Canada's existing dairy supply management system is resulting in lost opportunities for all Canadians, including milk producers, according to a study released yesterday (23 November) from the Conference Board of Canada.

It does this by creating a higher-cost structure that limits Canada's ability to compete for dairy business in growing markets, such as India and China, the report, Making Milk: The Practices, Players, and Pressures Behind Dairy Supply Management said.

It also leaves milk producers ill-prepared for a more competitive environment and constrains exports, which are held back by subsidy limits set by the World Trade Organization, the study claimed.

"Supply management largely meets its stated goal of improving producer incomes. But it also prevents milk producers from capitalizing on opportunities in global markets, while thwarting Canada's international trade objectives, and reducing competitiveness and innovation," said Glen Hodgson, senior vice-president and chief economist.

Since the 1970s, agencies under government authority have set the prices that farmers receive for their milk, and limited production through quotas to match anticipated Canadian demand for milk, cheese, butter, and other dairy products at those prices, the report stated.

To maintain high farmer milk prices and not undercut Canadian production, most dairy imports are restricted by tariffs of between 200% and 300%, it added.