Canada struggles with excess milk

Published 23 June 15

Canadian farmers have resorted to dumping milk in farm lagoons or using/selling it as feed as supply has outstripped domestic demand. The inability to send excess production to export markets highlights the pitfalls of the country’s supply management system. The existence of production quotas, designed to support farm incomes, means farmgate prices are set at relatively high levels, making exports uncompetitive. With prices on world markets low, Canadian processors of cheese and yogurts have started to use cheaper US milk proteins, which are allowed in under trade agreements, reducing demand for domestic milk. Further impacting on the demand for milk is a lack of processing capacity for the increasing volumes of skim milk available resulting from a rise in demand for butter and cream.

Pressure on the country’s supply management system is likely to continue as trade agreements increasingly open up the Canadian market to imports.