Dairy farmers in Canada are paid about $24 per hundred pounds of milk, nearly $10 more than their American counterparts, who may live mere miles to the south. Canadian farmers attribute the success and stability of their dairy market to supply management, a nationwide system that sets production quotas for dairy farms.
Milk quotas can be bought and sold in Canada, and they’re quite expensive — in the millions of dollars for a typical farm. Still, banks are willing to lend farmers money to pay for the quotas, because a controlled milk price set by regulators ensures a steady paycheck. There are around 11,000 dairy farms in Canada.
Supply management has been debated as a possibility for the U.S. dairy market for some time. In 2010, a bill designed to stabilize milk prices was introduced in Congress, though it eventually stalled. Other historical efforts to promote supply management have been stymied by dairy industry lobbyists. Conventional, consolidated dairy producers and processors are opposed to a quota system because the current system offers a clear advantage to large-scale production.
Yesterday, Secretary of Agriculture Sonny Perdue announced that enrollment has begun for the Dairy Margins Protection Program, a USDA-backed insurance plan for dairy farmers. The program, which was implemented as part of the 2014 farm law, is unpopular with farmers. But it may become more appealing as dairy farmers face another year of low prices.