Dairy: Supply Management Versus Organic

NYTimes has a story on Canadian dairy farmers and their relationship to the EU (remember the Canada/EU treaty which was delayed for a bit by Walloon dairy farmers (i.e., Belgium).  Their concern is that more cheese may be imported from the EU into Canada. Two paragraphs:

The way the country’s “supply management” system works now, Canadian dairy farms are almost guaranteed to prosper. Milk production is controlled by quotas, marketing boards keep prices high and stable, and import duties of up to 300 percent largely shut out competition from abroad.

But after the deal, the Comprehensive Economic and Trade Agreement, which was signed on Sunday, comes into effect, much more imported cheese will be allowed to enter Canada duty-free from the Continent. And farmers worry that this one dent in their defenses could be the beginning of the end for supply management.

Later the article cites an estimate of over $200 per year in additional costs for dairy products for the average Canadian farmer, or roughly $.50 a day.  Some speculations:

So the Canadian system probably maintains a lot of smaller family dairies, farms which have been lost in the U.S. as dairies got bigger and bigger.  (Maybe I'll get ambitious and research the point--looks like 11,000 farms averaging about 90 cows.  It's hard to get comparable data but a quick skim of this says my generalizations seem valid. This seems to say that there's proportionately more organic dairies/cows in the US..)  The food movement would like that.  But the dairy products in the grocery stores are likely rather generic; with supply management protecting a farmer's place in the economy, there's little incentive to experiment with organic milk, raw milk, or niche cheeses.  The food movement won't like that.

The bottom line, very tentatively, is: families can pay more to preserve family farms or pay more for choice of milk products (i.e., organic).  The downside of supply management is the higher prices apply to all; the upside of the US system is consumers can choose whether to pay the premium prices for organic.