Understanding the Internal Frictions Weighing on Milk Supply Management

摘要

The Canadian dairy industry must address some difficult issues in policy evolution, almost regardless of the pressure due to recent trade agreements.The industry is composed of a producer demographic with relatively older farm operators who hold high levels of underperforming capital, leading to challenges in the industry renewing itself.Dairy farms in Canada have experienced very strong operating returns. In recent years expansion in quota helps explain some of this; however, for the most part it has been steadily increasing milk prices that have increased revenues. In turn, these are capitalized, increasing milk quota values, to the point that some may view this as a reliable basis upon which to make quota investments. The sustainability of ever-increasing prices as the primary means to anchor earnings is questionable.