If Donald Trump believes all Wisconsin dairy farmers want him to continue attacking Canada’s triple-digit tariffs on American milk, the president of the United States is wrong.

“The Canadian dairy industry, how they operate, how they sell their milk, has very little impact on our industry here in the United States,” Laura Daniels, a lifelong dairy farmer and general manager of the Heartwood Farm located an hour’s drive west of Madison, Wisconsin, told BNN Bloomberg in a telephone interview.

“If Canada didn’t have a supply management system tomorrow, it would have very little impact on me as a dairy farmer in Wisconsin,” Daniels said. “But for the milk farmers in Canada, it would have a huge impact.”

After meeting with several state governors on Thursday, Trump agreed there “may be a little bit of pain initially” for dairy farmers if supply management is dismantled.

The pain felt in Canada, experts say, would be far more than “a little bit” and would last far longer.

Ending the system of price controls and quotas that have governed Canadian milk production since the 1970s would be an “absolute disaster for the dairy sector,” Bruce Muirhead, a professor at the University of Waterloo and a noted expert in dairy and agricultural policy, told BNN Bloomberg in a telephone interview.

“Most Canadian dairy farms would not survive” the end of supply management, Sylvain Charlebois, dean of Dalhousie University’s Faculty of Management and a professor of food distribution and policy, agreed via telephone.

“Canada would become a dumping ground for dairy products and that is a dangerous path to go down,” Charlebois said, noting the total number of dairy farms in Canada has declined from roughly 42,000 in the 1970s to 11,000 today, “So they are already disappearing.”

As many as 24,000 jobs in the Canadian dairy sector would be lost in the immediate aftermath of ending supply management, according to a 2015 study from the Boston Consulting Group. Canada’s gross domestic product, the study found, could suffer an annual loss of up to $3.5 billion if Canada relents to Trump’s demands.

“The extent of the risk is unique, because the United States represents a real alternative to supply in Canada,” the study found, noting American milk production has long exceeded local demand.

Peter Strebel, who has been working on a dairy farm south of Montreal since it was purchased by his father in 1976, wonders why the American president is pushing for Canada to abandon a system that he believes U.S. dairy farmers may actually want to adopt.

“Mr. Trump is mad at us because of supply management, but it was put in place to solve the problem that the U.S. has right now of overproduction,” Strebel told BNN Bloomberg via telephone. “America is already exporting 17 per cent of their milk production [so] just their surplus is already double all of Canadian consumption.”

“The Canadian market is just too small to make a difference to the U.S. surplus production problem,” Strebel said. “Canada is not going to solve the U.S. milk problem.”

Overproduction – and the risk of losing contracts with dairy processors as a result – is what “terrifies” Laura Daniels on the Heartwood Farm in southwest Wisconsin.

“I am not afraid of swings in the market, of low prices or high prices. I believe that creates opportunity,” Daniels said. “However, I would love more security in that I am always going to have a place to sell my milk if I am producing it.”

“What is happening is good farmers who are profitable are going to be forced out of business in some cases because the creamery won’t come and get their milk,” she explained, “and that is what terrifies me.”

Recent history suggests Daniels’ fear is well-founded. Last year, Wisconsin-based Grassland Dairy cancelled dozens of contracts with local dairy farms after reaching its processing capacity and several of those subsequently shut down. The problem is not unique to Wisconsin either, with milk farmers in several other American states losing their processing contracts just in the past few months. 

Ensuring adequate processing capacity is available to match production was among the key reasons Canada put supply management in place. And while those in favour of ending the regime point to average Canadian milk prices being roughly double what Americans pay for their milk, Trump’s quest to restrict immigration could effectively close that gap.

 

Recent arrivals to the United States account for slightly more than half of the American dairy sector’s workforce, according to a July 2015 study conducted by Texas A&M University’s Centre for North American Studies.

“Eliminating immigrant labor on dairy farms would reduce U.S. economic output by US$32.1 billion and reduce employment by 208,000 jobs,” the study found. “Retail milk prices across the United States would increase by an estimated 90.4 per cent.”

Heartwood’s Daniels stresses that she does not wish to challenge America’s national leadership. In fact, she is pleased to see the dairy industry getting more attention from the White House.

“But I’m big on making sure we are asking the right questions and we are not right now,” she said. “We have much bigger things to worry about than picking on Canada over their supply management system.”