black box, not anywhere. Where I land is this. Supply management may have been a rational stability system, but in 2006, the justification threshold is now much higher. If the public is going to pay through prices, through trade constraints, and sometimes through compensation, then the system needs to prove it's serving the public interest, not just protecting incumbents. And if you can't meet that test, then yes, Canada should be willing to rethink the level of protection and start talking

about reform in a way that's serious, gradual, and honest about trade-offs, which brings us to the only way to end this without turning it into a culture war. We need to talk about what a responsible transition could look like. One that doesn't destroy rural Canada, but also doesn't treat the dairy aisle like sacred ground, you're not allowed to question. Conclusion. So where does that leave us? It leaves us with a genuinely Canadian dilemma. We built a stability system to prevent chaos, and over time, that stability system

became a structure with winners, with barriers, with a political muscle, and with a trade footprint that follows us into every major negotiation. Which means the question isn't, do you love farmers or do you hate farmers? the question is, what kind of country are we going to be in 2026? A country that says, we'll pay a premium for stability because we value continuity, rural capacity, and domestic control, or a country that says in a cost of living crisis, you don't get to run a protected market unless it can explain itself, justify itself, and modernize itself. Because if supply management is going to remain a sacred file, it has to survive scrutiny in public without needing a PR campaign and a federal hymn book. And that's the thing. Calling it a cartel is rhetorically satisfying, but it's not the whole story. It's not an illegal cartel. It's a legal government-authorized coordination system built for a reason now colliding with new realities. Affordability pressure, concentration in the supply chain, barriers to entry, and trade leverage that keeps getting tested.

So the mature conclusion is this. If we keep it, it has to earn legitimacy. Not by saying this is how always been, not by treating questions as betrayal, but by meeting modern standards of public accountability. And if we can't do that, if the public cost is too high, the entry barriers are too steep, the downstream margins are too opaque, and the trade constraints are too constant, then we shouldn't pretend that defending the current model is the same as defending farmers, because those are not always the same thing. Now, the obvious follow-up question is, okay, genius, what would you do instead? And this is where I want to be careful, because there are two irresponsible moves people make here. Move one is to abolish it tomorrow. That's not policy,

that's arson. The second move is never touch it. And that's not stability. That's just denial. A responsible transition conversation is this. If Canada ever chooses to have it would live in the middle. If we keep supply management, you modernize it. Transparency across the chain, realistic entry pathways, and a hard-nosed trade strategy that doesn't pretend this is costless. If we change it, you do it gradually with a plan that acknowledges quota has been treated like a property-like asset, and you avoid detonating rural balance sheets overnight. And either way, you stop pretending the debate is farmers versus consumers, and you start talking about the whole system,

processors, retailers, finance, and how trade deals turn dairy into a reoccurring bargaining chip, because in a low trust era, the public will tolerate trade-offs, but it will not tolerate black boxes. So here's my closing thought. Milk shouldn't be a culture war. It should be a policy conversation

when serious enough to respect farmers, honest enough to respect consumers and strategic enough to respect the fact that trade negotiations don't care about our nostalgia. If we can talk about dairy with that level of maturity, then the problem isn't milk.

The problem is us.