WEBVTT 00:00:10.429 --> 00:00:13.330 Welcome to the Bullvine Podcast, your frontline 00:00:13.330 --> 00:00:16.449 source for dairy's toughest conversations. We 00:00:16.449 --> 00:00:19.030 are bringing you today's deep dive into Canada's 00:00:19.030 --> 00:00:21.489 political shakeup and its implications for North 00:00:21.489 --> 00:00:24.969 American dairy. In this episode, Mark Carney's 00:00:24.969 --> 00:00:27.629 surprise liberal win becomes dairy's new wildcard. 00:00:28.300 --> 00:00:30.640 We'll break down Quebec's political clout in 00:00:30.640 --> 00:00:33.500 supply management, decode the real math behind 00:00:33.500 --> 00:00:37.899 those 298 % tariffs, and reveal why robotic milking 00:00:37.899 --> 00:00:40.820 adoption is stalling amid trade wars. Whether 00:00:40.820 --> 00:00:42.759 you're a fourth -generation Quebecois producer 00:00:42.759 --> 00:00:45.619 or a Wisconsin cheesemaker watching border tensions, 00:00:45.899 --> 00:00:48.359 this is your essential briefing on the policies 00:00:48.359 --> 00:00:51.460 that could reshape every bulk tank from Ontario 00:00:51.460 --> 00:00:55.600 to Texas. Let's get boots muddy. Well, hello 00:00:55.600 --> 00:00:58.060 there, and welcome back to The Deep Dive. Good 00:00:58.060 --> 00:01:01.439 to be here. Today, we're wading into some seriously 00:01:01.439 --> 00:01:04.219 interesting waters north of the 49th parallel. 00:01:04.480 --> 00:01:07.459 We're talking about the, well, rather unexpected 00:01:07.459 --> 00:01:10.739 liberal victory of Mark Carney in Canada. Right. 00:01:10.840 --> 00:01:14.120 A bit of a surprise for many. Exactly. Now, this 00:01:14.120 --> 00:01:16.439 isn't just another blip on the political radar. 00:01:16.500 --> 00:01:19.319 This could potentially really shake things up 00:01:19.319 --> 00:01:21.319 for the Canadian dairy sector. Especially when 00:01:21.319 --> 00:01:23.560 you factor in the whole North American trade 00:01:23.560 --> 00:01:26.250 dynamic. It's always simmering, isn't it? Always. 00:01:26.530 --> 00:01:30.010 So this election outcome, it definitely throws 00:01:30.010 --> 00:01:32.170 a bit of a curveball into the equation for anyone 00:01:32.170 --> 00:01:34.469 whose livelihood depends on, well, the health 00:01:34.469 --> 00:01:36.329 and stability of the dairy industry. Yeah, we've 00:01:36.329 --> 00:01:38.189 got this system, supply management. It's been 00:01:38.189 --> 00:01:41.290 debated, tweaked, defended for years. And now 00:01:41.290 --> 00:01:43.950 we kind of need to figure out if this new leadership 00:01:43.950 --> 00:01:48.829 under Carney, is it going to be a friend or maybe 00:01:48.829 --> 00:01:51.329 a foe to its future? That's the million dollar 00:01:51.329 --> 00:01:54.170 question, isn't it? Will Carney's time in charge 00:01:54.170 --> 00:01:57.230 strengthen the Canadian dairy model or will it 00:01:57.230 --> 00:01:59.510 put more strain on it? That's what we're digging 00:01:59.510 --> 00:02:01.829 into today. Okay, so let's start with the win 00:02:01.829 --> 00:02:05.129 itself, the surprise factor. If you are placing 00:02:05.129 --> 00:02:07.969 bets before the election, I mean, the smart money 00:02:07.969 --> 00:02:10.229 seemed to be on a conservative victory, right? 00:02:10.289 --> 00:02:11.550 Pretty much all the polls were pointing that 00:02:11.550 --> 00:02:14.219 way, yeah. Then, boom. out of almost nowhere, 00:02:14.500 --> 00:02:17.680 Carney and the liberals clinch it. It's almost 00:02:17.680 --> 00:02:20.979 like expecting, I don't know, a crossbred to 00:02:20.979 --> 00:02:23.340 top the World Dairy Expo or something. You just 00:02:23.340 --> 00:02:25.360 didn't really see it coming. Definitely caught 00:02:25.360 --> 00:02:28.400 a lot of observers off guard. And the sources 00:02:28.400 --> 00:02:32.180 we looked at suggest a rather unusual factor 00:02:32.180 --> 00:02:35.080 might have played a part. Oh, what's that? Some, 00:02:35.159 --> 00:02:37.879 let's say, strong rhetoric from south of the 00:02:37.879 --> 00:02:40.460 border about... potentially much closer ties. 00:02:40.680 --> 00:02:42.719 Apparently that spooked some voters and triggered 00:02:42.719 --> 00:02:45.099 a bit of a shift right at the ballot box. Interesting. 00:02:45.180 --> 00:02:47.500 So external factors playing a big role. It's 00:02:47.500 --> 00:02:50.039 a good reminder, isn't it? How seemingly unrelated 00:02:50.039 --> 00:02:54.080 global stuff can, well, directly hit our own 00:02:54.080 --> 00:02:57.159 political landscape. Just like a sudden trade 00:02:57.159 --> 00:02:59.300 spat can send ripples right through our milk 00:02:59.300 --> 00:03:02.379 prices. A real wildcard moment, absolutely. And 00:03:02.379 --> 00:03:04.680 it seems like not everyone in the ag world is, 00:03:04.719 --> 00:03:07.110 uh... popping the champagne corks over this. 00:03:07.330 --> 00:03:10.389 No, probably not universally celebrated. We saw 00:03:10.389 --> 00:03:13.469 that quote from Christian Hebert, the grain producer 00:03:13.469 --> 00:03:16.569 out in Saskatchewan, expressing some, well, serious 00:03:16.569 --> 00:03:18.610 reservations about the Liberal Party's track 00:03:18.610 --> 00:03:20.889 record when it comes to agriculture. Right. And 00:03:20.889 --> 00:03:22.449 you'd have to imagine that kind of sentiment. 00:03:23.129 --> 00:03:25.569 It might be shared by quite a few folks in the 00:03:25.569 --> 00:03:27.330 dairy barn, too, wouldn't you think? You'd think 00:03:27.330 --> 00:03:29.870 so. What would be the debt reaction, do you figure? 00:03:30.280 --> 00:03:32.699 For dairy farmers seeing Carney win, given maybe 00:03:32.699 --> 00:03:35.280 some past friction or perceived lack of focus 00:03:35.280 --> 00:03:37.360 from that party. Well, there's definitely a segment, 00:03:37.439 --> 00:03:39.840 probably a significant one, in the ag community 00:03:39.840 --> 00:03:43.919 that approaches any new government with a, let's 00:03:43.919 --> 00:03:47.159 call it, a healthy dose of skepticism. Particularly 00:03:47.159 --> 00:03:49.439 if the party isn't seen as having deep agricultural 00:03:49.439 --> 00:03:52.639 roots. Makes sense. Wait and see. Exactly. And 00:03:52.639 --> 00:03:54.740 Carney's victory speech, you know, with that 00:03:54.740 --> 00:03:59.229 build, baby, build. It does hint at a pretty 00:03:59.229 --> 00:04:01.889 ambitious economic agenda. And that could mean 00:04:01.889 --> 00:04:05.009 pressure for change across the board, including 00:04:05.009 --> 00:04:08.189 agriculture, including established ways of doing 00:04:08.189 --> 00:04:10.330 things in agriculture. Absolutely. Established 00:04:10.330 --> 00:04:13.090 paradigms could definitely face some disruption. 00:04:13.169 --> 00:04:15.469 OK, well, that brings us neatly to the absolute 00:04:15.469 --> 00:04:19.149 cornerstone of Canadian dairy supply management. 00:04:19.660 --> 00:04:21.519 The big one. For our Canadian listeners, this 00:04:21.519 --> 00:04:24.240 isn't just some abstract policy. It's like woven 00:04:24.240 --> 00:04:26.399 into the fabric of the farm, isn't it? It's part 00:04:26.399 --> 00:04:29.079 of the farm's DNA almost. Absolutely. One of 00:04:29.079 --> 00:04:31.480 the sources even compared the security it provides 00:04:31.480 --> 00:04:35.420 to having well -bedded free stalls for high -producing 00:04:35.420 --> 00:04:38.379 cows. That's a comparison every dairy farmer 00:04:38.379 --> 00:04:41.000 gets, that kind of stability. Yeah. It's gold. 00:04:41.180 --> 00:04:43.639 Maybe just quickly for anyone outside Canada, 00:04:43.819 --> 00:04:46.199 what's the thumbnail sketch? Sure. Essentially, 00:04:46.220 --> 00:04:48.660 it involves setting production quotas for a farmer's 00:04:48.660 --> 00:04:51.259 milk, eggs, poultry. This helps manage supply 00:04:51.259 --> 00:04:53.860 to match demand, stabilizing prices for farmers 00:04:53.860 --> 00:04:56.160 and ensuring a consistent supply for consumers. 00:04:56.399 --> 00:04:58.379 Got it. So stability is the name of the game. 00:04:58.540 --> 00:05:01.180 It is. It offers a level of predictability that, 00:05:01.259 --> 00:05:04.259 frankly, many producers in other countries look 00:05:04.259 --> 00:05:07.339 at with maybe a little bit of envy sometimes. 00:05:07.680 --> 00:05:10.620 But. There's always a but, isn't there? There 00:05:10.620 --> 00:05:12.399 often is. Yeah. As the information points out, 00:05:12.420 --> 00:05:15.800 Canadian dairy. It's been this perennial staking 00:05:15.800 --> 00:05:19.180 point in North American trade talks. That source 00:05:19.180 --> 00:05:22.180 said it's the chronic mastitis in a problem cow. 00:05:22.420 --> 00:05:24.939 Another great analogy. Always there. Always a 00:05:24.939 --> 00:05:27.500 concern. Never quite fully resolved. Exactly. 00:05:27.660 --> 00:05:29.779 And those tariffs are a big part of that friction. 00:05:29.819 --> 00:05:32.240 We're talking really hefty numbers, right? Like 00:05:32.240 --> 00:05:35.540 200 and 300 percent on American dairy that comes 00:05:35.540 --> 00:05:38.040 in over the agreed quota limit. Yeah, they're 00:05:38.040 --> 00:05:40.120 substantial. The serious gatekeeper, as you said. 00:05:40.360 --> 00:05:42.279 And the material we looked at clarifies this 00:05:42.279 --> 00:05:44.019 isn't just about protecting the farm gate milk 00:05:44.019 --> 00:05:46.420 price, is it? It's bigger than that. It is. It's 00:05:46.420 --> 00:05:48.680 framed as being about safeguarding the broader 00:05:48.680 --> 00:05:51.420 rural economy, the social fabric of those communities, 00:05:51.560 --> 00:05:54.660 and crucially, those quota values themselves. 00:05:55.180 --> 00:05:57.319 Right. The value of the right to produce. Which 00:05:57.319 --> 00:05:59.220 can range, depending on the region, from like 00:05:59.220 --> 00:06:03.139 $35 ,000 up to maybe $50 ,000 per cow. That's 00:06:03.139 --> 00:06:05.379 a massive capital investment tied up in the system 00:06:05.379 --> 00:06:08.319 for any dairy operation. Huge. Okay. So that's 00:06:08.319 --> 00:06:10.600 the Canadian rationale. But there's another side 00:06:10.600 --> 00:06:13.399 to this coin, the trade reality. There is. And 00:06:13.399 --> 00:06:16.259 it's one that sometimes gets maybe lost in the 00:06:16.259 --> 00:06:18.860 political noise. The data actually shows a pretty 00:06:18.860 --> 00:06:21.160 significant increase in U .S. dairy exports going 00:06:21.160 --> 00:06:24.860 north into Canada since the new NAFTA, CUSMA, 00:06:24.879 --> 00:06:27.420 came into effect. How much of an increase? Nearly 00:06:27.420 --> 00:06:29.779 50 percent. It topped over a billion U .S. dollars 00:06:29.779 --> 00:06:32.839 last year. Wow. A billion dollars from the U 00:06:32.839 --> 00:06:40.339 .S. to Canada. That's right. Definitely paints 00:06:40.339 --> 00:06:42.300 a different picture than the usual narrative 00:06:42.300 --> 00:06:45.360 you hear about a completely closed Canadian market. 00:06:45.560 --> 00:06:47.699 It really does. And Philippe Charlebois from 00:06:47.699 --> 00:06:49.720 the Canadian Dairy Commission adds a really crucial 00:06:49.720 --> 00:06:52.600 bit of nuance here. He's quoted saying that to 00:06:52.600 --> 00:06:56.000 date, 100 % of U .S. dairy imports to Canada 00:06:56.000 --> 00:06:58.920 were made free of tariff. So all the dairy coming 00:06:58.920 --> 00:07:02.220 in under the CUSMA access limits pays no tariff 00:07:02.220 --> 00:07:05.300 at all. Correct. Those headline -grabbing 200 00:07:05.300 --> 00:07:09.879 -300 % tariffs. They only kick in after those 00:07:09.879 --> 00:07:12.939 agreed -upon import volumes are exceeded. Huh. 00:07:13.720 --> 00:07:15.699 That's a detail that often gets glossed over, 00:07:15.839 --> 00:07:18.000 as the source says. Massively glossed over in 00:07:18.000 --> 00:07:20.180 the political back and forth, yeah. So, okay. 00:07:20.500 --> 00:07:22.680 This puts Mark Carney in a really tricky spot, 00:07:22.800 --> 00:07:25.000 doesn't it? He's walking this political tightrope. 00:07:25.100 --> 00:07:27.670 Definitely a tightrope. On one side, you've got 00:07:27.670 --> 00:07:29.750 the Americans, likely President Trump again, 00:07:29.850 --> 00:07:32.509 pushing on trade, demanding more access. On the 00:07:32.509 --> 00:07:34.209 other, you've got the incredibly influential 00:07:34.209 --> 00:07:36.670 Quebec dairy lobby. Yeah, it's like trying to, 00:07:36.689 --> 00:07:39.610 I don't know, herd cats while juggling full milk 00:07:39.610 --> 00:07:41.889 pails, like you said earlier. It's tough. And 00:07:41.889 --> 00:07:44.089 the material really underscores how vital dairy 00:07:44.089 --> 00:07:46.209 is in Quebec. It's not just economics there, 00:07:46.250 --> 00:07:48.959 is it? No, it's much deeper. It's woven into 00:07:48.959 --> 00:07:51.040 the province's culture, its political identity. 00:07:51.279 --> 00:07:54.079 You've got massive co -ops like AgriPort headquartered 00:07:54.079 --> 00:07:56.420 there, wielding considerable influence. And then 00:07:56.420 --> 00:07:59.300 you throw in the political math. The Bloc Québécois, 00:07:59.399 --> 00:08:02.040 the Quebec Nationalist Party, potentially holding 00:08:02.040 --> 00:08:04.800 significant sway in a minority government scenario. 00:08:05.079 --> 00:08:07.579 Which is looking quite possible. Right. That 00:08:07.579 --> 00:08:09.800 could really limit Carney's room to maneuver 00:08:09.800 --> 00:08:12.519 on anything related to dairy policy, couldn't 00:08:12.519 --> 00:08:14.550 it? Absolutely. It ties his hands to a large 00:08:14.550 --> 00:08:16.850 extent. Which makes his public statement that 00:08:16.850 --> 00:08:20.089 Canada's dairy sector is, quote, off the table 00:08:20.089 --> 00:08:23.250 in any negotiations with President Trump sound, 00:08:23.449 --> 00:08:26.170 well, less like an ironclad guarantee and more 00:08:26.170 --> 00:08:28.750 like a political necessity, maybe? That's how 00:08:28.750 --> 00:08:30.990 the information frames it, yeah. It's something 00:08:30.990 --> 00:08:33.730 he almost has to say, given the political realities, 00:08:33.950 --> 00:08:36.110 especially the need for Quebec support. It's 00:08:36.110 --> 00:08:38.759 like, you know, a... Farmer promising their spouse 00:08:38.759 --> 00:08:41.360 they absolutely won't buy any more cows, even 00:08:41.360 --> 00:08:44.159 when that perfect herd dispersal comes up. Exactly. 00:08:45.100 --> 00:08:48.179 You say it, but circumstances might change. It's 00:08:48.179 --> 00:08:50.500 a very delicate balancing act. If you look at 00:08:50.500 --> 00:08:52.700 the different potential approaches outlined in 00:08:52.700 --> 00:08:54.419 the source material. Yeah, let's touch on that. 00:08:54.480 --> 00:08:57.100 The liberal approach versus maybe what the conservatives 00:08:57.100 --> 00:09:00.139 might have done. So liberals likely needing that 00:09:00.139 --> 00:09:02.440 block support are probably going to aim to maintain 00:09:02.440 --> 00:09:07.179 those robust. quota values and the on -farm standards 00:09:07.179 --> 00:09:09.519 like CQM or action, which are really central 00:09:09.519 --> 00:09:12.080 in Quebec, protect the core system. Whereas the 00:09:12.080 --> 00:09:15.279 Conservatives maybe might have been more open 00:09:15.279 --> 00:09:18.480 to some kind of gradual quota reform, loosening 00:09:18.480 --> 00:09:21.500 things up a bit over time. Potentially. The thinking 00:09:21.500 --> 00:09:23.940 is they might have been less beholden to that 00:09:23.940 --> 00:09:26.399 specific dynamic. And how does that play out 00:09:26.399 --> 00:09:29.059 in U .S. relations? The liberal stance seems 00:09:29.059 --> 00:09:31.200 geared towards, you know, digging in their heels 00:09:31.200 --> 00:09:33.039 on things like those class seven milk ingredients, 00:09:33.320 --> 00:09:36.059 resisting concessions there. Right. Well, maybe 00:09:36.059 --> 00:09:38.399 looking for compromises elsewhere. But the conservatives 00:09:38.399 --> 00:09:41.210 might have seen. Adjusting some of those special 00:09:41.210 --> 00:09:44.669 milk class pricing rules as maybe a bargaining 00:09:44.669 --> 00:09:47.049 chip, something to offer in broader trade talks. 00:09:47.250 --> 00:09:50.230 That's the speculation. Yeah. Which, as the source 00:09:50.230 --> 00:09:52.350 notes, could have created more uncertainty for 00:09:52.350 --> 00:09:55.330 the big Canadian processors like Saputo and Agripor 00:09:55.330 --> 00:09:57.769 under a conservative government. That's an interesting 00:09:57.769 --> 00:10:01.129 angle. OK, what about climate policy? Big difference 00:10:01.129 --> 00:10:03.789 there, too. Yeah, quite stark. The liberals are 00:10:03.789 --> 00:10:06.600 committed to carbon pricing. That obviously means 00:10:06.600 --> 00:10:09.820 potentially higher costs on farm fuel, feed, 00:10:09.980 --> 00:10:12.600 power, fertilizer, maybe indirectly. There was 00:10:12.600 --> 00:10:14.899 an estimate, wasn't there? Yeah, one source suggested 00:10:14.899 --> 00:10:18.179 maybe around $15 ,000 a year for a typical 100 00:10:18.179 --> 00:10:21.700 cow herd just from the carbon tax impact. Ouch. 00:10:21.919 --> 00:10:24.299 And the conservatives? They were opposed to the 00:10:24.299 --> 00:10:26.440 carbon tax. They might have leaned more towards, 00:10:26.440 --> 00:10:29.299 say, incentive programs for emission reductions 00:10:29.299 --> 00:10:31.860 rather than the stick of a tax. Okay, and then 00:10:31.860 --> 00:10:34.059 processing investment. That seems like a key 00:10:34.059 --> 00:10:36.840 part of the liberal platform. It does. They're 00:10:36.840 --> 00:10:39.940 proposing this $200 million domestic food processing 00:10:39.940 --> 00:10:44.620 fund. The idea seems to be encouraging more vertical 00:10:44.620 --> 00:10:47.679 integration within the dairy sector itself, building 00:10:47.679 --> 00:10:49.620 more capacity here. Instead of just shipping 00:10:49.620 --> 00:10:52.899 raw milk or basic commodities. Exactly. The conservative 00:10:52.899 --> 00:10:55.200 alternative might have been perhaps more market 00:10:55.200 --> 00:10:57.659 -driven, maybe favoring larger -scale efficiency 00:10:57.659 --> 00:11:00.629 gains over targeted funds like this. So this 00:11:00.629 --> 00:11:03.009 liberal fund, it could be a real shot in the 00:11:03.009 --> 00:11:06.029 arm for creating capacity for those higher value 00:11:06.029 --> 00:11:09.190 niche products, right? Things consumers are increasingly 00:11:09.190 --> 00:11:11.389 looking for. That seems to be the goal. What 00:11:11.389 --> 00:11:13.169 kind of projects do you think might actually 00:11:13.169 --> 00:11:15.529 get funded? And what bottlenecks could it help 00:11:15.529 --> 00:11:17.980 fix? Well, you could see investments in plants 00:11:17.980 --> 00:11:20.480 that can handle specialized processing. Things 00:11:20.480 --> 00:11:24.019 like A2 milk, maybe more artisanal or specialty 00:11:24.019 --> 00:11:27.779 cheeses, fluid milk variations, grass -fed butter, 00:11:27.940 --> 00:11:30.720 innovative dairy ingredients for other food products. 00:11:30.980 --> 00:11:34.100 Stuff that captures more value. Precisely. It 00:11:34.100 --> 00:11:35.919 could help the Canadian industry keep more of 00:11:35.919 --> 00:11:38.820 that value chain here at home. reduce reliance 00:11:38.820 --> 00:11:41.399 on exporting lower -value products, and maybe 00:11:41.399 --> 00:11:43.620 even displace some imports of finished goods. 00:11:43.820 --> 00:11:46.100 And the bottlenecks, maybe lack of capacity for 00:11:46.100 --> 00:11:48.399 certain types of processing currently. Yeah, 00:11:48.419 --> 00:11:50.240 exactly. If we don't have the facilities to make 00:11:50.240 --> 00:11:52.759 certain products efficiently, we end up importing 00:11:52.759 --> 00:11:55.740 them, even while we might be exporting raw milk. 00:11:56.279 --> 00:11:58.500 This fund could help bridge some of those gaps. 00:11:59.039 --> 00:12:01.440 So it looks like Carney's strategy, on paper 00:12:01.440 --> 00:12:03.539 anyway, is a bit more nuanced than just pure 00:12:03.539 --> 00:12:06.559 protectionism. There's this focus on processing, 00:12:06.639 --> 00:12:10.080 on value added. Seems that way. But as anyone 00:12:10.080 --> 00:12:12.840 listening knows, dairy doesn't exist in a vacuum. 00:12:13.059 --> 00:12:15.879 The whole agricultural trade picture. That's 00:12:15.879 --> 00:12:17.480 going to have a big impact, isn't it? Oh, absolutely. 00:12:17.639 --> 00:12:19.779 It's all interconnected. The material uses farm 00:12:19.779 --> 00:12:22.620 equipment as a prime example. Good one. So many 00:12:22.620 --> 00:12:25.059 components cross the border multiple times before 00:12:25.059 --> 00:12:27.500 a tractor or a combine is even assembled. So 00:12:27.500 --> 00:12:30.200 tariffs or trade friction there, it just adds 00:12:30.200 --> 00:12:32.899 costs all the way down the line. We saw equipment 00:12:32.899 --> 00:12:35.080 sales dip, didn't we? Both sides of the border 00:12:35.080 --> 00:12:38.580 early in 2025. The U .S. saw an 18 .4 % drop, 00:12:38.720 --> 00:12:42.620 Canada 5 .7%. That leads to farmers delaying 00:12:42.620 --> 00:12:45.080 purchases, holding off on upgrades. Which for 00:12:45.080 --> 00:12:48.000 dairy can be a real problem these days. We're 00:12:48.000 --> 00:12:49.919 increasingly reliant on automation, aren't we? 00:12:50.080 --> 00:12:54.169 Robotic milkers. automated feed pushers, rumination 00:12:54.169 --> 00:12:57.350 monitors, all that tech. Absolutely critical 00:12:57.350 --> 00:12:59.789 for efficiency and often for labor savings, too. 00:12:59.929 --> 00:13:02.769 So if delays in getting that new tech happen 00:13:02.769 --> 00:13:06.009 because of broader trade issues or economic uncertainty, 00:13:06.350 --> 00:13:08.490 that could actually hurt Canadian competitiveness, 00:13:08.590 --> 00:13:10.629 couldn't it? Even with supply management protecting 00:13:10.629 --> 00:13:13.210 prices. Precisely. If you can't adopt the efficiency 00:13:13.210 --> 00:13:15.350 boosting tech quickly, you risk falling behind. 00:13:15.549 --> 00:13:17.990 It undermines the very gains you need to stay 00:13:17.990 --> 00:13:21.019 viable long term. It's like having great genetics, 00:13:21.039 --> 00:13:23.100 but not being able to afford the AI technician. 00:13:23.299 --> 00:13:27.039 Good point. OK, let's pivot to that climate policy 00:13:27.039 --> 00:13:29.840 question mark again. This seems like a big area 00:13:29.840 --> 00:13:32.200 of uncertainty under Carney. It really does. 00:13:32.659 --> 00:13:34.480 His history is interesting. You know, the former 00:13:34.480 --> 00:13:37.120 Bank of England governor, very focused on climate 00:13:37.120 --> 00:13:40.019 finance, the climate warrior tag. Right. But 00:13:40.019 --> 00:13:42.399 then more recently, pivoting to talk more about 00:13:42.399 --> 00:13:44.279 energy independence, maybe a bit more balanced. 00:13:44.559 --> 00:13:47.610 Exactly. And that shift, well. It creates some 00:13:47.610 --> 00:13:50.149 nervousness for agricultural producers, understandably. 00:13:50.269 --> 00:13:52.789 Dairy farmers are definitely watching this. Concerns 00:13:52.789 --> 00:13:56.009 about methane reduction targets, for sure. And 00:13:56.009 --> 00:13:58.409 the ongoing impact of that carbon pricing on 00:13:58.409 --> 00:14:01.529 inputs feed, fuel, fertilizer, electricity. All 00:14:01.529 --> 00:14:03.850 major costs on a dairy farm. The liberal platform 00:14:03.850 --> 00:14:06.509 talks a big game, right? Becoming a world -leading 00:14:06.509 --> 00:14:08.929 superpower in both clean and conventional energy. 00:14:09.149 --> 00:14:10.830 Sounds good, but what does it mean for a dairy 00:14:10.830 --> 00:14:14.350 farm running milk coolers, ventilation, tractors, 00:14:14.409 --> 00:14:17.129 things that use a lot of energy? That's the missing 00:14:17.129 --> 00:14:19.730 piece. The details are fuzzy. What's the real 00:14:19.730 --> 00:14:21.929 cost impact going to be? We saw that earlier 00:14:21.929 --> 00:14:24.970 estimate, maybe $2 to $3 per hectoliter of milk 00:14:24.970 --> 00:14:27.649 attributed to carbon pricing. Which adds up fast. 00:14:27.929 --> 00:14:30.970 It does. And are the investments needed for clean 00:14:30.970 --> 00:14:34.009 energy solutions like methane digesters or energy 00:14:34.009 --> 00:14:36.269 efficient cooling systems, are they actually 00:14:36.269 --> 00:14:38.490 economically viable for the average farm right 00:14:38.490 --> 00:14:40.980 now without significant support? Those are the 00:14:40.980 --> 00:14:43.620 huge unanswered questions, the kind that probably 00:14:43.620 --> 00:14:45.899 keeps some producers up at night. It's like waiting 00:14:45.899 --> 00:14:48.179 for milk test results, that kind of uncertainty. 00:14:48.500 --> 00:14:51.279 Definitely unsettling. And, you know, we absolutely 00:14:51.279 --> 00:14:54.480 cannot have a proper deep dive on Canadian dairy 00:14:54.480 --> 00:14:57.440 policy without really emphasizing the massive 00:14:57.440 --> 00:14:59.620 influence of Quebec. Oh, for sure. It's central 00:14:59.620 --> 00:15:01.220 to the whole discussion. What are the numbers 00:15:01.220 --> 00:15:04.750 again? About 4 ,700 farms in Quebec, producing 00:15:04.750 --> 00:15:07.990 roughly 40 % of all the milk in Canada, often 00:15:07.990 --> 00:15:10.470 on smaller herds, to average around 70 cows, 00:15:10.549 --> 00:15:13.409 I think. So huge production share, lots of farms, 00:15:13.529 --> 00:15:15.909 lots of rural votes. That translates into serious 00:15:15.909 --> 00:15:18.909 political weight. Immense weight. And historically, 00:15:19.210 --> 00:15:21.649 Quebec's very strong defense of supply management. 00:15:22.409 --> 00:15:24.690 It's sometimes been a point of frustration for 00:15:24.690 --> 00:15:27.570 producers in other regions, like Western Canada, 00:15:27.690 --> 00:15:30.389 maybe, and definitely for U .S. trade negotiators. 00:15:30.610 --> 00:15:33.570 Right. And now with the Bloc Québécois potentially 00:15:33.570 --> 00:15:36.009 holding that balance of power in Parliament. 00:15:36.149 --> 00:15:38.230 Their influence could be amplified even further. 00:15:38.409 --> 00:15:40.970 Which could make it even harder to push for any 00:15:40.970 --> 00:15:44.669 kind of modernization or reforms to supply management 00:15:44.669 --> 00:15:47.549 that producers outside Quebec might want to see. 00:15:47.690 --> 00:15:50.710 Things like more flexibility, maybe easier entry 00:15:50.710 --> 00:15:53.710 for new farmers. Exactly. It creates this dynamic 00:15:53.710 --> 00:15:57.250 where the specific political situation might 00:15:57.250 --> 00:15:59.590 effectively block certain types of evolution 00:15:59.590 --> 00:16:02.320 within the system. even if there's appetite for 00:16:02.320 --> 00:16:04.620 it elsewhere. Political reality trumping economic 00:16:04.620 --> 00:16:06.879 logic, perhaps. Which brings us to something 00:16:06.879 --> 00:16:09.360 often misunderstood, especially south of the 00:16:09.360 --> 00:16:12.659 border. The why behind supply management in the 00:16:12.659 --> 00:16:14.940 first place. It's not just protectionism, is 00:16:14.940 --> 00:16:17.299 it? No, not solely. The sources are clear on 00:16:17.299 --> 00:16:19.480 this. The stated goals are broader. Things like 00:16:19.480 --> 00:16:21.740 ensuring stability in rural communities, providing 00:16:21.740 --> 00:16:24.379 consistent quality and component premiums for 00:16:24.379 --> 00:16:27.740 processors, and crucially, avoiding that intense 00:16:27.740 --> 00:16:29.980 price volatility you see in the U .S. market. 00:16:30.120 --> 00:16:32.679 Where prices can swing wildly. Dramatically. 00:16:32.940 --> 00:16:35.559 So Canadian consumers might pay a bit more for 00:16:35.559 --> 00:16:38.399 dairy sometimes, but the trade -off is meant 00:16:38.399 --> 00:16:40.679 to be that stability at the farm level. And the 00:16:40.679 --> 00:16:42.740 source material highlighted the farm numbers 00:16:42.740 --> 00:16:45.480 difference, right? Yeah, stark contrast. Canadian 00:16:45.480 --> 00:16:47.940 dairy farm numbers have been relatively stable, 00:16:47.960 --> 00:16:50.799 maybe a slow decline, whereas the U .S. has been 00:16:50.799 --> 00:16:53.279 losing, what, 7 to 9 percent of its dairy farms 00:16:53.279 --> 00:16:56.210 every year for quite a while now. Wow, 7 % to 00:16:56.210 --> 00:16:58.330 9 % annually. That's a massive consolidation. 00:16:58.909 --> 00:17:01.970 It is. But the flip side, as the info points 00:17:01.970 --> 00:17:05.109 out, is that Canadian stability relies on managing 00:17:05.109 --> 00:17:08.240 production through those quotas. limits on how 00:17:08.240 --> 00:17:10.539 much you can produce. Something American producers 00:17:10.539 --> 00:17:14.720 used to a more open grow if you can market would 00:17:14.720 --> 00:17:17.460 likely resist strongly. Very different philosophies, 00:17:17.460 --> 00:17:19.220 yeah. Okay, now let's look beyond North America 00:17:19.220 --> 00:17:21.980 for a second. The material suggests Carney's 00:17:21.980 --> 00:17:24.099 background, Bank of Canada, Bank of England, 00:17:24.279 --> 00:17:26.720 international finance, could actually open some 00:17:26.720 --> 00:17:29.539 doors globally for Canadian dairy. That's a really 00:17:29.539 --> 00:17:31.819 interesting point. His international network 00:17:31.819 --> 00:17:34.000 and understanding of global markets could be 00:17:34.000 --> 00:17:36.380 an asset. How so? We have trade deals already, 00:17:36.480 --> 00:17:39.299 right? Like CETA with Europe and the CPTPP with 00:17:39.299 --> 00:17:42.099 Pacific countries. We do. And those agreements 00:17:42.099 --> 00:17:45.700 do provide access for Canadian dairy cheese quotas 00:17:45.700 --> 00:17:48.220 into Europe, broader access into markets like 00:17:48.220 --> 00:17:52.039 Japan or Vietnam under CPTPP. But maybe Carney's 00:17:52.039 --> 00:17:55.059 connections could help maximize those opportunities. 00:17:55.690 --> 00:17:58.289 or navigate lingering issues. And Canada does 00:17:58.289 --> 00:18:00.509 have a quality story to tell, doesn't it? Our 00:18:00.509 --> 00:18:02.750 milk quality standards are generally higher than 00:18:02.750 --> 00:18:04.609 in the U .S., for example. That's a key advantage. 00:18:05.190 --> 00:18:08.289 Things like our lower somatic cell count limit 00:18:08.289 --> 00:18:11.210 400 ,000 cells per milliliter compared to the 00:18:11.210 --> 00:18:14.410 U .S. federal limit of 750 ,000. That resonates 00:18:14.410 --> 00:18:17.049 in markets that prioritize quality and food safety. 00:18:17.309 --> 00:18:19.490 So the thinking is Carney might be better positioned 00:18:19.490 --> 00:18:21.609 to leverage those advantages on the world stage, 00:18:21.890 --> 00:18:24.230 help expand those non -North American markets. 00:18:24.369 --> 00:18:25.359 It's certainly a potential. Potential upside 00:18:25.359 --> 00:18:27.779 of his background, yeah. Could he be the key 00:18:27.779 --> 00:18:29.759 to unlocking more global opportunities? Maybe. 00:18:29.920 --> 00:18:32.380 Okay. But circling back to the domestic system, 00:18:32.579 --> 00:18:35.039 the information raises this fundamental paradox 00:18:35.039 --> 00:18:37.619 within supply management, the stability versus 00:18:37.619 --> 00:18:40.299 innovation question. Right. It's this inherent 00:18:40.299 --> 00:18:42.960 tension. Supply management provides that safety 00:18:42.960 --> 00:18:46.859 net, that stability. But arguably, it can also 00:18:46.859 --> 00:18:48.980 dampen the pressure for certain kinds of innovation. 00:18:49.400 --> 00:18:53.279 How so? Well, limits on expansion mean you can't 00:18:53.279 --> 00:18:55.299 always achieve economies of scale as easily. 00:18:55.599 --> 00:18:58.640 High quota costs make it harder for new, maybe 00:18:58.640 --> 00:19:01.720 more innovative farmers to get started. And maybe 00:19:01.720 --> 00:19:04.259 there's just less intense cutthroat competitive 00:19:04.259 --> 00:19:07.140 pressure driving radical change compared to a 00:19:07.140 --> 00:19:09.519 wide open market. Plus the huge cost of quota 00:19:09.519 --> 00:19:11.559 we talked about. That's capital that could be 00:19:11.559 --> 00:19:14.619 going into new barns, new tech, new product development, 00:19:14.819 --> 00:19:17.220 right? Exactly. It diverts. potentially billions 00:19:17.220 --> 00:19:20.059 in capital away from on -farm or processing investments, 00:19:20.220 --> 00:19:22.160 and into just acquiring the right to produce. 00:19:22.480 --> 00:19:25.039 Yeah. Despite all that, Canadian dairy has been 00:19:25.039 --> 00:19:27.220 innovative, hasn't it? The sources mention things 00:19:27.220 --> 00:19:29.539 like high adoption rates for robotic milking. 00:19:29.740 --> 00:19:31.859 Impressively high, actually. Right. And ongoing 00:19:31.859 --> 00:19:33.960 genetic improvements, feed efficiency gains. 00:19:34.380 --> 00:19:36.200 Innovation definitely does happen within the 00:19:36.200 --> 00:19:38.420 system. It's not stagnant. So it's a paradox. 00:19:38.880 --> 00:19:41.180 Constraints exist, but innovation finds a way. 00:19:41.460 --> 00:19:45.140 Pretty much. Which leads to the question. How 00:19:45.140 --> 00:19:48.079 will Carney's policies affect this balance? You've 00:19:48.079 --> 00:19:50.940 got the likely continuation of supply management's 00:19:50.940 --> 00:19:54.019 core structure, but also these... proposed new 00:19:54.019 --> 00:19:56.359 investments like that processing fund. Will the 00:19:56.359 --> 00:19:58.640 investment boost innovation enough to overcome 00:19:58.640 --> 00:20:01.180 the inherent limitations? Or will the structure 00:20:01.180 --> 00:20:03.640 still act as a bit of a break? That's the million 00:20:03.640 --> 00:20:06.059 dollar question, isn't it? Can you stimulate 00:20:06.059 --> 00:20:08.900 more dynamism without dismantling the stability? 00:20:09.220 --> 00:20:12.019 It's like having access to the latest precision 00:20:12.019 --> 00:20:14.420 farming tech, but still being limited by your 00:20:14.420 --> 00:20:17.640 field size. Good analogy. So let's try and synthesize 00:20:17.640 --> 00:20:19.740 this. What's the bottom line here for Canadian 00:20:19.740 --> 00:20:22.190 dairy folks listening? What does Carney's victory 00:20:22.190 --> 00:20:25.349 really mean day to day? Well, it seems like a 00:20:25.349 --> 00:20:28.890 mix, both continuity and potential change. Continuity 00:20:28.890 --> 00:20:31.250 in what sense? The fundamentals of supply management 00:20:31.250 --> 00:20:33.390 are almost certainly staying put, at least for 00:20:33.390 --> 00:20:35.750 the foreseeable future. The political landscape, 00:20:35.970 --> 00:20:38.089 especially with Quebec's influence and the likely 00:20:38.089 --> 00:20:41.069 minority government, makes major structural reform 00:20:41.069 --> 00:20:44.289 highly unlikely. So that core stability remains. 00:20:44.609 --> 00:20:46.849 OK, so the basic system holds. What's the change 00:20:46.849 --> 00:20:49.130 part? The change comes in the surrounding policy 00:20:49.130 --> 00:20:52.720 environment. Things like that potential $200 00:20:52.720 --> 00:20:55.400 million for processing, the extra money for market 00:20:55.400 --> 00:20:57.980 access initiatives and clean technology adoption, 00:20:58.339 --> 00:21:02.059 doubling loan limits. Those are tangible potential 00:21:02.059 --> 00:21:04.779 shifts. So for a progressive dairy producer, 00:21:05.019 --> 00:21:08.200 what's the outlook? Potential benefits? Potential 00:21:08.200 --> 00:21:10.359 challenges. It could be continued protection 00:21:10.359 --> 00:21:13.220 from intense U .S. import pressure, new funding 00:21:13.220 --> 00:21:15.660 opportunities for upgrading processing or adopting 00:21:15.660 --> 00:21:18.039 green tech, maybe support for developing new 00:21:18.039 --> 00:21:20.180 products. And the challenges. Challenges include. 00:21:20.799 --> 00:21:23.079 The potential impact of carbon pricing and other 00:21:23.079 --> 00:21:25.799 climate policies on operating costs, the ongoing 00:21:25.799 --> 00:21:28.099 constraints on expansion or flexibility due to 00:21:28.099 --> 00:21:30.420 the quota system, and the continued high cost 00:21:30.420 --> 00:21:32.960 of entry or expansion via quota purchase. So 00:21:32.960 --> 00:21:34.440 it really comes down to that central question 00:21:34.440 --> 00:21:36.400 we keep circling back to, doesn't it? Can supply 00:21:36.400 --> 00:21:39.440 management evolve? Can it become flexible enough 00:21:39.440 --> 00:21:43.480 to allow more new entrants? Maybe. offer greater 00:21:43.480 --> 00:21:45.440 production flexibility for farmers trying to 00:21:45.440 --> 00:21:47.480 manage components or hit specific market demands? 00:21:47.779 --> 00:21:50.380 Can it foster more domestic processing capacity? 00:21:51.059 --> 00:21:53.839 All without sacrificing that core stability it 00:21:53.839 --> 00:21:56.099 was built for. That's the tightrope Carney has 00:21:56.099 --> 00:21:58.400 to walk. A very complex balancing act, yeah. 00:21:58.480 --> 00:22:00.779 No easy answers there. And what about for our 00:22:00.779 --> 00:22:02.940 American listeners? What are the implications 00:22:02.940 --> 00:22:06.799 for U .S. dairy producers looking north? Well, 00:22:06.880 --> 00:22:09.549 honestly, probably continued frustration. Despite 00:22:09.549 --> 00:22:12.009 that trade surplus, the U .S. already enjoys 00:22:12.009 --> 00:22:14.410 in dairy with Canada. That billion dollars flowing 00:22:14.410 --> 00:22:17.509 north. Exactly. Despite that reality, the political 00:22:17.509 --> 00:22:19.849 rhetoric south of the border is likely to continue 00:22:19.849 --> 00:22:22.809 portraying Canada's system as unfairly protectionist 00:22:22.809 --> 00:22:25.410 and a major problem. Carney's win probably doesn't 00:22:25.410 --> 00:22:28.170 change that narrative much. So expect the complaints 00:22:28.170 --> 00:22:31.309 about access to continue, even if the actual 00:22:31.309 --> 00:22:33.029 trade flows tell a slightly different story. 00:22:33.269 --> 00:22:35.869 Very likely, yes. There seems to be a real disconnect 00:22:35.869 --> 00:22:37.630 sometimes between the political talking points 00:22:37.630 --> 00:22:40.329 and the economic facts of the dairy trade relationship. 00:22:40.670 --> 00:22:44.109 OK, so wrapping this up, the ultimate measure 00:22:44.109 --> 00:22:46.509 of success for Carney, at least when it comes 00:22:46.509 --> 00:22:50.079 to dairy, what will it be? It probably won't 00:22:50.079 --> 00:22:52.259 just be about keeping the system intact. It'll 00:22:52.259 --> 00:22:55.200 be judged, I think, on his government's ability 00:22:55.200 --> 00:22:57.819 to actually navigate that modernization challenge 00:22:57.819 --> 00:23:01.319 to help Canadian dairy adapt and evolve while 00:23:01.319 --> 00:23:04.119 somehow preserving that stability everyone relies 00:23:04.119 --> 00:23:06.559 on. That is a huge challenge, especially with 00:23:06.559 --> 00:23:08.339 all the pressures we've talked about. It is indeed. 00:23:08.809 --> 00:23:10.910 The dairy landscape, both sides of the border, 00:23:11.009 --> 00:23:13.230 it's constantly shifting. All eyes will definitely 00:23:13.230 --> 00:23:15.470 be on Ottawa to see what moves they make next. 00:23:15.670 --> 00:23:18.029 Absolutely. Well, as we finish up this deep dive, 00:23:18.150 --> 00:23:20.410 it's just crystal clear, isn't it? Canadian dairy 00:23:20.410 --> 00:23:23.710 under Mark Carney. It's facing this really complex 00:23:23.710 --> 00:23:26.390 mix of domestic politics, international trade 00:23:26.390 --> 00:23:28.670 demands, climate pressures, evolving consumer 00:23:28.670 --> 00:23:32.569 tastes. It's a lot. Full plate for sure. So here's 00:23:32.569 --> 00:23:34.630 that final thought for you, our listeners, to 00:23:34.630 --> 00:23:37.519 chew on. Considering everything we've discussed, 00:23:37.759 --> 00:23:40.619 the likely continuation of supply management's 00:23:40.619 --> 00:23:43.200 core, but with these new investments and potential 00:23:43.200 --> 00:23:46.180 cost pressures from climate policy, what are 00:23:46.180 --> 00:23:48.599 the key strategic adaptations that will be most 00:23:48.599 --> 00:23:50.740 critical for your dairy farm to thrive in the 00:23:50.740 --> 00:23:53.539 coming years? What new opportunities might actually 00:23:53.539 --> 00:23:56.119 pop up from this changing landscape? And how 00:23:56.119 --> 00:23:58.740 can you best position your operation to grab 00:23:58.740 --> 00:24:00.960 them? Definitely something to ruminate on, as 00:24:00.960 --> 00:24:03.079 you said earlier, maybe during milking or while 00:24:03.079 --> 00:24:06.240 scraping stalls. Exactly. Plenty to think about. 00:24:06.339 --> 00:24:08.279 Thanks so much for joining us for this deep dive. 00:24:08.440 --> 00:24:36.059 Thanks for having me. And remember, in dairy 00:24:36.059 --> 00:24:38.980 politics as in breeding, the best genetics always 00:24:38.980 --> 00:24:40.759 win in the long lactation.