Canada’s dairy supply management faces pressure ahead of US tariff deadline

Protected farm sectors enter trade talks

Canadian dairy farmers are warning the federal government against making further concessions on supply management as negotiations with the United States intensify ahead of President Donald Trump’s tariff deadline. The dispute concerns a system covering milk, eggs and poultry that has shaped Canadian agricultural production and market access since the federal government established it in the 1970s.

Supply management plans domestic output according to Canadian demand and restricts imports with high tariffs. Les Affaires reports that duties on affected products generally range from 200% to 300%, and can be higher. The World Trade Organization accepts Canada’s use of supply management, even though the country blocks almost all imports of milk, eggs and poultry, according to the publication. However, the WTO prevents Canada from exporting those three categories under the system.

Consumer costs versus price stability

The Montreal Economic Institute estimated in an analysis published on June 18 that Canadian consumers pay an average additional cost of C$224 per person each year for milk, eggs and chicken compared with prices paid by an average consumer in the US Midwest. That equals C$0.61 per day. The institute said the burden represents 1.25% of income for households at the lower end of the income scale, against 0.3% for households at the upper end.

Supporters acknowledge that removing supply management could reduce supermarket prices for a litre of milk, a dozen eggs and a package of chicken breasts. They argue, however, that the comparison does not capture the system’s wider role in stabilizing prices and farm revenue. Charles-Félix Ross, director general of the Union des producteurs agricoles, told Les Affaires that production planning helps align supply with domestic demand. Farmers cannot capture the full benefit of sudden price increases, but they are also less exposed to sharp declines.

Past concessions have already opened access

Canada’s protected market is not completely closed or unchanged. Ottawa previously made supply-management concessions during negotiations for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which includes partners such as Australia, Japan, Mexico, New Zealand and Vietnam. Canada also provided additional access under its trade agreement with the European Union, including a limited opening for European cheese producers.

The system contains no direct subsidy, according to Les Affaires, distinguishing it from agricultural support funded through taxes in the United States and Europe. Its import restrictions nevertheless reduce foreign competition. The publication notes that economic research associates stronger import competition with greater incentives to innovate, creating a potential productivity cost for protected Canadian producers.

Processors pursue growth outside Canada

Export constraints also influence corporate strategy. Canadian companies including Agropur and Saputo have acquired dairy processors in the United States to expand in that market because they cannot use exports of Canadian dairy products as their main route to growth there. Any new concession could therefore affect not only farmers but also quota values, processor sourcing and investment decisions across the domestic supply chain.

Supporters present supply management as a tool for food sovereignty, stable regional employment and the preservation of family farms. They also point to volatility outside Canada: US egg prices rose 350% in the year to March 2025 amid inflation and avian influenza, according to Les Affaires. For Ottawa, the tariff talks involve a measurable consumer premium and restricted trade on one side, and predictable production, farm income and domestic capacity on the other.