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Canadian dairy farms follow similar trends to main rivals

George Morris report says number of dairy farms has fallen by 90 per cent since the
late 1960s and the cow herd has shrunk from 3.5 million to one million today

Canada’s dairy herd, as well as the number of farms and processors, has contracted at about the same pace as its counterparts in the U.S., Australia, and Europe, says a new report from the George Morris Centre.

The main difference is that Canada hasn’t increased milk production as much as other countries have, and due mainly to regulated pricing, hasn’t seen the volatile swings in consumer prices for milk and other dairy products, says the Guelph-based agriculture think-tank.

Raw milk prices are considerably higher here than in the U.S., but because Canadian dairy farmers don’t require government subsidies, there hasn’t been the same fiscal pressure to change the system as was the case in New Zealand or other countries.

The report was commissioned by the Conference Board of Canada, a vociferous critic of supply management. It shows supply management “has contributed to stagnating production, reduced Canada’s ability to negotiate for freer trade for all Canadian goods and services, and created incentives for individuals to allegedly smuggle cheese from the United States and resell at a massive profit in Canada,” said Danielle Goldfarb, an associate director of the conference board.

But the George Morris report paints a more balanced picture of the dairy industry.

“Industry adjustment has occurred in Canada, but without the market growth seen elsewhere,” it states. “Overall, the evolution of Canadian dairy policy is consistent with that of its peers.”

Often overlooked by critics, the report states, is how much more efficient dairy farms have become under the system.

“In the late 1960s, there were over 135,000 dairy farms in Canada, more than half of which were in Ontario and Quebec. In 2010, there were just under 14,000 dairy farms, with the dominant proportion remaining in Ontario and Quebec… In 1940, there were just over 3.5 million dairy cows in Canada; today there are just under one million.”

Technology, has made the sector much more efficient, the report states.

”Since the early 1970s, overall milk production has been stable, while the cow herd declined by about one-half, implying major productivity improvements at the producer level.”

The number of dairy-processing plants has followed a similar trend, falling by half since the mid-1970s and by 90 per cent since the early 1960s.

Still, supply management is expected to come under pressure during trade negotiations with Europe and in Trans-Pacific Partnership. The system was introduced in the late 1960s to deal with chronic surplus production that pushed prices down for farmers and prompted government to create costly support programs.

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