Dairy Industry

• Fluid milk
• Cheese
• Butter
• Milk protein concentrates
• Infant formula ingredients
• Ice cream

1. 1

   Invest in value-added dairy processing (specialty cheeses, protein ingredients)

2. 2

   Develop export capabilities for dairy products outside supply management coverage

3. 3

   Modernize processing facilities to improve cost competitiveness within TRQ volumes

4. 4

   Pursue Canadian dairy brand differentiation based on quality and animal welfare

5. 5

   Prepare contingency plans for further supply management erosion in trade negotiations

CUSMA granted US dairy producers 3.59% of Canada's dairy market through tariff-rate quotas, representing the largest concession in Canadian supply management history. US dissatisfaction with Canada's TRQ allocation methodology led to a successful WTO dispute panel ruling against Canada. Further dairy market access demands are expected in any CUSMA review or renegotiation, threatening the viability of supply management.

Supply management insulates Canadian dairy from global price volatility but creates structural rigidity that limits processor flexibility. Quota values exceeding $30,000 per kilogram of butterfat represent stranded asset risk if supply management is further eroded. Processor consolidation has reduced the number of dairy plants, concentrating production and distribution risk.

Canadian dairy operates within a regulated domestic market, making direct international competition limited. US dairy producers, benefiting from scale and lower input costs, exert persistent pressure for expanded Canadian market access. New Zealand and EU dairy exporters also seek Canadian market access through trade agreements, compounding competitive pressures.