What is the story behind Canada’s 270% tariff on US Dairy products? Does the US have a similar tariff on Canadian dairy products coming in?
From Wikipedia:
You can tell the Canadians shopping here, because they’re the ones with 12 gallons of milk in their carts. 
Canada uses a supply management system. Farmers can only produce so much milk etc. This ensures that there is a market for their product.
In the U.S., farmers produce whatever they want, no restrictions. This makes prices cheaper for the consumer but the farmer may struggle to sell their product because there is too much of it. The U.S. governments may subsidize the farmers either directly or by purchasing the product and destroying it. That’s right. The U.S. government may buy millions of gallons of milk or cheese and dump it. That is a form of subsidy in itself.
The Canadian government does not want U.S. diary products because it would greatly compromise their present system.
Both countries provides systems for the success of their farmers. In the U.S., it is a direct subsidy to farmers while in Canada, farmers do not get money from the government, they art part of a management system.
The milk marketing board in Canada assigns quotas. You cannot sell dairy products without a quota form the board - they buy all production and then sell it on to the blessed manufacturers of all dairy products. They set the price they pay high enough to ensure a farmer with a quota can remain solvent. Thus, dairy products in Canada are relatively expensive.
The USA, as I understand it, does not meddle in the marketplace. Instead, they subsidize (pay) select farmers directly. Not so much a milk quota as a dollar quota. So the farmer is free to produce as much as he can, but the price is determined by what the farmer needs to charge to make a profit, minus what he’s already gotten in subsidies. This prevents unsubsidized farmers from getting into the business unless they are supernaturally efficient, but the cost of keeping Wisconsin solvent is borne by the US taxpayers at large, not the consumers of dairy products.
Po-tay-to po-tah-to.
So if a Canadian dairy products maker wants to export to the USA, he has to compete with really low prices while paying a tidy sum for raw materials. (AFAIK a Canadian farmer cannot sell directly to the USA, even if they can meet all the health regulations.)
If a US dairy wants to export dairy products to Canada - they need a quota. Under international agreements, the is a small quota set aside for imports. Anything over and above that quota there would be sky-high tariffs to prevent it from disrupting the milk marketing board.
So when Trump said at the G& “let’s get rid of all tariffs” The Trudeau response was “does that include subsidies?”. Apparently Trump had no idea what he meant.
Every country wants to ensure its farming community is stable - not just because they are voters, but because a stable food supply is critical. If Canada could become a dumping ground for any surplus US farm production, then a couple of bumper years could bankrupt our farmers and they stop farming - then in a shortage, Canada would be the last place to get shipped to and we’d all be the worse here for it.
All of the discussion above is basically accurate but does not state that the quotas and subsidies distort the marketplace and cause consumers to overpay for staples. If some farmers go bankrupt what will happen? Will their land in the middle of nowhere popular be converted to condos? Or will their land be bought by other more efficient farmers who will keep farming? Also, much of the fresh produce we eat does not come from Canadian farmers.
Not for all commodities. Marketing orders are controlled by the producers, who get together and decide how much they will produce and who produces it. If you produce too much, it is illegal to sell it. It is a government-sanctioned plan to keep prices high, because, as we all know, consumers love to pay high prices.
Sure, but the discussion has to include that the US subsidies also distort the marketplace, but in the opposite direction: the subsidies lower the market price, to the benefit of US consumers (and Canadian cross-border milk shoppers ).
Both systems are designed to provide greater income for dairy farmers than the market by itself would provide.
Then would it be fair to say that if both the US and Canada eliminated all tariffs between them and did not subsidize dairy farmers at all, there would be virtually no dairy farms in Canada?
I say this because its more difficult and expensive to raise dairy cattle in Canada because of the climate. The longer, colder winter means a shorter grain growing season, so cattle feed is not as abundant in Canada and thus more expensive. Cattle in Canada have to be sheltered in expensive barns during the long winter. The warmer US climate means less sheltering of the dairy cattle.
Canada has chosen to manage its dairy market by controlling output to match demand. Which keeps farmers getting livable wages for their milk. They weren’t as interested in over producing to drive down prices, which can crash the price and put small producers out of business. And see the kind of subsidies where the US gov is buying and destroying over production. And which by it’s very nature needs ever expanding markets.
It’s a different approach to ensuring market stability, in effect. Now look at the differences between what’s allowed during processing, additives in feed etc, and I think you’ll see that standards are different with much more bothersome oversight. Varying health and safety standards on farms adds another layer to the onion.
I should think allowing the wiping out a successful and thriving major industry coupled with, reliance on a foreign source for a fundamental food staple would be a pretty much impossible sell to any citizenry, any where, any time.
(The guy who’s promoting the whole 260% tariff nonsense, you may have noticed, is a notoriously lying liar who lies, by the way.)
In contrast to say the balmy conditions for animal husbandry in Wisconsin aka “America’s Dairyland”? :dubious:
Benefit? US consumers still pay for the subsidies in the form of taxes. But the artificially depressed price means that the milk is used for more wasteful purposes. Also, any exported dairy products is a transfer of US tax money to overseas. It’s a net loss to everyone but the farmers (well, all taxpayers at least).
What will happen? Farmers go broke. Nobody will rush in to start a dairy farm because the price of milk is too low; after all, Canadian farmers would have to compete with American farmers who get money from the government so don’t have to complete cover their costs from milk sales. The farmland stays empty or goes into something else, like - say - wheat or corn. (Corn is less important than milk) Next time there’s an attack of dairy collapse syndrome (or whatever does in cows) shipping milk to Canada will be very low on the US milk suppliers’ list, assuming the feds don’t step in and mandate no exports - leaving Canada without milk.
Even if the USA is not subsidized, all other things being equal, the American producers could in a productive good year flood the market and put half Canadian dairy producers out of business, since they are 10 times the size. If we have a good year, we barely register a blip in the American market. And once a farm goes under, it takes a lot to restart.
Canada could remove the dairy tariffs and simply say dairy products produced with growth hormones are not allowed to be sold in the country.
(Canadian farmers don’t use growth hormones, U.S. farmers do.)
If the goal is to preserve availability of food in times of crisis, you can have tariffs which equal foreign subsidies or simply not allow foreign imports of staples. In Canada, there is supply management of maple syrup, because if Canada doesn’t manage supply, it’ll get overtaken by foreign producers and then they might run short of the existentially strategic resource that is maple fucking syrup?
This is no different than British Luddites 200 years ago who were against the general lowering of textile prices because of better technology and efficiency. Yes, farms will close and people will lose their jobs and the latter should be helped although not qua farmers. The reduction in the proportion of farmers has been happening for the last few hundred years and has greatly improved human welfare overall. Farmers used to be 90% of the population and now they’re much less because greater productivity resulted in needing to allocate a smaller percentage of the population to food production. That’s a great thing. I guess creative destruction is great as long as it’s not happening close to the present, then it’s abominable.
Trying to keep farmers employed by messing with supply, prices or subsidies is as silly as trying to keep steelworkers and coal miners employed.
Allowing production of an excess will always require ever increasing markets. Clearly that has an endpoint, eventually you reach saturation.
With market management you produce what’s needed, not more. Control of what’s going into the milk and cows that produce it, and health and safety standards differ greatly, so you’re actually comparing apple and oranges. But ultimately it’s just two different approaches. Both of which attempt to protect producers and insure they can cover their production costs.
Would America be okay with New Zealand flooding their market with yet cheaper milk, wiping out an entire segment of the economy, throwing thousands out of work and leaving control of what’s in the milk and what conditions it’s produced under to someone else? Handing reliance for a food staple, to a foreign entity? Do you seriously think that would fly in the US?
If not, why on earth would you think another nation would sign on for such a thing?
You mean such as what is happening with steel and aluminum which a certain person wants to put tariffs on in order to stimulate this sector of the american economy?
There is no amount of milk needed. People can survive just fine without milk. What the milk market management system does is ensure farmers get more of their countrymen’s money. Almost half the dairy farms in Canada are in Quebec which the rest of the country has to kowtow to for political reasons. Thus the tariffs for milk are especially egregious.
As someone who enjoys milk quite a bit, I would love it if another country would come in and start selling milk at a sharp discount. Every industry thinks it is special and thus they need the government to reach into their fellow citizens pockets for them.
Well said. I almost commented when somebody called milk vital or something similar. There are many alternatives to milk.
Many areas of agriculture are not subsidized, and those farms still exist.
Which agricultural segment in the U.S. are not subsidized? I’m curious.
Don’t recall using the term “balmy”, but the fact is the Canadian winters are longer and colder on average than Wisconsin winters. On average Wisconsin January temperatures are around 40 degrees Fahrenheit (high/low average). In Quebec January temperatures average 15 degrees Fahrenheit (high/low average).