The Current - Why Farmers Are Nervous About Canada’s Next Trade Move

Episode Date: July 7, 2025

Farmers on both sides of the border are watching closely as Canada and the U.S. continue trade talks. With Canada backing off its digital services tax, some are asking: is supply management next? That’s the system that controls how much milk, eggs and poultry Canadian farmers can produce and guarantees a set price for what they sell. We hear from a dairy farmer in New York who says U.S. producers still don’t have the access they were promised under USMCA, and an egg farmer in B.C. who says supply management helped her farm survive. Plus, a food economist walks us through how the system works — and what might happen if it’s put back on the table.

We're all looking for great places to visit in Canada. One of my favorites is the Stratford Festival. The theatre is truly of the highest caliber and there's so much selection. They have 11 large-scale shows on stage and trust me, whatever is on manure there will be exceptional. People always think Shakespeare when they think of Stratford, but it's so much more. Broadway musicals, family shows, classic comedy and drama. Whether it's Robert LaPage's Macbeth or Donna Fior's Annie, you will be blown away.

It's the perfect Canadian getaway. To quote William Shatner, who got his start in Stratford, every Canadian should make the pilgrimage to Stratford. Start your next adventure at StratfordFestival.ca. This is a CBC Podcast. Hello, I'm Matt Galloway and this is the Current Podcast. It's very simple. Prime Minister Carney in Canada caved to President Trump in the United States of America. And every country on the planet needs to have good trade relationships with the United

States. And it was a mistake for Canada to vow to implement that tax that would have hurt our tech companies here in the United States. Late last month, Prime Minister Mark Carney surprised many Canadians by announcing that he was going to kill the digital services tax. White House press secretary, Caroline Levitt said Carney had caved, but the Canadian government said it was a move that will quote, allow the negotiations of a new economic and security relationship with the United States to make vital progress. But the sudden change in policy has brought up fears about what else the Prime Minister

might give up to satisfy our southern neighbor. High on the list of concerns, supply management. That's the complicated system that manages how much milk, eggs and poultry Canadian farmers produce and the price they're paid for their products. Critics of supply management have renewed calls to end or modify the program and some US farmers agree. They say Canada has not been a fair player internationally. Blake Jendebeen is a dairy farmer in Northern New York State.

Blake, hello. Yes, good morning, Megan. How are you? Good morning. Fine, thanks. What do you and other US farmers you've spoken to think of supply management as a system? Well, I belong to a cooperative AgriMark. We sell cabbage cheese and recently I was on the board and was the vice chairman of the board and so I have a good feeling on how real dairy farmers feel about what's happening. To be honest with you, there are a lot of small dairy farmers from New York through New England and all the way up into Maine that admire and respect the Canadian quota

system and how it allows farmers to continue to be profitable at a smaller scale. But at the same time, we know that making sure food is affordable and we drive down costs for all of our American neighbors, we have to get larger and we have to spread those costs over more cows and more acres so that we can provide healthy dairy products at an extremely reasonable cost at the grocery store. What has it been like to be a dairy farmer in the United States since the US-Mexico-Canada agreement came into effect five years ago?

Yeah, I think it's really important to humanize dairy farming. Sometimes with all the rhetoric on television, we forget that these are people that we are working really, really hard. And dairy farming is a labor of love. And unfortunately, it's been consolidating in the United States for the last 60 years. And it will continue to consolidate. And farms will continue to get bigger.

And the trade agreement, did that speed up that process? 60 years and it will continue to consolidate and farms will continue to get bigger. And the trade agreement, did that speed up that process? It's not just the trade agreement. It is general market conditions. All things get more expensive. Labor gets more expensive. Insurance gets more expensive. Individual cows get more expensive.

Building costs get more expensive, building costs get more expensive. What's speeding it up really are these trade agreements, bilateral trade agreements with Canada, one of our best friends as a country in the world. Our energy costs are going up because of this trade war. Fertilizer costs will go up because of this trade war. Fertilizer costs will go up because of this trade war. So many things are going to affect the dairy industry in the United States that aren't great for dairy farmers, and we know this. And have you seen any go out of business? Yes, we have had many farms go out of business. In fact, within our cooperative, we had 1,200 farmers in 2011,

and today we've got just over 400 individual dairy farms, but the volume of milk has gone up. The volume of milk that we produce in this cooperative has gone up. What do you think Canada could do to improve access for US farmers? Well, there are quite a few things. So Megan, we have an agreement. What I want to make sure that everybody knows is that American farmers, we want trade negotiations to happen with respect and dignity. Farmers respect farmers.

Canadian farmers are hard workers. American farmers are hard workers. Our lives are very similar. We get up in the morning and we work our tails off all day long. And the dairy industry in the US, we believe we have an agreement in the USMCA. Right now, Canada has failed to live up to some of its dairy commitments in the USMCA and

we need to resolve these disputes in the upcoming review this year. We can talk about some of those disputes and I think it's really important like I said before to talk about these disputes with mutual respect and dignity. We don't have much more time but you're actually running for Congress for the Democrats in the midterms. What do you make very quickly of how US President Donald Trump has been handling the issue so far? Well, first of all, I care about Donald Trump voters.

And what I'm focused on are this district that I want to represent, it has four border counties with Canada. And the trade war is a problem. Just traffic in the Ogdensburg-Prescott Bridge is down below 2019 levels. And we all know why. So what we want to do is make sure that our voices are heard and we get back to normal trade policy. That's what everybody wants on both sides

of the aisle, red or blue, Republican or Democrat. Normality. Okay. Blake, thank you very much. You're welcome. Blake, gender bean is a dairy farmer in northern New York state. It's not just dairy production in Canada that's controlled by the supply management system. Eggs, chickens and turkeys are as well. Cammie Lockwood is an egg farmer with Lockwood Farms on Vancouver Island. Cammie, hello. Good morning.

Good morning. What does it mean that your farm is supply managed? It essentially means that the demand for Canadian eggs is matched with the supply for Canadian eggs. For myself, it means that I can actually be a farmer and depend on the sale of every single egg that my farm produces, which is amazing. It really gave us a very solid foundation to begin to work with and introduced us to a whole new sector. Now you're a you don't come from a farming family so you and your partner are new entries into the system. What was it like as a new farmer to enter into the supply management

system? Honestly it was like winning the lottery. We had been struggling to try and make ends meet, running to farmers markets and very weather dependent and sales dependent. And when we were able to join the supply managed sector, it just meant that we could both build our careers in farming and really follow our passion. As I said, it really was like winning the lottery. How would losing that system change how you operate? Losing the system just creates a whole lot more volatility in the marketplace. Supply management does a really good job of keeping monopolies out and supply

strong. It's very much a cooperative system in which we're all working together to ensure that Canadians have enough supply and we're able to work through the different transitions and the different fluctuations that we've seen given avian influenza as well as different market demands. So it allows each province and across Canada to manage that supply and ensure that no province is short and that no area is short on eggs. And it really, we see that consistency too for the consumers as well. The prices of our eggs don't fluctuate. So what would it look like for you personally if that system was gone? If that system was gone, as I said like it would just create a whole lot more volatility. It means

that it becomes more of a boom and a bust system where we either have oversupply and the price of eggs drop and that it means that we can't really depend on the market in the same way and that we wouldn't be able to plan for growth, we wouldn't be able to, because each time we'd be going to the bank and they would be asking us, well, what's the price of eggs at now?

And it would be very dependent on the financing we'd be able to get on what the price of eggs is. Now that it's so stable and consistent, it allows for some really good planning. Would prices be cheaper for consumers if there wasn't supply management? They might be cheaper, but they might also be more expensive, like as we've seen in the States, right? All the late-night TV hosts joke about how much the eggs are costing in the States right now, and that's because of avian influenza and the lack of supply.

So there would be times where it might be cheaper, there would be times where it would be more expensive. But then it would also leave farmers essentially directly to deal with grocery stores. And we, grocery stores really, the large chains really, really push hard on prices. So supply managed protects the price that farmers receive for the eggs as well. Right. Do you think more room could be made for international producers within the system? No.

It's one of the main tenets of supply management is protection of the Canadian system. And what it does mean is that the eggs produced in Canada are sold to Canadians. And I think that's something that all Canadians are really going for right now. Now, we're seeing criticism of supply management inside and outside Canada right now. We've talked a little bit about this, but why do you think it's so important that we hold on to this system? I think it's really, really a truly Canadian system. It's looked on internationally with a fair amount of jealousy from other farmers, and I have spoken to farmers around the world,

and they're aware that the supply management creates that stability for Canadians, both for the farmers as well as for the consumers. It really is a cooperative system as well and it keeps our farms smaller. We have, I believe in egg farms, we have about 1300 egg farms across Canada and the average size is about 22,000 hens, whereas in the states the average is well over a million hens. And as you can see, keeping farms smaller and keeping them in the families is something that is really a truly Canadian value. Cammy, thank you.

Thank you very much. Kami Lockwood is an egg farmer on Vancouver Island. We're all looking for great places to visit in Canada. One of my favorites is the Stratford Festival. The theatre is truly of the highest caliber, and there's so much selection. They have 11 large-scale shows on stage, and trust me, whatever is on when you're there will be exceptional.

People always think Shakespeare when they think of Stratford, but it's so much more. Broadway musicals, family shows, classic comedy and drama. Whether it's Robert LaPage's Macbeth or Donna Fior's Annie, you will be blown away. It's the perfect Canadian getaway. To quote William Shatner, who got his start in Stratford, every Canadian should make the pilgrimage to Stratford. Start your next adventure at StratfordFestival.ca. Hey, how's it going?

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gave me a few options, and helped me along the way. You had a ton of debt, and you're saying Credit Counseling Society helped with all of it? Yep and now I can sleep better at night. Right on! When debts got you, you've got us. Give Credit Counseling Society a call today. Visit NoMoreDets.org. Mike Von Masso is a food economist at the University of Guelph in Ontario. Mike, hello. Good morning, Megan. Good morning. Could you explain supply management at a basic level?

Well, so supply management is a – the policy objective is to stabilize prices for farmers to ensure that we have a long – an ongoing safe supply of perishable products. For consumers, it's to try and keep prices from fluctuating wildly. What happens is price for farmers is calculated based on a cost of production formula, but within that, they have to produce the quota that they're given. They cannot overproduce, they cannot underproduce. They have to manage to the quota they're given. And that means we produce in Canada what we consume in Canada for the most part. We import about a billion dollars worth of dairy products.

We do import some poultry products as well. Now, we've heard it gives stability to the farmers. I'm wondering what the costs or tradeoffs are of the system. Well, some people will argue that we pay more for supply managed products in this country. The evidence for that is sort of variable. We do pay more for some products, but some products are cheaper. I think eggs are cheaper now. They were also cheaper two years ago, very marginally. And so the other thing I think we need to keep in mind is that the structure of the grocery industry in Canada and the US is different.

And so we have, in fact, probably two-thirds of the items that we looked at in our study were cheaper in the US than in Canada. And so some of that difference is probably not attributable to supply management at all. Right. I mean, we've seen a lot of criticism right now that supply management raises the prices of food items. Researchers such as Ryan Cardwell at the University of Manitoba argue the system makes foods more expensive and that people near the US border would cross into Canada to get cheaper goods.

What do you make of that argument? Well, I think what they argue is that people go the other way for cheaper foods. People who live near the border cross the border to go to the US. To the US, yeah. Yes, yes. That's right. And in some cases, that's happened. But the argument I have is that it's not unique to supply managed products. There are some products that are cheaper, but there are also some products that are more expensive. It could be

distribution. We also know that Walmart drives the grocery business in the US. They're an everyday low pricing business, whereas Loblaws is the big player here. So it's often difficult to compare as well because we know that specials are twice as frequent and twice as deep in Canada versus the US. So if we compare, say, yogurt, I'm a yogurt eater, I never buy yogurt at full price. And that's a strategic difference that we see between the US industry and the Canadian grocery industry. Right, that's interesting. How fair is the system to our trade partners like the United

States? Is there room to make the system better for the U.S. without harming Canadian farmers? Well, I think what we need to be careful of is that we don't look at supply management in isolation because each country has its own dairy policy. And in fact, in the big giant bill that was passed in the US last week we saw for example that SNAP benefits food stamps were reduced and the estimate is is that that will cost dairy demand almost 1% of demand acknowledging that that might hurt dairy farmers, the government increased the margin protection. So if farmers make below their cost of production, or a smaller proportion

of their cost of production, they can opt into a program that will pay them out. That will actually continue to have higher production than the price merits, and so they will have excess product to export. So I think it's important to say, is supply management different than what other countries have? Yes, it is. Does it have room for improvement? Yes, likely.. Does it have room for improvement? Yes, likely. But we can't say, well, look how bad supply management is without looking at what happens in the US as well, which could provide them an unfair advantage in accessing our market. What improvements would you like to see or do you think would make a difference? What would you like to see or do you think would make a difference? Well, I think one of the biggest things I'd like to see is a more sort of clear and proactive

unbiased assessment of what has happened. I think that there has been a little bit of work analyzing supply management, but there hasn't been enough to say it's as good as some people say it is or as bad as others say it is. So could we improve some things? I think without a doubt how we allocate milk and those sorts of things. But by the same token, I think as the egg farmer from British Columbia said, that central desk selling that protects individual farmers from pressure from processors and groceries is also an important consideration. You know, people say we're not comparing apples to apples. I would argue that when we compare the systems,

we're comparing one kind of apple to another kind of apple. And it really is what the personal preference is. Right. Mike, thanks very much for speaking with me today. Thanks Megan. Have a great day. You too. Mike Von Masso is the OAC Chair in Food System Leadership and a professor of Food, Agriculture and Resource Economics at the University of Guelph in Ontario. You've been listening to The Current Podcast. My name is Matt Galloway. Thanks for listening. I'll talk to you soon.