Welcome to the Bullvine Podcast, your frontline
source for dairy's toughest conversations. We
are bringing you today's deep dive into Canada's
political shakeup and its implications for North
American dairy. In this episode, Mark Carney's
surprise liberal win becomes dairy's new wildcard.
We'll break down Quebec's political clout in
supply management, decode the real math behind
those 298 % tariffs, and reveal why robotic milking
adoption is stalling amid trade wars. Whether
you're a fourth -generation Quebecois producer
or a Wisconsin cheesemaker watching border tensions,
this is your essential briefing on the policies
that could reshape every bulk tank from Ontario
to Texas. Let's get boots muddy. Well, hello
there, and welcome back to The Deep Dive. Good
to be here. Today, we're wading into some seriously
interesting waters north of the 49th parallel.
We're talking about the, well, rather unexpected
liberal victory of Mark Carney in Canada. Right.
A bit of a surprise for many. Exactly. Now, this
isn't just another blip on the political radar.
This could potentially really shake things up
for the Canadian dairy sector. Especially when
you factor in the whole North American trade
dynamic. It's always simmering, isn't it? Always.
So this election outcome, it definitely throws
a bit of a curveball into the equation for anyone
whose livelihood depends on, well, the health
and stability of the dairy industry. Yeah, we've
got this system, supply management. It's been
debated, tweaked, defended for years. And now
we kind of need to figure out if this new leadership
under Carney, is it going to be a friend or maybe
a foe to its future? That's the million dollar
question, isn't it? Will Carney's time in charge
strengthen the Canadian dairy model or will it
put more strain on it? That's what we're digging
into today. Okay, so let's start with the win
itself, the surprise factor. If you are placing
bets before the election, I mean, the smart money
seemed to be on a conservative victory, right?
Pretty much all the polls were pointing that
way, yeah. Then, boom. out of almost nowhere,
Carney and the liberals clinch it. It's almost
like expecting, I don't know, a crossbred to
top the World Dairy Expo or something. You just
didn't really see it coming. Definitely caught
a lot of observers off guard. And the sources
we looked at suggest a rather unusual factor
might have played a part. Oh, what's that? Some,
let's say, strong rhetoric from south of the
border about... potentially much closer ties.
Apparently that spooked some voters and triggered
a bit of a shift right at the ballot box. Interesting.
So external factors playing a big role. It's
a good reminder, isn't it? How seemingly unrelated
global stuff can, well, directly hit our own
political landscape. Just like a sudden trade
spat can send ripples right through our milk
prices. A real wildcard moment, absolutely. And
it seems like not everyone in the ag world is,
uh... popping the champagne corks over this.
No, probably not universally celebrated. We saw
that quote from Christian Hebert, the grain producer
out in Saskatchewan, expressing some, well, serious
reservations about the Liberal Party's track
record when it comes to agriculture. Right. And
you'd have to imagine that kind of sentiment.
It might be shared by quite a few folks in the
dairy barn, too, wouldn't you think? You'd think
so. What would be the debt reaction, do you figure?
For dairy farmers seeing Carney win, given maybe
some past friction or perceived lack of focus
from that party. Well, there's definitely a segment,
probably a significant one, in the ag community
that approaches any new government with a, let's
call it, a healthy dose of skepticism. Particularly
if the party isn't seen as having deep agricultural
roots. Makes sense. Wait and see. Exactly. And
Carney's victory speech, you know, with that
build, baby, build. It does hint at a pretty
ambitious economic agenda. And that could mean
pressure for change across the board, including
agriculture, including established ways of doing
things in agriculture. Absolutely. Established
paradigms could definitely face some disruption.
OK, well, that brings us neatly to the absolute
cornerstone of Canadian dairy supply management.
The big one. For our Canadian listeners, this
isn't just some abstract policy. It's like woven
into the fabric of the farm, isn't it? It's part
of the farm's DNA almost. Absolutely. One of
the sources even compared the security it provides
to having well -bedded free stalls for high -producing
cows. That's a comparison every dairy farmer
gets, that kind of stability. Yeah. It's gold.
Maybe just quickly for anyone outside Canada,
what's the thumbnail sketch? Sure. Essentially,
it involves setting production quotas for a farmer's
milk, eggs, poultry. This helps manage supply
to match demand, stabilizing prices for farmers
and ensuring a consistent supply for consumers.
Got it. So stability is the name of the game.
It is. It offers a level of predictability that,
frankly, many producers in other countries look
at with maybe a little bit of envy sometimes.
But. There's always a but, isn't there? There
often is. Yeah. As the information points out,
Canadian dairy. It's been this perennial staking
point in North American trade talks. That source
said it's the chronic mastitis in a problem cow.
Another great analogy. Always there. Always a
concern. Never quite fully resolved. Exactly.
And those tariffs are a big part of that friction.
We're talking really hefty numbers, right? Like
200 and 300 percent on American dairy that comes
in over the agreed quota limit. Yeah, they're
substantial. The serious gatekeeper, as you said.
And the material we looked at clarifies this
isn't just about protecting the farm gate milk
price, is it? It's bigger than that. It is. It's
framed as being about safeguarding the broader
rural economy, the social fabric of those communities,
and crucially, those quota values themselves.
Right. The value of the right to produce. Which
can range, depending on the region, from like
$35 ,000 up to maybe $50 ,000 per cow. That's
a massive capital investment tied up in the system
for any dairy operation. Huge. Okay. So that's
the Canadian rationale. But there's another side
to this coin, the trade reality. There is. And
it's one that sometimes gets maybe lost in the
political noise. The data actually shows a pretty
significant increase in U .S. dairy exports going
north into Canada since the new NAFTA, CUSMA,
came into effect. How much of an increase? Nearly
50 percent. It topped over a billion U .S. dollars
last year. Wow. A billion dollars from the U
.S. to Canada. That's right. Definitely paints
a different picture than the usual narrative
you hear about a completely closed Canadian market.
It really does. And Philippe Charlebois from
the Canadian Dairy Commission adds a really crucial
bit of nuance here. He's quoted saying that to
date, 100 % of U .S. dairy imports to Canada
were made free of tariff. So all the dairy coming
in under the CUSMA access limits pays no tariff
at all. Correct. Those headline -grabbing 200
-300 % tariffs. They only kick in after those
agreed -upon import volumes are exceeded. Huh.
That's a detail that often gets glossed over,
as the source says. Massively glossed over in
the political back and forth, yeah. So, okay.
This puts Mark Carney in a really tricky spot,
doesn't it? He's walking this political tightrope.
Definitely a tightrope. On one side, you've got
the Americans, likely President Trump again,
pushing on trade, demanding more access. On the
other, you've got the incredibly influential
Quebec dairy lobby. Yeah, it's like trying to,
I don't know, herd cats while juggling full milk
pails, like you said earlier. It's tough. And
the material really underscores how vital dairy
is in Quebec. It's not just economics there,
is it? No, it's much deeper. It's woven into
the province's culture, its political identity.
You've got massive co -ops like AgriPort headquartered
there, wielding considerable influence. And then
you throw in the political math. The Bloc Québécois,
the Quebec Nationalist Party, potentially holding
significant sway in a minority government scenario.
Which is looking quite possible. Right. That
could really limit Carney's room to maneuver
on anything related to dairy policy, couldn't
it? Absolutely. It ties his hands to a large
extent. Which makes his public statement that
Canada's dairy sector is, quote, off the table
in any negotiations with President Trump sound,
well, less like an ironclad guarantee and more
like a political necessity, maybe? That's how
the information frames it, yeah. It's something
he almost has to say, given the political realities,
especially the need for Quebec support. It's
like, you know, a... Farmer promising their spouse
they absolutely won't buy any more cows, even
when that perfect herd dispersal comes up. Exactly.
You say it, but circumstances might change. It's
a very delicate balancing act. If you look at
the different potential approaches outlined in
the source material. Yeah, let's touch on that.
The liberal approach versus maybe what the conservatives
might have done. So liberals likely needing that
block support are probably going to aim to maintain
those robust. quota values and the on -farm standards
like CQM or action, which are really central
in Quebec, protect the core system. Whereas the
Conservatives maybe might have been more open
to some kind of gradual quota reform, loosening
things up a bit over time. Potentially. The thinking
is they might have been less beholden to that
specific dynamic. And how does that play out
in U .S. relations? The liberal stance seems
geared towards, you know, digging in their heels
on things like those class seven milk ingredients,
resisting concessions there. Right. Well, maybe
looking for compromises elsewhere. But the conservatives
might have seen. Adjusting some of those special
milk class pricing rules as maybe a bargaining
chip, something to offer in broader trade talks.
That's the speculation. Yeah. Which, as the source
notes, could have created more uncertainty for
the big Canadian processors like Saputo and Agripor
under a conservative government. That's an interesting
angle. OK, what about climate policy? Big difference
there, too. Yeah, quite stark. The liberals are
committed to carbon pricing. That obviously means
potentially higher costs on farm fuel, feed,
power, fertilizer, maybe indirectly. There was
an estimate, wasn't there? Yeah, one source suggested
maybe around $15 ,000 a year for a typical 100
cow herd just from the carbon tax impact. Ouch.
And the conservatives? They were opposed to the
carbon tax. They might have leaned more towards,
say, incentive programs for emission reductions
rather than the stick of a tax. Okay, and then
processing investment. That seems like a key
part of the liberal platform. It does. They're
proposing this $200 million domestic food processing
fund. The idea seems to be encouraging more vertical
integration within the dairy sector itself, building
more capacity here. Instead of just shipping
raw milk or basic commodities. Exactly. The conservative
alternative might have been perhaps more market
-driven, maybe favoring larger -scale efficiency
gains over targeted funds like this. So this
liberal fund, it could be a real shot in the
arm for creating capacity for those higher value
niche products, right? Things consumers are increasingly
looking for. That seems to be the goal. What
kind of projects do you think might actually
get funded? And what bottlenecks could it help
fix? Well, you could see investments in plants
that can handle specialized processing. Things
like A2 milk, maybe more artisanal or specialty
cheeses, fluid milk variations, grass -fed butter,
innovative dairy ingredients for other food products.
Stuff that captures more value. Precisely. It
could help the Canadian industry keep more of
that value chain here at home. reduce reliance
on exporting lower -value products, and maybe
even displace some imports of finished goods.
And the bottlenecks, maybe lack of capacity for
certain types of processing currently. Yeah,
exactly. If we don't have the facilities to make
certain products efficiently, we end up importing
them, even while we might be exporting raw milk.
This fund could help bridge some of those gaps.
So it looks like Carney's strategy, on paper
anyway, is a bit more nuanced than just pure
protectionism. There's this focus on processing,
on value added. Seems that way. But as anyone
listening knows, dairy doesn't exist in a vacuum.
The whole agricultural trade picture. That's
going to have a big impact, isn't it? Oh, absolutely.
It's all interconnected. The material uses farm
equipment as a prime example. Good one. So many
components cross the border multiple times before
a tractor or a combine is even assembled. So
tariffs or trade friction there, it just adds
costs all the way down the line. We saw equipment
sales dip, didn't we? Both sides of the border
early in 2025. The U .S. saw an 18 .4 % drop,
Canada 5 .7%. That leads to farmers delaying
purchases, holding off on upgrades. Which for
dairy can be a real problem these days. We're
increasingly reliant on automation, aren't we?
Robotic milkers. automated feed pushers, rumination
monitors, all that tech. Absolutely critical
for efficiency and often for labor savings, too.
So if delays in getting that new tech happen
because of broader trade issues or economic uncertainty,
that could actually hurt Canadian competitiveness,
couldn't it? Even with supply management protecting
prices. Precisely. If you can't adopt the efficiency
boosting tech quickly, you risk falling behind.
It undermines the very gains you need to stay
viable long term. It's like having great genetics,
but not being able to afford the AI technician.
Good point. OK, let's pivot to that climate policy
question mark again. This seems like a big area
of uncertainty under Carney. It really does.
His history is interesting. You know, the former
Bank of England governor, very focused on climate
finance, the climate warrior tag. Right. But
then more recently, pivoting to talk more about
energy independence, maybe a bit more balanced.
Exactly. And that shift, well. It creates some
nervousness for agricultural producers, understandably.
Dairy farmers are definitely watching this. Concerns
about methane reduction targets, for sure. And
the ongoing impact of that carbon pricing on
inputs feed, fuel, fertilizer, electricity. All
major costs on a dairy farm. The liberal platform
talks a big game, right? Becoming a world -leading
superpower in both clean and conventional energy.
Sounds good, but what does it mean for a dairy
farm running milk coolers, ventilation, tractors,
things that use a lot of energy? That's the missing
piece. The details are fuzzy. What's the real
cost impact going to be? We saw that earlier
estimate, maybe $2 to $3 per hectoliter of milk
attributed to carbon pricing. Which adds up fast.
It does. And are the investments needed for clean
energy solutions like methane digesters or energy
efficient cooling systems, are they actually
economically viable for the average farm right
now without significant support? Those are the
huge unanswered questions, the kind that probably
keeps some producers up at night. It's like waiting
for milk test results, that kind of uncertainty.
Definitely unsettling. And, you know, we absolutely
cannot have a proper deep dive on Canadian dairy
policy without really emphasizing the massive
influence of Quebec. Oh, for sure. It's central
to the whole discussion. What are the numbers
again? About 4 ,700 farms in Quebec, producing
roughly 40 % of all the milk in Canada, often
on smaller herds, to average around 70 cows,
I think. So huge production share, lots of farms,
lots of rural votes. That translates into serious
political weight. Immense weight. And historically,
Quebec's very strong defense of supply management.
It's sometimes been a point of frustration for
producers in other regions, like Western Canada,
maybe, and definitely for U .S. trade negotiators.
Right. And now with the Bloc Québécois potentially
holding that balance of power in Parliament.
Their influence could be amplified even further.
Which could make it even harder to push for any
kind of modernization or reforms to supply management
that producers outside Quebec might want to see.
Things like more flexibility, maybe easier entry
for new farmers. Exactly. It creates this dynamic
where the specific political situation might
effectively block certain types of evolution
within the system. even if there's appetite for
it elsewhere. Political reality trumping economic
logic, perhaps. Which brings us to something
often misunderstood, especially south of the
border. The why behind supply management in the
first place. It's not just protectionism, is
it? No, not solely. The sources are clear on
this. The stated goals are broader. Things like
ensuring stability in rural communities, providing
consistent quality and component premiums for
processors, and crucially, avoiding that intense
price volatility you see in the U .S. market.
Where prices can swing wildly. Dramatically.
So Canadian consumers might pay a bit more for
dairy sometimes, but the trade -off is meant
to be that stability at the farm level. And the
source material highlighted the farm numbers
difference, right? Yeah, stark contrast. Canadian
dairy farm numbers have been relatively stable,
maybe a slow decline, whereas the U .S. has been
losing, what, 7 to 9 percent of its dairy farms
every year for quite a while now. Wow, 7 % to
9 % annually. That's a massive consolidation.
It is. But the flip side, as the info points
out, is that Canadian stability relies on managing
production through those quotas. limits on how
much you can produce. Something American producers
used to a more open grow if you can market would
likely resist strongly. Very different philosophies,
yeah. Okay, now let's look beyond North America
for a second. The material suggests Carney's
background, Bank of Canada, Bank of England,
international finance, could actually open some
doors globally for Canadian dairy. That's a really
interesting point. His international network
and understanding of global markets could be
an asset. How so? We have trade deals already,
right? Like CETA with Europe and the CPTPP with
Pacific countries. We do. And those agreements
do provide access for Canadian dairy cheese quotas
into Europe, broader access into markets like
Japan or Vietnam under CPTPP. But maybe Carney's
connections could help maximize those opportunities.
or navigate lingering issues. And Canada does
have a quality story to tell, doesn't it? Our
milk quality standards are generally higher than
in the U .S., for example. That's a key advantage.
Things like our lower somatic cell count limit
400 ,000 cells per milliliter compared to the
U .S. federal limit of 750 ,000. That resonates
in markets that prioritize quality and food safety.
So the thinking is Carney might be better positioned
to leverage those advantages on the world stage,
help expand those non -North American markets.
It's certainly a potential. Potential upside
of his background, yeah. Could he be the key
to unlocking more global opportunities? Maybe.
Okay. But circling back to the domestic system,
the information raises this fundamental paradox
within supply management, the stability versus
innovation question. Right. It's this inherent
tension. Supply management provides that safety
net, that stability. But arguably, it can also
dampen the pressure for certain kinds of innovation.
How so? Well, limits on expansion mean you can't
always achieve economies of scale as easily.
High quota costs make it harder for new, maybe
more innovative farmers to get started. And maybe
there's just less intense cutthroat competitive
pressure driving radical change compared to a
wide open market. Plus the huge cost of quota
we talked about. That's capital that could be
going into new barns, new tech, new product development,
right? Exactly. It diverts. potentially billions
in capital away from on -farm or processing investments,
and into just acquiring the right to produce.
Yeah. Despite all that, Canadian dairy has been
innovative, hasn't it? The sources mention things
like high adoption rates for robotic milking.
Impressively high, actually. Right. And ongoing
genetic improvements, feed efficiency gains.
Innovation definitely does happen within the
system. It's not stagnant. So it's a paradox.
Constraints exist, but innovation finds a way.
Pretty much. Which leads to the question. How
will Carney's policies affect this balance? You've
got the likely continuation of supply management's
core structure, but also these... proposed new
investments like that processing fund. Will the
investment boost innovation enough to overcome
the inherent limitations? Or will the structure
still act as a bit of a break? That's the million
dollar question, isn't it? Can you stimulate
more dynamism without dismantling the stability?
It's like having access to the latest precision
farming tech, but still being limited by your
field size. Good analogy. So let's try and synthesize
this. What's the bottom line here for Canadian
dairy folks listening? What does Carney's victory
really mean day to day? Well, it seems like a
mix, both continuity and potential change. Continuity
in what sense? The fundamentals of supply management
are almost certainly staying put, at least for
the foreseeable future. The political landscape,
especially with Quebec's influence and the likely
minority government, makes major structural reform
highly unlikely. So that core stability remains.
OK, so the basic system holds. What's the change
part? The change comes in the surrounding policy
environment. Things like that potential $200
million for processing, the extra money for market
access initiatives and clean technology adoption,
doubling loan limits. Those are tangible potential
shifts. So for a progressive dairy producer,
what's the outlook? Potential benefits? Potential
challenges. It could be continued protection
from intense U .S. import pressure, new funding
opportunities for upgrading processing or adopting
green tech, maybe support for developing new
products. And the challenges. Challenges include.
The potential impact of carbon pricing and other
climate policies on operating costs, the ongoing
constraints on expansion or flexibility due to
the quota system, and the continued high cost
of entry or expansion via quota purchase. So
it really comes down to that central question
we keep circling back to, doesn't it? Can supply
management evolve? Can it become flexible enough
to allow more new entrants? Maybe. offer greater
production flexibility for farmers trying to
manage components or hit specific market demands?
Can it foster more domestic processing capacity?
All without sacrificing that core stability it
was built for. That's the tightrope Carney has
to walk. A very complex balancing act, yeah.
No easy answers there. And what about for our
American listeners? What are the implications
for U .S. dairy producers looking north? Well,
honestly, probably continued frustration. Despite
that trade surplus, the U .S. already enjoys
in dairy with Canada. That billion dollars flowing
north. Exactly. Despite that reality, the political
rhetoric south of the border is likely to continue
portraying Canada's system as unfairly protectionist
and a major problem. Carney's win probably doesn't
change that narrative much. So expect the complaints
about access to continue, even if the actual
trade flows tell a slightly different story.
Very likely, yes. There seems to be a real disconnect
sometimes between the political talking points
and the economic facts of the dairy trade relationship.
OK, so wrapping this up, the ultimate measure
of success for Carney, at least when it comes
to dairy, what will it be? It probably won't
just be about keeping the system intact. It'll
be judged, I think, on his government's ability
to actually navigate that modernization challenge
to help Canadian dairy adapt and evolve while
somehow preserving that stability everyone relies
on. That is a huge challenge, especially with
all the pressures we've talked about. It is indeed.
The dairy landscape, both sides of the border,
it's constantly shifting. All eyes will definitely
be on Ottawa to see what moves they make next.
Absolutely. Well, as we finish up this deep dive,
it's just crystal clear, isn't it? Canadian dairy
under Mark Carney. It's facing this really complex
mix of domestic politics, international trade
demands, climate pressures, evolving consumer
tastes. It's a lot. Full plate for sure. So here's
that final thought for you, our listeners, to
chew on. Considering everything we've discussed,
the likely continuation of supply management's
core, but with these new investments and potential
cost pressures from climate policy, what are
the key strategic adaptations that will be most
critical for your dairy farm to thrive in the
coming years? What new opportunities might actually
pop up from this changing landscape? And how
can you best position your operation to grab
them? Definitely something to ruminate on, as
you said earlier, maybe during milking or while
scraping stalls. Exactly. Plenty to think about.
Thanks so much for joining us for this deep dive.
Thanks for having me. And remember, in dairy
politics as in breeding, the best genetics always
win in the long lactation.