Whenever I travel (which is not that often), I make a point of doing two things:  drink the local beer, and taste the local milk.  As fun as trying new beer is, a lot more can actually be learned by sampling a country’s milk.  Milk after all tells a story about a region’s agriculture from livestock breeds, to cropping systems, to production methods, to local ecology.  Dairy is a complex and living food that is influenced greatly by subtle changes in the cow’s diet, and it is actually quite difficult to produce milk with consistent qualities.  Milk is measured by its components (butterfat & protein), and these components will differ not only from region to region, but also from herd to herd and even cow to cow.  Like you and I, each dairy cow is an individual and as such metabolizes their feed and produces milk differently than each other.
 
I have long noticed a big difference between Canadian dairy products and those produced in the United States.  But it wasn’t until we travelled to Cuba that I really started to see how certain factors in a region impact the taste of milk.  While in Cuba we had the opportunity to visit some farms and saw many crossbred dairy cows.  In Cuba, they don’t feed their dairy cows grain as a feed concentrate like we do here in Canada.  Instead, they feed what they have lots of – coconut!  Coconut is high in fat and protein, which is precisely what a cow needs to produce milk.  While in Cuba I enjoyed many glasses of rich milk that had a faint taste of coconut.  What a wonderful eating experience and one that spoke volumes about the local agriculture.
 
Recently the dairy industry in Canada has been in the forefront of our political scene as Canada continues NAFTA negotiations with the United States.  The major sticking point in these negotiations is the supply management system that is in place to regulate the dairy industry in Canada.
 
While the media has put Canada’s supply management at the forefront in our news recently, I have yet to hear a simple distillation of what supply management is all about and what it means for Canadian farmers and consumers.  For that reason, I thought it would be appropriate to use this edition of Well Vittled to give a quick overview.
 
Supply management (or the quota system as it is sometimes called), came into effect in 1970 and was the federal government’s response to a call for help from Canadian dairy farmers who were struggling greatly with the volatility of the market at the time.  Specifically, they were struggling to keep their farms viable as the price of milk dropped while the cost of production increased.  At the grocery store the price of milk was in constant flux due to supply and demand.  In a nutshell, both the farmer and the consumer were suffering from the inconsistency that was created by unregulated production.
 
To remedy the problem, the “quota system” was instituted.  This meant that farmers had to purchase quota, or a share in the market, in order to produce the commodity.  At the time supply management came into effect quota was automatically awarded to dairy farmers who were currently producing milk.  They were given a quota relative to the amount of milk they were producing in their region, or pool.  Additional quota could be purchased at a modest cost thereby giving a farmer the “right” to produce more milk should the farm wish to expand.  By stabilizing the production of milk the quota system lessened the volatility of price for the consumer while providing a guaranteed return for the farmer.
 
With supply management the milk is purchased and distributed by the provincial milk marketing board (Dairy Farmers of Ontario, in this province).  The marketing board picks up the milk from the farm, sells it to processors, pays farmers a fixed rate per liter, and runs advertising campaigns to grow the industry.  When a farmer retires, his/her quota is sold back to the marketing board, which then re-distributes it to other farmers who purchase the quota as they wish to expand.  The overall effect is that the amount of milk produced remains constant even if there are fewer farms producing it.   Controlling the production of milk means that the consumer can count on a stable price at the grocery store because supply and demand is always balanced.
 
In an unregulated dairy industry (as seen in the United States), the stage is set for monopolies to proliferate.  Large farms are able to achieve an economy of scale that allows them to sell the product at a lower price than smaller farms can.  In the end, processors purchase at the lowest price possible and the small dairy farm eventually goes out of business because it cannot compete.  By contrast, in the supply-managed system, a small dairy (less than 50 cows) is paid the EXACT same price per liter as the farm that milks 500 cows.  This means that small, medium, and large producers can co-exist in the industry and are able to benefit equally from the marketing and distribution of a central buyer (the milk marketing board).  Supply management is the only thing keeping many Canadian dairy farms in business.
 
In summary, here are the key pros and cons of supply management, from my perspective:
 
PROS

• Producers at all scales have equal opportunity to participate in the industry
• Farmers are guaranteed a cheque every month based on the volume of milk they produce
• Farmers can focus on production rather than marketing and distribution
• Consumers can rely on stable pricing at the grocery stores
• Quality of the product is consistent across the country because the milk marketing board tests every sample from every farm to ensure there is no antibiotics or prohibited substances in the milk
• The Canadian Quality Milk Program ensures that cow health and facility sanitation are a key focus on farms
• Farmers can continually invest in their farm businesses by borrowing against the equity they have in the quota they hold

CONS

• While quota was free in the beginning, it is currently valued at nearly $25,000 per cow in Ontario, making it nearly impossible to get into dairy farming
• Farmers are penalized for both over-producing and under-producing, which means that dairy cow feeding programs typically do not involve grazing - rather the animals are fed a formulated ration that is consistent from day to day
• Chronic failure to fill quota amount will result in quota being clawed back from the farmer.   The risk of losing quota is an impediment to alternative production methods
• Seasonal dairy operations, or grazing-based dairy operations, cannot exist in this system.  This means that a farmer cannot choose to produce dairy only during the summer months.  For the consumer, this means we do not see any real variety in our favourite dairy products.  For example, grass-fed butter or milk is not something Canadian dairy farmers can produce under this system
• Small farms like Sleepy G Farm (which does not hold quota) are unable to participate in dairy production despite having a herd of cows, an adequate barn and facilities, and 175 members who would potentially like to purchase organic milk and butter

Supply management has evolved a lot since its inception and has largely been a great success.   However, this is a big topic, and one which I’ve only scratched the surface.  Additionally, I know that there are people among us who view their food choices as a constitutional right that should not be subject to government regulation.  Perhaps the best example of this involves the growing demand for raw (unpasteurized) milk, which is strictly prohibited in Canada and absolutely illegal to distribute in any fashion.  This is a sad reality because well, humans have been drinking raw milk for as long as they’ve been milking cows.  We drink the raw milk from our own cows and boy is it delicious!  But, thanks to supply management and Canadian Food Inspection Agency regulations you’ll just have to take my word for it.