Dairy farming is one of the largest agricultural sectors in Canada. Dairy has a significant presence in all of the provinces and is one of the top two agricultural commodities in seven out of ten provinces.
In 2018, there were 967,700 dairy cows on 10,679 farms across the country. Quebec and Ontario are the major dairy producing provinces, with 5,120 and 3,534 farms, which produce 37% and 33% of Canada's total milk. This is supposed to represent 8% of farmers in Canada. While dairy farming is still prominent in Canadian society, the number of dairy farms in Canada has been dropping significantly since 1971 while the size of the average farm has significantly increased to 89 cows per farm.
The Canadian dairy sector contributes approximately $19.9 billion yearly to Canada's GDP, and sustains approximately 221,000 full-time equivalent jobs and generates $3.8 billion in tax revenues. On average, two-thirds of Canadian dairy produced is sold as fluid milk while the remaining one-third is refined into other dairy products such as milk, cheese and butter.
In Canada, dairy farming is subject to the system of supply management. Under supply management, which also includes the egg and poultry sectors, farmers manage their production so that it coincides with forecasts of demand for their products over a predetermined period - while taking into account certain imports that enter Canada, as well as some production which is shipped to export markets. Imports of dairy, eggs, and poultry are controlled using tariff rate quotas, or TRQs. These allow a predetermined quantity to be imported at preferential tariff rates (generally duty free), while maintaining control over how much is imported. The over-quota tariffs are set at levels where practically no dairy products are sold to Canada above the quotas. That should allow Canadian farmers to receive a price reflecting the cost to produce in the country.
There has been pushback regarding the supply management system, and research indicates that the Canadian population generally have varied views with the current system. The Dairy Farmers of Canada, a dairy advocacy group, claims that the system is necessary for farmers to provide quality milk to consumers.
History
The Canadian Dairy Farmers' Federation was founded in 1934. The group became Dairy Farmers of Canada in 1942, and its mandate was to stabilize the dairy market and increase revenues for dairy farmers. In the face of lobbying, government programs were instituted in the 1940s and 1950s to increase prices and limit imports. 1958 saw the creation of the Agricultural Stabilization Board, though it was not limited to dairy. In the 1950s and 1960s there was significant volatility in dairy prices; dairy producers were seen as having too much bargaining power relative to dairy farmers, and the United Kingdom was poised to enter the European Common Market, resulting in the loss of Canada's largest dairy export partner. These challenges led to the creation of the Canadian Dairy Commission, whose mandate was to ensure the quality and supply of milk, that producers received a "fair" return on investment, and set prices based on production costs, market price, consumer's ability to pay, and current economic conditions.
2021 "Buttergate"
In 2021, Canadian dairy received national and international attention due to an alleged change in texture of Canadian butter. Consumers also claimed that the butter was not softening at room temperature. Dubbed Buttergate, the controversy began with a column in the Globe and Mail, asserting that among other factors, that the use of palmitic oil, derived from palm oil, as a feed supplement was causing the change in texture of butter. Demand for butter in Canada increased during the Covid-19 Pandemic, and farmers were supposedly using palmitic oil to increase yields. A wider discussion was sparked about dairy in Canada, with strong opinions about the use of palmitic oil from some such as Professor Sylvain Charlebois of Dalhousie University. While some academics and scientists rejected the palmitic oil claims due to a lack of hard evidence, subsequent studies did provide new evidence palmatic acids can make butter harder at room temperature.