Cows don’t lie

US president Donald Trump says the 250% tariff on Canadian dairy may be enacted today. On Wednesday comes a 25% levy on our steel and aluminum. On April 2nd, all Canadian exports are to be taxed. For years Americans have complained about Canada’s supply management system, which forms a key part of our nation’s food security.

Decades ago I met dairy farmer Murray Harris, who schooled me – as a political candidate – on what supply management is and why it should stay. He is now retired from farming but still steeped in industry issues. “I was lucky to work with cows for over 40 years,” he says. “Cows never lie.”

He posts on this blog as ‘Cow Man’. He seemed like the right guy to ask for a informed opinion as farmers (and the rest of us) face the latest threat. – Garth

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Which has the greater impact on your health? The cost of the food that you consume, or its quality?

Canadian milk is free of antibiotics, and production hormones. Production hormones are allowed in the US dairy herds.

At the farm, before being transferred to a stainless steel tanker all milk is sampled, and is tested upon delivery to the dairy. If the milk tests positive for antibiotics the entire tanker load, comprised of shipments from several farms, is rejected and the offending farmer has to pay for the entire load, potentially at a cost of over $30,000. Violations are extremely rare.

If the milk temperature exceeds 4C between pick-ups, the milk is rejected. Farm premises are inspected for animal welfare and sanitation standards.

Milk shipments are also tested for bacteria, somatic cell counts, protein and butterfat. Failure to meet high standards ultimately results in the cancellation of the farmer’s license.

The highest cost component of milk production is the feed that the dairy cow consumes. The US has cheaper input costs, including cotton seed, animal by-products, outdoor housing, and undocumented workers.

70% of dairy farm workers in Iowa are undocumented, providing cheaper labour. Temporary Farm Workers in Ontario, rarely work on dairy farms; as their work permits are seasonal.

The price paid to Canadian Farmers is set by a cost of production formula.

The Canadian Food Inspection Agency (CIFA) regulates the ingredients of livestock feed in Canada. Unlike in Canada the residue of euthanized animals is allowed in US dairy cow feed. In the US H5N1 bird flue is suspected as having been transferred to dairy cattle through the use of euthanatized chickens and litter in dairy feeds. Here

Changes to CFIA regulations in Canada occurred in 2003, subsequent to the spread of BSE from bone meal being used in livestock feed. Here

Dairy farm debt ranges up to $40,000 per cow in Ontario. Farm Credit Corporation will loan up to 70% of equity to a farmer. A farmer could therefore have $60,000 per cow invested for a gross annual return of $8,400 per cow, using Lactanet data. Here

Consider this, financial bloggers. Would you want to have a net return for working 365 days a year, after expenses, of less than $50,000 per farmer ? Supply Management (SM) farmers have a lot of equity and in most cases a lot of debt. Equity does not buy the groceries. US dairy debt levels per cow are 10% of Ontario dairy farm debt per cow, based mostly on stabling costs.

SM Boards in Canada have “New Entrance Assistance Programs”, to facilitate those wanting to the enter dairy and poultry sectors, through production allowance levels, graduated over a period of up to 15 years.

The payout for dairy farmers is the lifetime appreciation of farmland. As Garth says, “buy dirt”!

Dairy production is the largest agricultural sector in Ontario, with farm gate production of about 3 billion litres. Nearly all is for domestic consumption. Under USMCA Canada can export some dairy products, totalling $293.25 million CAD in 2023. In the same year the US exported $756.62 million CAD of dairy products into Canada; but Canada is taking more than 2.5 times the amount of US dairy, as it exports to the US. To exceed their limits, US producers have to pay high tariff rates, of 250%. These rates are why the US Administration is screaming “rip-off “. The rates of imports and tariffs were agreed upon during each of the NAFTA and USMCA Trade agreements. Does the US Administration want these limits removed ? The total US dairy production is about 100 billion litres per annum whereas Canada’s total dairy production (in 2023) was 9.5 billion litres. Canadian dairy herds average 100 cows unlike some dairy herds in the US that are over 4,000 cows. Here

Productions per farming unit in Canada is capped by Marketing Board regulations, in order to protect the family farm, from being taken out by large corporate entities.

Canadian SM flocks average 14,000 hens. Enhanced flock sizes present a risk to supply security. Rose Acres, a US egg producer, was stricken with H5N1. That flock of 2.8 million hens was euthanized, and over 13 million chickens have been euthanized in US. This has resulted in a dramatic increase in egg prices. Frey’s in Phoenix, now lists their eggs at $10 US a increase in egg prices. Frey’s in Phoenix, now lists their eggs at $10 US a dozen.

Supply Management is a vital core holding in Canada’s Economic Portfolio. Decimation of Supply Management will result in plummeting farmland values, in a reset of debt/equity ratios, and in an evaporation of liquidity in all farm sectors. .

Garth rightly insists on diversification to reduce risk. Are massive dairy farms and poultry flocks, with lower costs per unit that sometimes result in lower US consumer prices, worth the risk?

Is food safety and security from Canadian regulated farms, worth paying for?

About the picture: “A picture with a cow,” writes Mauury. “I’m the one on the right. Cass Ridge R Maple Jazz was the most elite cow born on our farm. In her first lactation Jazz was the highest producing heifer in Canada. Jazz went on to be the youngest Holstein to ever classify Excellent for body conformation. This lead to her genetics being in wide demand, passed on through her sons, in artificial insemination units, and dozens of her embryos being marketed globally, through cryogenic transfer. Both Jazz and her mother Janine work a privilege to care for and develop. “

To be in touch, email to ‘[email protected]’.

Source: https://www.greaterfool.ca/2025/03/10/cows-dont-lie/