Category: Agriculture

In less than a month, Lactalis has made two moves that deserve the attention of Canada’s dairy sector. On July 15, the French giant reached an agreement to acquire Agropur’s fine-cheese business, including the OKA, Monsieur Gustav and L’Extra brands and the plants in Oka and Saint-Hyacinthe. Then, on August 14, Lactalis announced a £988 million deal, about US$1.34 billion, to buy Saputo’s British dairy operations.

Two different transactions on two continents. But together they illustrate something much bigger: the rise of Lactalis in Canada is part of a global growth strategy, and Canada is clearly one of the markets where the group wants a larger presence.

So for Canadian dairy farmers, is that good news or bad news?

Lactalis in Canada: a giant that is actually investing

It would be too simplistic to describe Lactalis as a foreign company merely taking Canadian market share. The group already has a substantial industrial presence in this country.

According to Lactalis Canada, the company operates 19 manufacturing sites in Canada, employs about 4,500 people and processes roughly 2.2 billion litres of 100% Canadian milk. Since 2018, it also says it has invested more than $900 million in capital projects and transformation initiatives in Canada.

Its portfolio already includes extremely familiar brands: Cracker Barrel, Black Diamond, P’tit Québec, Balderson, Ficello, Astro, IÖGO, Olympic, Lactantia, Beatrice, Galbani and Président, among others. If the acquisition of Agropur’s fine-cheese business receives Competition Bureau approval, OKA, Monsieur Gustav and L’Extra will be added to that list.

From a dairy farmer’s perspective, there is an obvious positive argument here. A company that invests in Canadian plants and processes milk produced here is far more useful to our sector than growth based simply on importing finished dairy products.

But how large do we want Lactalis to become?

The downside is concentration.

Lactalis is not simply a large processor. The group describes itself as the world’s leading dairy company, with 2025 revenue of €31.2 billion, 266 dairies and cheese plants in 49 countries and 124 acquisitions completed over twenty years.

Acquisitions are therefore a core part of its strategy.

In Canada, that strategy has already reshaped the dairy aisle. When Parmalat, now Lactalis Canada, acquired Kraft Heinz’s natural-cheese business, the Competition Bureau noted that the main competitors in regular grocery-store cheese were essentially Parmalat and Kraft Heinz, Saputo with Armstrong, and retailers’ private labels.

The Bureau ultimately cleared that transaction in 2019, concluding that it was unlikely to substantially lessen competition. But each new acquisition gradually changes the landscape. The proposed purchase of OKA and Agropur’s other fine-cheese assets is itself expressly subject to Competition Bureau approval.

The real question is not whether Lactalis is “too big” simply because it is foreign. The question is at what point the concentration of brands, plants and processing capacity in one group’s hands begins to reduce meaningful competition. That issue of market power in the dairy chain also connects directly to the debate over farm-gate prices, processing and the supposedly free dairy market.

The Agropur case is especially sensitive

When market share moves from Saputo to Lactalis, it is essentially a transfer between two private companies processing Canadian milk.

Agropur is different. Agropur is owned by its dairy-farmer members. A business held by the cooperative therefore allows farmers, at least in principle, to participate more directly in the value created beyond the farm gate.

Seeing a producer-owned cooperative sell iconic brands such as OKA to a multinational can therefore create perfectly legitimate discomfort.

But Agropur’s own strategy also matters. The cooperative says its fine-cheese operations were profitable, but represented only about 2% of consolidated revenue and 2% of the milk processed in its Canadian plants. Agropur says it wants to focus investment on value-added fluid milk, industrial cheese, butter and dairy ingredients.

A few months before announcing the fine-cheese sale, Agropur unveiled investment projects approaching $1 billion in Beauceville, Quebec, and Bedford, Nova Scotia, to expand its capacity in value-added dairy proteins. Those projects still require final approval, but they suggest the cooperative is not abandoning the Canadian market. It is choosing where to concentrate its capital.

What about Saputo’s sale in the United Kingdom?

The agreement announced August 14 for Saputo’s British dairy operations is striking in size: £988 million. More than anything, it demonstrates Lactalis’s financial strength and appetite for acquisitions on a global scale.

It would be risky, however, to conclude that Saputo is selling in the United Kingdom because it expects an imminent battle with Lactalis in Canada. There is currently no public evidence establishing that connection.

The broader hypothesis remains interesting: in an increasingly concentrated global industry, major processors are choosing their markets and product categories with greater discipline. Some assets are sold to free up capital while other sectors receive large investments.

What we can say with confidence is that Lactalis is currently on the buying side.

Supply management does not answer this question

This development also highlights a distinction that is sometimes overlooked in debates about supply management and the pressures facing Canada’s dairy market.

Supply management is primarily designed to govern milk production, farm-gate pricing and access to the Canadian market. It does not guarantee that the companies processing that milk are Canadian-owned, much less farmer-owned.

It is entirely possible to maintain strong Canadian milk production under supply management while seeing a growing share of brands and processing capacity owned by large international groups.

That is not automatically a bad thing. A global processor can bring capital, technology, market access and marketing capacity that smaller companies may not have. But ownership of processing also influences where profits end up and who holds bargaining power in the food chain.

So, good news or bad news?

Probably both.

For Canadian dairy farmers, Lactalis can be good news when it invests here, modernizes plants and grows sales using Canadian milk. The company has the financial resources to support its brands against powerful retailers, develop new products and compete with other global giants.

But Lactalis’s growth becomes a concern when it steadily reduces the number of major independent processors and concentrates ever more brands and production capacity in the same hands.

The problem may therefore not be Lactalis itself. It is the speed at which the global dairy sector is consolidating.

For Agropur and Saputo, the recent transactions may be perfectly rational portfolio decisions. For Lactalis, they clearly fit a growth strategy that has been unfolding for decades.

And for us as dairy farmers, the issue deserves close attention. We benefit from having strong processors capable of investing and selling our products. But we also benefit from having enough of them that no single company becomes indispensable.

Sources

• Reuters, Lactalis to buy Saputo’s British dairy operations
• Lactalis Canada, proposed acquisition of Agropur’s fine-cheese division
• Agropur, agreement to sell its fine-cheese operations
• Agropur, investment projects in Beauceville and Bedford
• Competition Bureau, review of Parmalat’s acquisition of Kraft Heinz’s natural-cheese business
• Lactalis Group, key figures

We hear it regularly whenever agriculture comes up: “Dairy farmers are millionaires.”

That is not entirely false.

Many dairy farms own assets worth several million dollars: land, buildings, livestock, machinery, equipment and, in Canada, quota. Taken together, all of that can represent a considerable amount of wealth.

So why do we not see all these farmers living like millionaires?

Because two very different things are being confused: owning valuable assets and earning a high income.

A multimillion-dollar farm is not a bank account

Imagine a farm valued at $5 million.

That does not mean its owner personally has $5 million. You first have to subtract the farm’s debt and account for the fact that the business may be owned by several shareholders or members of the same family. A farm with $5 million in assets, $2 million in debt and several owners clearly does not make each of them a person with $5 million to spend.

Most importantly, those millions are tied up in productive assets.

A hectare of land worth $30,000, $40,000 or $50,000 does not pay the grocery bill. Neither does a valuable barn. The same is true of a tractor, a cow or dairy quota.

Those assets exist to produce.

To turn that wealth into cash, a farmer generally has to sell part of the production system, borrow more money or, ultimately, sell the business.

It is real wealth. But it is nothing like holding a few million dollars in financial investments and being able to draw on them to fund your lifestyle.

What do farms actually pay out?

A dairy farmer usually does not punch a time clock when entering or leaving the barn. Yet the hours add up: animal care, feeding, milking, field work, machinery maintenance, repairs, administration, paperwork, emergencies, calvings, weekends and long days dictated by weather.

Statistics Canada data provide a useful glimpse of what farm families actually receive in wages.

In 2023, Canadian dairy farms paid an average of $43,710 in salaries and wages to family members, according to Statistics Canada’s Farm Financial Survey.

That figure has to be interpreted carefully. It can cover more than one family member and does not include dividends or certain withdrawals from the business. It is therefore not the “average dairy farmer salary.”

But it illustrates the contrast very clearly: the value of a farm and the money actually paid to the people working there are two very different realities.

A business owner can also build equity as debt is paid down or assets appreciate. That increases net worth without necessarily increasing the amount of money available for day-to-day living.

In other words, owning a share of a business worth several million dollars absolutely does not mean receiving the kind of income usually associated with a millionaire.

“Then just sell the farm”

That is usually the next response.

If the farm is worth millions, why not simply sell it?

Because a farm is not just an investment.

It is the farmer’s workplace. It is what generates income. Often, it is also a business the family has operated for generations and hopes to pass on to the next one.

Telling a farmer they can become rich by selling the farm is therefore a bit like saying: “You could have a lot of money if you liquidated your business and gave up your profession.”

Technically, that can sometimes be true.

But even then, the gross sale price is not what ends up in the seller’s pocket. Debt must be repaid, transaction costs paid and, depending on the situation, taxes may also apply.

And that still says very little about the farmer’s standard of living during the thirty or forty years spent operating the business.

Part of those millions may never be cashed out

Family farms have another important characteristic: they are often transferred to the next generation for less than full market value.

That is not necessarily an act of pure generosity.

A dairy farm may hold enormous asset value without generating enough profit for a young farmer to borrow the full market value of the business.

Take again a farm worth several million dollars.

If the older generation demands every dollar of that value at transfer, the successor has to come up with enormous capital or take on massive debt to buy the business. The same farm then has to generate enough cash to service that debt, pay operating expenses, reinvest and support the new generation.

At some point, the numbers simply stop working.

So for the farm to continue, owners may agree to transfer part of the business below market value.

In other words, a dairy farmer can spend a career building several million dollars of value inside a business, never personally have access to those millions, and then voluntarily give up part of that value so the farm can survive after retirement.

That is a rather unusual definition of a millionaire.

But the wealth is still real

It would be just as misleading to go to the opposite extreme and pretend the value of farms does not matter.

It matters a great deal.

A dairy farmer who owns a business with substantial equity has real wealth. That asset can serve as collateral, appreciate in value and eventually be sold. All else being equal, that is obviously not the same financial situation as someone who owns no assets.

And if an owner chooses to liquidate the farm at full market value rather than transfer it, they may indeed realize a significant amount of accumulated wealth.

There is no reason to deny that.

But that is not the point.

The question is whether the value of a farm tells us the income and living standard of the farmer operating it.

And there, the answer is clearly no.

Millionaires on paper

So, are dairy farmers millionaires?

For some, if you add up the net value of their ownership stake in the business, yes.

But if by “millionaire” we picture someone with a very high income, substantial liquidity and millions of dollars they can freely spend, the image quickly becomes misleading.

A farmer can simultaneously own a share of a multimillion-dollar business, work 60 hours or more in some weeks, draw a relatively modest income and hope one day to transfer that business to their children for far less than an outside buyer might be willing to pay.

That is not a contradiction.

It is simply the difference between being wealthy in assets and being wealthy in available cash.

And when we talk about dairy farmers’ income, that distinction deserves to be made.

This claim is also one of the ten “myths” about supply management raised by Sylvain Charlebois that I examined point by point.

Further reading

• Closed Dairy Market? The Numbers Say Otherwise
• The Problems With Dairy Quota
• Sylvain Charlebois vs. Supply Management: The Free Market He Is Selling Does Not Exist

Canada’s supply management system has survived decades of trade negotiations, several changes of government and repeated campaigns predicting its imminent demise. It is still standing, and since 2025 it has even benefited from unprecedented legislative protection. Yet rarely has the system been placed so directly at the centre of a trade power struggle.

The threat no longer takes only the form of an explicit demand for abolition. It appears through a succession of concessions, technical challenges and tariff pressure that can, piece by piece, reduce the share of the market actually reserved for Canadian producers. This gradual erosion, more than any sudden deregulation, is now the main danger.

A system that organizes the market rather than subsidizing it

Supply management rests on three pillars: matching production to Canadian demand, a pricing mechanism intended to cover the costs of efficient production and import controls. It applies to dairy, chicken, turkey, table eggs and broiler hatching eggs. The Farm Products Council of Canada describes it as a way to avoid both overproduction and shortages, provide fair returns to producers and maintain a stable supply.

The principle is straightforward: produce according to what the domestic market can absorb. In non-quota sectors, a good year can quickly become bad news if all producers expand at the same time and push prices down. Supply management reduces this classic cycle of expansion, surplus, price collapse and consolidation.

The model does not guarantee wealth. Farms remain exposed to feed, energy, labour, building and financing costs. It does, however, provide predictability that supports long-term investment without relying as heavily on public payments when markets collapse. In 2024, supply-managed sectors generated more than C$15 billion in farm cash receipts, according to Agriculture and Agri-Food Canada transition materials.

The immediate threat: the power struggle with the United States

The review of the Canada-United States-Mexico Agreement was already expected to bring supply-managed agriculture back to the forefront. Washington has long criticized Canada’s over-quota tariffs, dairy tariff-rate quota administration and certain pricing mechanisms. The 2026 U.S. National Trade Estimate Report maintains those complaints.

Canadian tariffs that can exceed 200% are often presented as proof of a completely closed market. That description is incomplete. Those rates mainly apply to imports above negotiated quota volumes. Within those quotas, significant quantities of foreign products already enter Canada at reduced or zero tariffs. Federal data on tariff-rate quotas for supply-managed products show separate access commitments under the World Trade Organization, the CPTPP and CUSMA.

By the summer of 2026, the confrontation had become more concrete. The U.S. administration linked the treatment of American dairy exporters to a new tariff measure against Canada. In a July 20, 2026 statement, the U.S. Trade Representative invoked Section 338 and announced additional duties while specifically criticizing Canada’s treatment of the U.S. dairy sector.

Supply management has therefore become a bargaining chip in a dispute that also touches automobiles, alcohol, public procurement and other Canadian policies. The danger is clear: even if Ottawa refuses to abolish the system, it could face pressure to grant more market access in exchange for concessions elsewhere.

The erosion began long ago

Canada preserved the architecture of supply management in its major trade agreements, but it gave up part of its domestic market in each of the last major negotiations. The agreement with the European Union, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and CUSMA all created or expanded import quotas.

Each additional access commitment may look limited on its own. Taken together, they represent sales Canadian farms can no longer make. The problem is structural: domestic demand does not automatically rise to offset imports. When foreign products take a larger share of the market, Canadian production must fall or grow more slowly.

The federal government itself acknowledged these losses by creating compensation programs for producers and processors. Those payments helped affected businesses invest, but temporary compensation does not replace a market lost permanently. It mainly confirms that trade concessions carry a real cost.

The CPTPP illustrates the mechanism well. Canada granted permanent quotas for dairy, poultry and eggs, phased in over time and set to expand. The official summary of the agreement says market access was granted while the three pillars of supply management were maintained. That is legally true, but economically, the import-control pillar can be weakened without disappearing altogether.

Bill C-202: a real shield, but not an absolute guarantee

Since June 26, 2025, Bill C-202 has prohibited the Minister of Foreign Affairs from entering into certain trade commitments that would increase tariff-rate quotas on supply-managed products or reduce over-quota tariffs. This is a major change: protection of the system no longer depends only on a political promise repeated at every negotiation.

The law sharply reduces the room available to a Canadian negotiator who might otherwise trade away more dairy, poultry or egg market access for gains in another sector. The government says this is consistent with its policy of defending all three pillars, as explained in Global Affairs Canada briefing documents.

But no ordinary statute is irreversible. A future Parliament can amend a law. Commercial pressure can also shift toward areas the law protects less directly: quota-allocation rules, composition standards, product classifications, import permits or pricing policies. The battle can therefore become more technical without becoming less important.

Critics of supply management argue that C-202 removes a bargaining chip from Canadian negotiators in advance. That criticism deserves consideration, but it also reveals the law’s real purpose: to stop supply-managed farms from repeatedly serving as trade currency for other industries. After three major agreements that gave away market access, drawing a line is hardly excessive.

Technical challenges: opening the market without abolishing the system

Recent dairy disputes have not necessarily targeted the elimination of Canadian production quotas. They have focused mainly on how Canada allocates import quotas. The United States challenged the share reserved for Canadian processors, arguing that the method limited commercial opportunities for U.S. exporters.

That may sound administrative, but the consequences can be substantial. A quota can exist on paper; allocation determines who can use it, which products enter and when. Changing those rules can increase competition in specific parts of the Canadian market without formally reopening the entire agreement.

The same logic applies to product categories and ingredients. In a food industry where milk proteins, preparations and processed products cross borders in many forms, a regulatory definition can matter as much as a tariff. Defending the system therefore requires constant technical expertise, not just broad political declarations.

Domestic pressure: food prices, concentration and the battle over the narrative

Supply management is also vulnerable politically within Canada. During periods of food inflation, it is tempting to blame the price of milk, eggs or chicken entirely on farm income. Yet the farm-gate price is only part of the retail price. Processing, transportation, packaging, distribution and retail margins all intervene between the barn and the checkout.

The system must still accept transparency. Its defenders gain nothing by pretending it is perfect. Entry costs tied to quota can complicate farm transfers and new entrants. Rules must evolve with consumption. Producers must also demonstrate progress on animal welfare, the environment and productivity.

But abolishing supply management would not eliminate Canadian production costs or concentration in processing and retail. It would mainly shift more risk onto farms and expose the domestic market more directly to foreign surpluses. In countries that support producers differently, assistance often comes straight from the public treasury. Consumers then pay part of their food bill as taxpayers rather than at the grocery store.

Why defending it goes beyond farmers

The debate is not only about quota values or the income of a few thousand farms. It concerns Canada’s ability to maintain production across its territory, close to consumers and subject to Canadian standards. In its National Food Security Strategy, Ottawa now presents supply management as a fundamental element of Canadian self-sufficiency in milk, eggs and poultry, as well as rural vitality.

The pandemic, animal diseases, trade wars and logistics disruptions have shown that food supply cannot be reduced to the lowest price available on the world market on a given day. Lost production capacity cannot be rebuilt instantly. Geographically distributed farms are food infrastructure as much as they are an economic sector.

The stability provided by the system also helps processors plan supplies and allows consumers to count on regular production. It reduces the violent swings between surpluses that devastate farmers and shortages that raise costs for the public.

What to watch now

The first line of defence will be the concrete application of C-202 during CUSMA discussions. Ottawa will have to resist not only requests for additional access, but also equivalent concessions disguised as technical changes.

The administration of existing quotas will also need close attention. Canada must respect the agreements it has signed or risk adverse rulings and retaliation. But respecting negotiated access does not mean offering more than was agreed.

Finally, farm organizations will need to explain the system more effectively to the public. The phrase “300% tariffs” is politically powerful because it is simple. The answer cannot merely be that it is misleading. It must explain volumes already imported, the difference between in-quota and over-quota tariffs, the composition of retail prices and the forms of farm support used elsewhere.

An agricultural policy choice, not an anomaly to apologize for

Supply management is not an accidental relic. It is a collective policy choice: match production to demand, pay prices that support viable domestic production and prevent the Canadian market from becoming an outlet for subsidized surpluses from major agricultural powers.

Its main weakness today lies in accumulation. One small concession, then another; one technical change, then a new interpretation; one temporary compensation payment for a market lost forever. The system can keep its name and institutions while slowly being hollowed out.

Canada’s legislative shield therefore arrives at a decisive moment. It does not remove the need to negotiate carefully, modernize the model or respond honestly to criticism. It does, however, establish a reasonable principle: dairy, poultry and egg producers should no longer be the automatic bargaining chip in every trade agreement.

The question is no longer only whether supply management will survive. It is whether Canada is prepared to defend it in the details, where most of the battle is now being fought.

Sources and references

• Farm Products Council of Canada — Supply management
• Parliament of Canada — Bill C-202, Royal Assent
• Agriculture and Agri-Food Canada — National Food Security Strategy
• Global Affairs Canada — Position on protecting supply management
• USTR — National Trade Estimate Report 2026
• USTR — Tariff measures targeting Canada, July 20, 2026
• Global Affairs Canada — 2026-2027 tariff-rate quotas
• Global Affairs Canada — CPTPP agricultural outcomes

For years, the United States has accused Canada of protecting its dairy market too aggressively. Yet when you look at actual trade flows and the use of CUSMA tariff-rate quotas, a much more nuanced picture emerges. Americans already sell far more dairy products to Canada than we sell to them, and in some categories they use almost all of the access they have been granted. On our side, several U.S. quotas available to Canadian products remain nearly empty.

The debate deserves better than the image of a Canadian dairy market hermetically sealed against American products. The market is organized, quota-based and protected, yes. But closed? The numbers tell a different story.

Nearly two and a half times more U.S. dairy products coming into Canada

Start with the trade balance. According to 2024 data from the Canadian Dairy Information Centre cited by Dairy Farmers of Canada, the United States sold nearly C$880 million worth of dairy products to Canada, compared with about C$358 million in the other direction.

In other words, the United States sells Canada nearly 2.5 times more dairy products than Canada sells to the United States.

That figure does not prove that every Canadian rule is ideal. It does demonstrate something much simpler: the Canadian market is already an important outlet for the U.S. dairy industry.

CUSMA nevertheless provides a degree of reciprocity

CUSMA created new tariff-rate quotas for dairy products. A tariff-rate quota allows a specified quantity of a product to enter at a low or zero tariff. Once that quantity is exceeded, the product can generally still be imported, but at a much higher tariff.

On paper, several dairy concessions are relatively reciprocal. Canada opened new volumes to U.S. products, and the United States opened volumes to Canadian products. Cheese is especially revealing because both sides had total access of roughly 12.5 million kilograms in 2025, even though the tariff-category structure is not perfectly identical.

The question is therefore not only how many tonnes are authorized. It is how much of that access is actually used.

Cheese: 86% on one side, 2.33% on the other

In 2025, Canada granted U.S. products two cheese quotas under CUSMA: 6.25 million kg for cheese of all types and 6.25 million kg for industrial cheese.

U.S. imports used 97.85% of the first quota and 74.66% of the second. Combined, that represents about 10.78 million kg out of 12.5 million, for an overall utilization rate of roughly 86.25%.

Now look in the other direction.

The historical fill document published by U.S. Customs and Border Protection shows that in 2025 Canada also had access to a U.S. cheese quota of 12.5 million kg. Canadian imports into the United States under that quota reached only 290,702 kg.

Utilization rate: 2.33%.

Put another way, for every kilogram of Canadian cheese that entered the United States under this quota, roughly 42 kilograms of available access went unused.

That is probably the most important number in the entire file. For cheese, our immediate problem is clearly not that the U.S. quota is too small. We are nowhere close to using it.

The same pattern appears elsewhere

Cheese is not an isolated case. The 2025 data show other major gaps.

• Butter, cream and cream powder: U.S. products used about 94.47% of their Canadian quota of 4.5 million kg. Canadian products used only 25.55% of the corresponding U.S. quota.
• Skim milk powder: U.S. imports used about 11.86% of their Canadian quota of 7.5 million kg. Canada used only 0.74% of its U.S. quota of the same size.
• Whole milk powder: Canada used only 0.13% of its U.S. quota in 2025.
• Concentrated milk: Canada used none of its 1.38 million litres of U.S. access in 2025.

It would still be wrong to draw an overly simple conclusion. Americans do not fill every quota they have in Canada. Their 50-million-kg milk quota, for example, was only about 17.3% utilized in 2025. The picture varies sharply by product.

But one thing is clear: in several categories where Canada exports very little to the United States, the size of the quota is not the immediate constraint.

Why do we export so little?

This is where the issue becomes more interesting than a simple political fight over tariffs.

Canadian supply management is designed first and foremost to supply the domestic market. Production is adjusted to Canadian demand. The United States, by contrast, has a much larger dairy industry, very large processing capacity and export infrastructure developed over many years.

For an American buyer, the question is straightforward. Why import cheese, powder or a dairy ingredient from Canada if an equivalent product is available from a huge pool of U.S. suppliers without crossing a border?

For a Canadian supplier to be attractive, it generally needs an additional advantage: a better price, a distinctive product, a sought-after brand, a particular quality attribute or a capability the U.S. market does not easily provide.

This is an economic interpretation of the data, not proof of a single cause. But it fits the observed utilization rates much better than the idea that Canada is simply prevented from exporting because its quotas are too small.

The United States also imposes regulatory friction

Exporting a Canadian dairy product to the United States is not as simple as selling the same product inside Canada.

For several dairy products covered by tariff-rate quotas, the U.S. importer must obtain an annual licence from the U.S. Department of Agriculture to qualify for the reduced tariff. Imported food must also meet Food and Drug Administration requirements. Relevant foreign facilities must be registered and shipments are subject to prior notice. Depending on the product and the importer, U.S. foreign-supplier verification rules may also apply.

These steps create real friction. In a U.S. market with enormous domestic supply, they can be enough to make a Canadian supplier less attractive when it does not offer a clear commercial advantage.

But it would be an exaggeration to present these rules as proof that Washington is artificially blocking Canadian dairy products.

Because Canada also imposes rules on importers

U.S. products entering Canada are also subject to regulatory obligations. Importers must comply with the Safe Food for Canadians Regulations, Canadian Food Inspection Agency requirements, Canadian composition and labelling standards and, for quota-controlled products, the permit system administered by Global Affairs Canada.

Friction therefore exists in both directions. The systems are not perfectly identical, but the available data do not support the claim that low Canadian exports are simply the result of an artificially closed U.S. border.

The imbalance appears to reflect more fundamental differences between the two industries: a Canadian industry organized mainly around its domestic market and a massive U.S. industry able to serve its home market while aggressively pursuing export opportunities.

A much less symmetrical Canadian concession

There is, however, one element of CUSMA that is much harder to describe as reciprocal.

Under the agreement, Canada accepted thresholds on its global exports of skim milk powder, milk protein concentrates and certain infant formula products.

For 2026-2027, the duty-free threshold is 37,596,820 kg for skim milk powder and milk protein concentrates, and 42,967,795 kg for infant formula. Above those thresholds, Canada must impose an export charge of C$0.54 per kg on the first category and C$4.25 per kg on the covered infant formula products.

Most importantly, these restrictions do not apply only to sales to the United States or Mexico. They apply to Canadian exports to the entire world.

That is an important concession to keep in mind when CUSMA is presented as a simple reciprocal exchange of dairy market access.

Canada has already been challenged, and the story is more nuanced than it is often portrayed

The United States has challenged the way Canada allocates dairy tariff-rate quotas for several years.

In 2022, an initial CUSMA panel sided with the United States on an important point: Canada had reserved too large a share of certain quotas for processors. Ottawa then changed its system.

Washington challenged the revised approach as well, including Canada’s market-share allocation method and the exclusion of retailers, restaurants and some other importers from direct allocations.

This time, in 2023, two of the three panel members concluded that Canada’s revised measures did not violate the CUSMA provisions cited by the United States. The third member dissented.

The current dispute is therefore not simply about how much U.S. cheese Canada agrees to let in. It is also about who in Canada can directly obtain the right to use that access.

A protected market is not a closed market

It is perfectly legitimate to criticize supply management. Tariff-rate quotas, quota values, competition, allocation methods and consumer costs are all fair subjects for debate.

But words matter.

A market in which the United States sells nearly C$880 million worth of dairy products a year, has new access negotiated under CUSMA and uses more than 86% of its cheese access is not a closed market.

It is a protected and organized market.

And when both sides of the border are compared, the paradox becomes difficult to ignore: the United States is asking for even more access to Canada’s dairy market even though it already runs a large dairy trade surplus with us. Meanwhile, Canada leaves most of several U.S. quotas available to Canadian exporters unused.

So perhaps the real question is not only: why does Canada protect its market?

It could also be: why does our industry use so little of the access it already has to the U.S. market?

More on supply management

• Sylvain Charlebois’s 10 Myths About Supply Management: What He Gets Right, What He Oversimplifies, and What He Leaves Out
• Supply management: is Canada’s agricultural shield beginning to crack?

Sources

• Global Affairs Canada, 2025 Annual Report on the Administration of the Export and Import Permits Act
• U.S. Customs and Border Protection, USMCA Agriculture Historical Fill Document
• Dairy Farmers of Canada, Canada-U.S. dairy trade balance
• USTR, 2023 CUSMA panel decision on Canadian dairy TRQs
• USTR, 2022 CUSMA dairy TRQ decision
• USDA Foreign Agricultural Service, Dairy Import Licensing Program
• Food and Drug Administration, importing food into the United States
• Canadian Food Inspection Agency, dairy import requirements
• Global Affairs Canada, CUSMA dairy export thresholds
• Global Affairs Canada, 2026-2027 under-threshold quantities