Q&A: Supply management is crucial to Canada's dairy industry, says local farmer

The nation’s dairy industry and its system of supply management are at the centre of a tense trade war between Canada and the United States.

Tommy Faulkner of London Dairy Farms talks about the dispute and its implications on local dairy producers

Tommy Faulkner of London Dairy Farms says ending the supply management system will ruin the Canadian dairy industry and won't help the U.S. industry, which he says is struggling because of oversupply and low prices. (Andrew Lupton/CBC)

The nation's dairy industry and its system of supply management are at the centre of a tense trade war between Canada and the United States.

The system includes policies that tightly control the price of dairy products like milk, cheese and eggs. It also maintains stable prices to ensure a farmer's living income.

U.S. President Donald Trump said the system is unfair to dairy farmers across the border and calls for its complete dissolution. In response, Prime Minister Justin Trudeau vowed to protect the system.

CBC News reporter Andrew Lupton spoke with farmer Tommy Faulkner of London Dairy Farms about the dispute and its implications on local dairy producers.

The farm located south of Hwy. 401 has been around for about 14 years and houses thousands of cows.

What has Canada's system of supply management done for your industry?

It is a very good thing.

Supply management allows us to fill the marketplace without overfilling it. When a commodity is overfilled to the market, the prices depress in an exponential way which leads to bankruptcies.

In our system, we supply all the milk the market needs and probably a little more but not too much more than it would cause disruptions in the market place.

U.S. President Donald Trump has described this system as "very unfair" to American farmers. How do you respond?

I don't see it that way.

In the U.S. they have different prices for milk according to different locations like different areas.

You could argue this but they have supply management as well. Their idea of supply management is to let thousands of dairy farmers go broke, have their lives and families in turmoil … and that does no good for anyone.

What is something that needs to be understood is that a lot of business in the world are not necessary monopolies but oligopolies and farmers are probably the last area where true competition can exist. So supply management is in many ways just collective sales.

And if you look at retail prices in the U.S. they are very similar to ours. In our country, the farmers get a slightly larger share of the retail profit. In the U.S. they get a smaller change. In the U.S. now prices are at a historic low, bankruptcies are at a historic high and retail price of milk hasn't changed any significant extent so that system doesn't work very well.

How about Canadians? Are they paying too much for dairy products?

If you compare our retail prices to retail prices in another jurisdiction around the world, we're not even on the high end.

If you look at other jurisdictions that have eliminated supply management … the consequences of it were horrendous. The consumers did not get a lower price of milk.

Are you worried now that the system of supply management is in the spotlight?

I worry that we will suffer the death of a thousand cuts because the system has been eroded over the last number of years over trade agreements in other countries. It's at a point now where it can't stand another weakening or there really is no system.

I don't see any negotiations of our system as beneficial; it probably is lean now as it can be.

Why would we want to take something that's serving our needs as a country in every respect and go into a system where the only outcome is turmoil, bankruptcy and subsidies?