Canadian Dairy Commission
Template:Short description Template:Use mdy dates Template:Infobox government agency The Canadian Dairy Commission (CDC) (Template:Langx) is an Ottawa-based Government of Canada Crown Corporation that provides a framework for managing Canada's dairy industry.<ref name=WWD/>
The CDC's mandate is to "ensure fair compensation to producers and provide consumers with access to a quality product."<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>
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.<ref name=FactSheet>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> The CDC also coordinates federal and provincial dairy policies.<ref name=WWD/>
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History
The Canadian federal government has been active in supporting the dairy industry since 1890, when the first Dominion Dairy Commissioner was appointed.<ref name="dairyweb_1999">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>
In 1967 the government of Canada passed the Canadian Dairy Commission Act which established the Canadian Dairy Commission (CDC).<ref name="CAES_Hedley_2015">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>Template:Rp
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.<ref >{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> In 1972, the Farm Products Agencies Act authorized the establishment of supply management, which can restrict production by use of quotas.<ref name="LOP_Heminthavong_2015"/><ref name="CDC_supply_management">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> <ref name="LOP_Frechette_1986">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>Template:Rp
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."<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> The CDC aims to avoid depending on government subsidies and the dumping of surpluses into third markets.<ref name=FactSheet/>
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.<ref name=WWD/> 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.<ref name="LOP_Heminthavong_2015"/>Template:Rp By restricting domestic supply and imports, the support price is maintained.<ref name="LOP_Heminthavong_2015"/><ref name=Manley/>
How the support price is determined
The CDC sets support prices for milk components (butterfat and skim milk).<ref name=WWD/> Provincial marketing boards use the CDC-determined price as a benchmark to set prices in each province.<ref name=WWD/><ref name="AgriFood_Mussell_2016">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>
Milk support prices are changed typically once a year using a formula determined by the industry.<ref name=Stewart/><ref name=CDC2023>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref><ref name=Process>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>Template:Rp The price adjustment formula is based on the cost of milk production, as determined by a randomized and anonymous survey of roughly 200 farms.<ref name=Process/> The CDC formula includes cash costs, capital costs, and labour costs, but does not include the cost to purchase milk production quota.<ref name=Stewart/><ref name=Process/>Template:Rp
In determining the support price, the CDC consults producers, processors, restauranteurs, retailers, and consumers.<ref name=FactSheet/> The CDC can set aside the formula in "exceptional circumstances," which, as of 2022, it had done four times since 2017.<ref name=Stewart/> 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.)<ref name=CBC>Template:Cite news</ref><ref name=Process/>Template:Rp
The CDC regulates only the price of milk received by farmers, however, some provinces (such as Quebec) regulate the retail price of fluid milk.<ref>Template:Cite news</ref><ref name=Process/>Template:Rp
Other roles
The CDC monitors production and demand for milk, and it adjusts the national milk production target as necessary.<ref name=WWD/> When production exceeds demand, the CDC oversees the removal from the market of surplus butter and skim milk powder for export or later sale.<ref name="AgriFood_Mussell_2016">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>
The CDC promotes consumer awareness and programs to stimulate demand for Canadian dairy products.<ref name=WWD>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> In collaboration with the private sector, the CDC monitors the seasonal domestic supply of milk to maintain a balance between supply and demand.<ref name=WWD/>
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."<ref name=Charlebois/> Restaurants Canada has long asked for a seat on the CDC board.<ref name=Stewart/>
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.<ref name=Stewart/> 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."<ref name=Stewart/> 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).<ref name=Leth>Template:Cite news</ref>
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.<ref name=Shel>Template:Cite news</ref><ref>Template:Cite news</ref><ref>Template:Cite news</ref><ref>Template:Cite news</ref> 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).<ref name=Elliot>Template:Cite journal</ref>
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.<ref name=CharleboisGM>Template:Cite news</ref>
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.<ref name=Charlebois>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> The study said the CDC's price setting formula would benefit from having an external competent review.<ref name=Charlebois/><ref name=Leth/>
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.<ref name=Coyne/><ref name=Stewart/> (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.)<ref name=Stewart/><ref name="LOP_Heminthavong_2015">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> 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."<ref name=Coyne>Template:Cite news</ref> 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.<ref name=Manley>Template:Cite news</ref>
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.<ref>Template:Cite news</ref><ref name=Manley/> <ref name=Schwanen>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> 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).<ref>Template:Cite news</ref><ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>Template:Rp
Also, the high cost has a disproportionate impact on low-income Canadians, since a greater proportion of their incomes are spent on dairy products.<ref name=Stewart>Template:Cite news</ref><ref name=Schwanen/>
References
External links
Template:Crown corporations of Canada Template:Authority control