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The current restrictions on milk supply and trade in Canada exceed what is needed to give efficient dairy farmers an opportunity to earn a fair return. A cap in support prices should be instituted and remain in place at least until a more meaningful benchmark for farm efficiency, and more open export and interprovincial trade in milk, are achieved.
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THE STUDY IN BRIEF
Canada's system of dairy supply-management restricts the availability of milk to Canadian households, food processors and restaurants to maintain a higher price for milk and dairy products than Canadians would otherwise pay. The immediate beneficiaries of the system are Canadian dairy farmers who own production "quotas," without which any significant milk production is virtually forbidden.
The system is enabled at the federal level in several important ways. These include an often-discussed import tariff which effectively closes the door- beyond certain minimum access commitments made to our trade partners - to imported dairy products. Less well-known to Canadians are the Agricultural Products Marketing Act, which effectively delegates federal power over interprovincial trade and exports to the provinces, and...