WEBVTT 00:00:11.720 --> 00:00:15.060 Breaking free from the chains of the past Where 00:00:15.060 --> 00:00:18.820 truth moves faster than a Holstein calf No law 00:00:18.820 --> 00:00:21.660 waiting on some printed page We're charting new 00:00:21.660 --> 00:00:25.300 ground in the digital age From genomic codes 00:00:25.300 --> 00:00:29.120 to robot facts We cut through the noise, no hold 00:00:29.280 --> 00:00:32.460 them back not your daddy's dairy news tonight 00:00:32.460 --> 00:01:01.210 we're sparking Welcome to the Bullvine Podcast, 00:01:01.770 --> 00:01:04.590 where we tackle the tough questions shaping the 00:01:04.590 --> 00:01:07.829 dairy industry today. I'm your host, and this 00:01:07.829 --> 00:01:10.870 is the show that brings you bold insights, expert 00:01:10.870 --> 00:01:13.849 analysis, and the conversations that matter most 00:01:13.849 --> 00:01:16.530 to dairy professionals across North America. 00:01:16.810 --> 00:01:20.090 Today, we're diving deep into one of the most 00:01:20.090 --> 00:01:23.709 contentious topics in our industry, the fundamental 00:01:23.709 --> 00:01:26.840 divide between Canadian supply management and 00:01:26.840 --> 00:01:29.659 the American free market approach to dairy. While 00:01:29.659 --> 00:01:32.140 you were celebrating Memorial Day or Victoria 00:01:32.140 --> 00:01:35.459 Day this past weekend, two completely different 00:01:35.459 --> 00:01:38.239 dairy philosophies were operating just miles 00:01:38.239 --> 00:01:41.780 apart across the 49th parallel. We're talking 00:01:41.780 --> 00:01:44.980 about systems so fundamentally opposed that they 00:01:44.980 --> 00:01:47.939 might as well be from different planets. One 00:01:47.939 --> 00:01:50.519 built on the idea that farmers deserve predictable 00:01:50.519 --> 00:01:53.879 profits through quota systems costing up to $50 00:01:53.879 --> 00:01:57.659 ,000 per cow. The other betting everything on 00:01:57.659 --> 00:02:00.500 market forces so volatile that the average dairy 00:02:00.500 --> 00:02:03.459 farm had negative income in nearly every year 00:02:03.459 --> 00:02:06.579 of the past decade. The question isn't which 00:02:06.579 --> 00:02:09.099 system is better, it's which one will survive 00:02:09.099 --> 00:02:12.139 the disruption that neither sees coming. From 00:02:12.139 --> 00:02:15.039 trade wars and quota disputes to the rise of 00:02:15.039 --> 00:02:17.479 plant -based alternatives and precision fermentation. 00:02:18.259 --> 00:02:21.240 Both systems face challenges that could make 00:02:21.240 --> 00:02:24.219 their current debates irrelevant. So buckle up. 00:02:24.509 --> 00:02:27.009 because today's discussion will challenge everything 00:02:27.009 --> 00:02:29.849 you think you know about what makes dairy farming 00:02:29.849 --> 00:02:33.389 successful. This is analysis that cuts through 00:02:33.389 --> 00:02:36.650 the politics and gets to the real economics affecting 00:02:36.650 --> 00:02:39.750 your operation, whether you're milking 50 cows 00:02:39.750 --> 00:02:52.479 in Quebec or 5 ,000 in California. Well, for 00:02:52.479 --> 00:02:54.879 you in the dairy world. Yeah, absolutely. We're 00:02:54.879 --> 00:02:57.360 taking a close look, a real deep dive into the 00:02:57.360 --> 00:03:00.979 fundamental differences between the North American 00:03:00.979 --> 00:03:04.460 dairy systems. It can be pretty baffling sometimes. 00:03:04.639 --> 00:03:06.719 It really can. Our main source today is this 00:03:06.719 --> 00:03:09.139 sharp excerpt called North American Dairy Systems, 00:03:09.379 --> 00:03:14.439 Flaws and Future. And it pulls no punches looking 00:03:14.439 --> 00:03:16.699 across the 49th parallel. No, it really doesn't 00:03:16.699 --> 00:03:19.800 spare anyone. It lays out this stark comparison. 00:03:20.750 --> 00:03:22.750 highlights the brilliant part, sure, but also 00:03:22.750 --> 00:03:25.379 some... pretty significant, maybe even catastrophic 00:03:25.379 --> 00:03:28.139 flaws in both the Canadian supply management 00:03:28.139 --> 00:03:30.840 system and the American free market approach. 00:03:30.939 --> 00:03:32.400 Makes you question things you thought you knew. 00:03:32.599 --> 00:03:34.960 Totally. And specifically for you, our listeners, 00:03:35.139 --> 00:03:37.259 knowledgeable dairy farmers, industry professionals. 00:03:37.599 --> 00:03:40.080 Yeah. Our job here is to unpack the surprising, 00:03:40.219 --> 00:03:42.520 maybe sometimes uncomfortable truths this source 00:03:42.520 --> 00:03:45.240 brings up. We want to pull out those key insights, 00:03:45.379 --> 00:03:47.180 the implications that actually matter for your 00:03:47.180 --> 00:03:49.599 farm, whichever side of the border you're on. 00:03:49.879 --> 00:03:52.199 Okay, let's get into it then. Let's unpack this. 00:03:52.990 --> 00:03:55.210 The starting point, the basic idea the source 00:03:55.210 --> 00:03:57.509 puts forward, is pretty straightforward. But, 00:03:57.569 --> 00:03:59.889 wow, it's powerful. You've got these two nations 00:03:59.889 --> 00:04:02.969 right next door running what's basically a live 00:04:02.969 --> 00:04:05.629 experiment in farm ideology, specifically for 00:04:05.629 --> 00:04:08.590 dairy. Supply management here, free market there. 00:04:08.810 --> 00:04:11.030 And the source is basically saying, look, after 00:04:11.030 --> 00:04:13.349 decades of pointing fingers back and forth, maybe 00:04:13.349 --> 00:04:16.430 not always productively. Maybe not. It's time 00:04:16.430 --> 00:04:20.850 for some brutal honesty about what each system 00:04:20.850 --> 00:04:24.300 actually does. delivers and crucially what the 00:04:24.300 --> 00:04:26.879 real costs are not just the obvious ones and 00:04:26.879 --> 00:04:28.759 that leads us straight into well the elephant 00:04:28.759 --> 00:04:31.139 in the room right or maybe the very very expensive 00:04:31.139 --> 00:04:34.360 barn exactly the cost reality check let's talk 00:04:34.360 --> 00:04:36.959 quota in canada yeah the numbers There's something 00:04:36.959 --> 00:04:38.519 else. If you're not living it every day, it's 00:04:38.519 --> 00:04:40.939 hard to grasp. The source points to early 2025 00:04:40.939 --> 00:04:44.379 figures. Canadian dairy quota costs hitting somewhere 00:04:44.379 --> 00:04:50.420 between $35 ,500 and $37 ,500 per kilogram of 00:04:50.420 --> 00:04:53.500 butterfat per day. Per day. And they even mention 00:04:53.500 --> 00:04:55.660 it creeping up towards, what was it, $58 ,000 00:04:55.660 --> 00:04:58.319 per cow in some places? Alberta, I think? Yeah, 00:04:58.319 --> 00:05:00.100 Alberta. So think about what that means. The 00:05:00.100 --> 00:05:03.480 source gives this example. A pretty modest... 00:05:03.720 --> 00:05:07.240 100 cow farm in Ontario could easily have quota 00:05:07.240 --> 00:05:11.300 assets tied up worth $3 to $5 million. And that's 00:05:11.300 --> 00:05:14.139 before you even think about land, the barn, the 00:05:14.139 --> 00:05:18.500 actual cows, equipment, anything else. Wow. That's 00:05:18.500 --> 00:05:20.459 just the price of admission, the right to produce 00:05:20.459 --> 00:05:23.639 milk. Exactly. Now, let's flip that coin, go 00:05:23.639 --> 00:05:26.379 south to the American side, zero quota cost up 00:05:26.379 --> 00:05:28.660 front. Right. You get the land, the capital, 00:05:28.779 --> 00:05:31.139 you can start milking cows. Seems simpler. On 00:05:31.139 --> 00:05:35.060 the surface, maybe. The source describes this 00:05:35.060 --> 00:05:37.800 situation as operating in a market just defined 00:05:37.800 --> 00:05:41.000 by, well, extreme volatility, constant ups and 00:05:41.000 --> 00:05:43.240 downs. And they back that up. There's this tough 00:05:43.240 --> 00:05:46.879 statistic. The average US dairy farm had negative 00:05:46.879 --> 00:05:50.600 net income. negative in all but one year for 00:05:50.600 --> 00:05:53.079 that whole decade leading up to 2019. Think about 00:05:53.079 --> 00:05:56.240 that. Losing money most years on average. Which 00:05:56.240 --> 00:05:59.120 brings us to the source's big provocative question. 00:05:59.259 --> 00:06:00.920 It sounds simple, but it really isn't, they ask. 00:06:01.079 --> 00:06:03.259 Which system is really more expensive? When you 00:06:03.259 --> 00:06:05.779 look at the long game, is it paying that, say, 00:06:06.100 --> 00:06:10.180 $50 ,000 up front for a pretty guaranteed right 00:06:10.180 --> 00:06:13.860 to make money in a stable system? Or is it rolling 00:06:13.860 --> 00:06:17.279 the dice year after year in a market where Statistically, 00:06:17.399 --> 00:06:20.220 you're likely to lose money more often than not. 00:06:20.319 --> 00:06:22.079 It's not just about the upfront check you write, 00:06:22.139 --> 00:06:23.800 is it? It's the whole financial world you operate 00:06:23.800 --> 00:06:26.660 in. Exactly. It forces you to look way beyond 00:06:26.660 --> 00:06:29.060 just the surface costs. It was really interesting. 00:06:29.199 --> 00:06:31.740 Despite these hugely different economic setups, 00:06:32.040 --> 00:06:34.699 the source points out some areas where performance 00:06:34.699 --> 00:06:37.279 is, well, surprisingly similar. Yeah, that's 00:06:37.279 --> 00:06:40.399 right. They look at per cow productivity. Okay. 00:06:40.540 --> 00:06:43.680 Canadian farms, the source says, get almost identical 00:06:43.680 --> 00:06:47.949 output per cow. They cite around 9 ,739 liters 00:06:47.949 --> 00:06:50.430 on average. Compare that to the U .S., which 00:06:50.430 --> 00:06:53.170 when you convert it is roughly 10 ,950 liters. 00:06:53.370 --> 00:06:55.329 So not a massive gap like you might assume based 00:06:55.329 --> 00:06:57.389 on how different the systems feel. Not at all. 00:06:57.470 --> 00:07:00.089 But alongside that similar production per animal, 00:07:00.310 --> 00:07:03.230 you see these huge structural differences. Like 00:07:03.230 --> 00:07:05.750 what? Well, Canadian farms, generally speaking, 00:07:05.889 --> 00:07:08.149 have dramatically lower overall capital needs 00:07:08.149 --> 00:07:10.370 because they don't need that sheer scale chasing 00:07:10.370 --> 00:07:13.009 tiny margins. Right. Less pressure to get enormous. 00:07:13.129 --> 00:07:16.709 Which means... The source reports minimal debt 00:07:16.709 --> 00:07:19.069 stress compared to a lot of those really large 00:07:19.069 --> 00:07:21.569 U .S. operations. And you see that reflected 00:07:21.569 --> 00:07:25.139 in ownership, too. 98 % family -owned farms in 00:07:25.139 --> 00:07:29.100 Canada versus maybe 92 % in the U .S. Still high, 00:07:29.300 --> 00:07:32.319 but a noticeable difference. 98 % is very high. 00:07:32.439 --> 00:07:35.860 It is. And the source uses this analogy I thought 00:07:35.860 --> 00:07:38.060 was pretty vivid. Oh, yeah? They describe Canadian 00:07:38.060 --> 00:07:40.819 farmers kind of like old -school breeders, you 00:07:40.819 --> 00:07:43.220 know, carefully perfecting their lines, slow 00:07:43.220 --> 00:07:46.120 and steady improvements in genetics, management, 00:07:46.240 --> 00:07:48.819 within that stable system. Okay, I can picture 00:07:48.819 --> 00:07:51.689 that. Whereas U .S. farmers... often are seen 00:07:51.689 --> 00:07:54.470 as chasing the absolute latest genomic trend, 00:07:54.649 --> 00:07:57.509 pushing for massive scale, hoping that getting 00:07:57.509 --> 00:08:00.209 bigger will somehow fix profitability issues. 00:08:00.389 --> 00:08:02.550 That the need for scale might actually be creating. 00:08:02.670 --> 00:08:05.129 Exactly. That's the irony the source points out. 00:08:05.170 --> 00:08:08.129 Chasing scale to solve problems that scale itself 00:08:08.129 --> 00:08:10.610 can sometimes cause. That analogy really does 00:08:10.610 --> 00:08:12.350 paint a picture. And look, for you listening 00:08:12.350 --> 00:08:14.649 right now, running your farm, these differences, 00:08:14.790 --> 00:08:16.550 they're not just talking points for professors, 00:08:16.750 --> 00:08:18.769 right? Not at all. The source really hammers 00:08:18.769 --> 00:08:21.759 this home. This is strategic intelligence. It 00:08:21.759 --> 00:08:23.860 directly impacts the choices you make, expansion 00:08:23.860 --> 00:08:28.300 plans, risk management, day -to -day stuff. Precisely. 00:08:28.319 --> 00:08:30.779 And it's not just data dumps. The source turns 00:08:30.779 --> 00:08:32.399 it around into questions you should be asking 00:08:32.399 --> 00:08:35.059 about your own operation. Okay, like what? Well, 00:08:35.179 --> 00:08:37.419 if you're a Canadian farmer, for instance, how 00:08:37.419 --> 00:08:40.139 does that big quota asset value stack up against 00:08:40.139 --> 00:08:42.159 your operational debt? Are you actually using 00:08:42.159 --> 00:08:44.879 the stability quota gives you like leveraging 00:08:44.879 --> 00:08:46.799 it for long term investments, sustainability 00:08:46.799 --> 00:08:50.259 stuff, energy efficiency, things that might be 00:08:50.259 --> 00:08:52.720 harder to fund otherwise? Good question. And 00:08:52.720 --> 00:08:55.279 have you really stress tested your exit strategy? 00:08:55.440 --> 00:08:58.059 What happens if quota values, you know, don't 00:08:58.059 --> 00:08:59.620 keep going up forever? What if they decline? 00:08:59.860 --> 00:09:02.779 Hmm. That's a tough one to think about. And for 00:09:02.779 --> 00:09:05.080 American farmers, what questions should they 00:09:05.080 --> 00:09:07.200 be asking? The source prompts you to think, OK, 00:09:07.360 --> 00:09:09.940 how much of my farm's actual profit comes from 00:09:09.940 --> 00:09:12.480 the market versus government programs? You know, 00:09:12.480 --> 00:09:15.559 things like DMC, the dairy margin coverage program 00:09:15.559 --> 00:09:18.679 or the baseline prices from federal milk marketing 00:09:18.679 --> 00:09:21.019 orders. Right. Disentangling that. Are you really 00:09:21.019 --> 00:09:24.000 getting economies of scale? Or, and this is the 00:09:24.000 --> 00:09:26.519 provocative bit from the source, are you just 00:09:26.519 --> 00:09:29.759 spreading losses thinner over more cows? They 00:09:29.759 --> 00:09:32.580 bring up that 2015 analysis again, claiming 73 00:09:32.580 --> 00:09:34.820 % of U .S. farm returns came from government 00:09:34.820 --> 00:09:37.860 support. So the question for you is, what slice 00:09:37.860 --> 00:09:40.519 of your own income traces back to those programs? 00:09:40.860 --> 00:09:43.019 These aren't comfortable questions, maybe. Yeah. 00:09:43.080 --> 00:09:45.779 But pretty essential for figuring out how resilient 00:09:45.779 --> 00:09:47.879 your business actually is within your system. 00:09:48.190 --> 00:09:49.690 Absolutely. You need to know where the money 00:09:49.690 --> 00:09:51.190 is really coming from. Which kind of leads us 00:09:51.190 --> 00:09:54.610 into what the source presents as maybe its most 00:09:54.610 --> 00:09:57.009 controversial point, this idea of an innovation 00:09:57.009 --> 00:10:00.470 paradox. Ah, yes. The claim, surprisingly, is 00:10:00.470 --> 00:10:02.929 that neither system, not Canada's stability, 00:10:03.129 --> 00:10:05.389 not the U .S.'s competition, is really optimized 00:10:05.389 --> 00:10:07.690 for driving truly revolutionary innovation in 00:10:07.690 --> 00:10:09.769 dairy farming itself. It sounds wrong, doesn't 00:10:09.769 --> 00:10:11.970 it? You'd think competition or stability would 00:10:11.970 --> 00:10:14.370 fuel it, but the source builds a case. How so? 00:10:14.730 --> 00:10:17.559 For Canada. Well, for Canada, they argue the 00:10:17.559 --> 00:10:19.600 quota system itself, the limits on expansion, 00:10:19.779 --> 00:10:22.179 can act as a bit of a break on certain innovations. 00:10:22.679 --> 00:10:25.899 Why pour massive money into, say, a breakthrough 00:10:25.899 --> 00:10:28.240 technology that dramatically boosts efficiency 00:10:28.240 --> 00:10:31.200 or output if you can't easily expand your herd 00:10:31.200 --> 00:10:34.000 to capitalize on it? So the incentive for those 00:10:34.000 --> 00:10:36.460 huge leaps isn't quite there if your production 00:10:36.460 --> 00:10:38.879 is capped. That's the argument. You might fine 00:10:38.879 --> 00:10:41.659 tune, but maybe not chase the game changers quite 00:10:41.659 --> 00:10:44.600 as hard. They use an example like perfecting 00:10:44.600 --> 00:10:46.980 AI without rigorous performance testing. If you 00:10:46.980 --> 00:10:49.179 can't grow anyway. Okay. And the U .S. side. 00:10:49.440 --> 00:10:52.600 How does that system hinder innovation according 00:10:52.600 --> 00:10:55.889 to the source? There, the argument is the relentless 00:10:55.889 --> 00:10:58.629 focus on scale and just surviving economically. 00:10:58.950 --> 00:11:00.850 Farmers are often trapped in this cycle, right? 00:11:00.909 --> 00:11:03.330 Pouring every last cent into feed to maximize 00:11:03.330 --> 00:11:05.950 immediate output per cow. Means there's nothing 00:11:05.950 --> 00:11:08.049 left for other big investments. Exactly. Maybe 00:11:08.049 --> 00:11:10.090 you have to skip crucial upgrades and advanced 00:11:10.090 --> 00:11:12.529 herd health monitoring or labor -saving robotics 00:11:12.529 --> 00:11:14.409 because you're just trying to manage cash flow 00:11:14.409 --> 00:11:16.590 month to month, making payroll, paying the feed 00:11:16.590 --> 00:11:20.549 bill. Survival trumps transformation. So where 00:11:20.549 --> 00:11:22.919 is the big innovation happening then? according 00:11:22.919 --> 00:11:26.100 to this source. They point overseas, places like 00:11:26.100 --> 00:11:29.500 New Zealand, Denmark, the Netherlands, countries 00:11:29.500 --> 00:11:32.879 that seem to blend market signals with some strategic 00:11:32.879 --> 00:11:36.460 long -term support. They mention successful breeding 00:11:36.460 --> 00:11:39.000 programs that really balance production with 00:11:39.000 --> 00:11:40.940 health and longevity traits, not just chasing 00:11:40.940 --> 00:11:43.700 one number. Interesting. They mention the U .S. 00:11:43.720 --> 00:11:45.840 Dairy Business Innovation Act too, right, with 00:11:45.840 --> 00:11:48.659 its funding boost. They do, but they frame it 00:11:48.659 --> 00:11:52.440 as sort of reactive, like, okay, our system isn't 00:11:52.620 --> 00:11:55.000 generating enough innovation organically, so 00:11:55.000 --> 00:11:57.080 let's create a program to try and force it. Ah, 00:11:57.279 --> 00:11:59.320 treating the symptom, not the cause. That's the 00:11:59.320 --> 00:12:01.539 implication. The source suggests both countries 00:12:01.539 --> 00:12:03.740 are so busy managing the problems within their 00:12:03.740 --> 00:12:06.679 systems, defending supply management, or navigating 00:12:06.679 --> 00:12:08.860 free market chaos, that they've stopped asking 00:12:08.860 --> 00:12:10.899 if the systems themselves are the root problem 00:12:10.899 --> 00:12:12.960 for innovation. And they put it bluntly, don't 00:12:12.960 --> 00:12:15.539 they? Yeah. The question is, when was the last 00:12:15.539 --> 00:12:17.860 time you heard about a truly revolutionary dairy 00:12:17.860 --> 00:12:20.120 farming innovation coming out of Canada or the 00:12:20.120 --> 00:12:22.659 U .S.? Are we just too busy defending our models? 00:12:22.879 --> 00:12:25.399 That idea of defending the past instead of building 00:12:25.399 --> 00:12:27.519 the future, that's a powerful theme here. Yeah. 00:12:27.580 --> 00:12:29.460 And it connects to another reality check the 00:12:29.460 --> 00:12:32.299 source provides around milk quality. Right, SEC, 00:12:32.720 --> 00:12:35.779 somatic cell count, key quality indicator. They 00:12:35.779 --> 00:12:38.279 cite the U .S. national DHI average dairy herd 00:12:38.279 --> 00:12:41.740 information average at 181 ,000 cells per ml 00:12:41.740 --> 00:12:45.830 back in 2023. Pretty good, objectively. Definitely. 00:12:46.009 --> 00:12:48.250 But then they compare it to Canada's regulatory 00:12:48.250 --> 00:12:52.029 maximum SEC, which is way up at 400 ,000. And 00:12:52.029 --> 00:12:54.009 even looking at competitive provincial averages 00:12:54.009 --> 00:12:57.669 in Canada, like Alberta's 205 ,000, well, the 00:12:57.669 --> 00:12:59.649 U .S. national average is actually lower. So 00:12:59.649 --> 00:13:01.710 what's the takeaway there, that U .S. milk is 00:13:01.710 --> 00:13:03.990 just better? Not necessarily better across the 00:13:03.990 --> 00:13:06.710 board. The source's point is more nuanced. It's 00:13:06.710 --> 00:13:09.320 that a higher regulatory standard like Canada's, 00:13:09.340 --> 00:13:11.460 doesn't automatically mean superior performance 00:13:11.460 --> 00:13:14.500 everywhere. Best farms in both countries achieve 00:13:14.500 --> 00:13:17.399 excellent quality, often way below any standard 00:13:17.399 --> 00:13:19.700 or average, but the systems create different 00:13:19.700 --> 00:13:21.879 incentives. In the U .S., the market pressure 00:13:21.879 --> 00:13:24.820 is intense, volume is key, so achieving high 00:13:24.820 --> 00:13:27.340 quality becomes a way for successful farms to 00:13:27.340 --> 00:13:30.549 differentiate and maybe capture premiums. In 00:13:30.549 --> 00:13:33.070 Canada, with more stability, the need to push 00:13:33.070 --> 00:13:35.730 quality far, far below the regulatory minimum 00:13:35.730 --> 00:13:38.450 might be less urgent for some operations. The 00:13:38.450 --> 00:13:41.429 drivers are different. Got it. So standards don't 00:13:41.429 --> 00:13:44.370 equal performance. Incentives matter. Exactly. 00:13:44.429 --> 00:13:47.110 And this fundamental incompatibility, these different 00:13:47.110 --> 00:13:49.850 incentives, they spill over into that ongoing 00:13:49.850 --> 00:13:52.110 friction we often see labeled as a trade war. 00:13:52.289 --> 00:13:53.730 Yeah, the one the source says nobody's really 00:13:53.730 --> 00:13:56.269 winning. Right. You see the headlines, U .S. 00:13:56.289 --> 00:13:59.429 dairy exports booming. And the source confirms 00:13:59.429 --> 00:14:02.370 at $8 .2 billion in 2024, second highest ever. 00:14:02.610 --> 00:14:05.149 And Canada is importing more U .S. dairy to a 00:14:05.149 --> 00:14:08.230 record $1 .14 billion. Sounds like trade is working 00:14:08.230 --> 00:14:10.990 then. But here's the catch. According to the 00:14:10.990 --> 00:14:13.330 source, they look at the actual market access, 00:14:13.590 --> 00:14:16.450 specifically the fill rates for U .S. tariff 00:14:16.450 --> 00:14:19.409 rate quotas, the TRQs. That's the amount agreed 00:14:19.409 --> 00:14:21.389 upon that can come into Canada at lower tariffs. 00:14:21.490 --> 00:14:25.309 The average fill rate, a pretty dismal 26 .72 00:14:25.309 --> 00:14:29.059 % for the calendar year allocations. So barely 00:14:29.059 --> 00:14:32.200 over a quarter of the agreed -upon quota is actually 00:14:32.200 --> 00:14:35.159 being used. Why? If the products are needed or 00:14:35.159 --> 00:14:38.580 wanted. The source points to how Canada allocates 00:14:38.580 --> 00:14:41.279 those import quotas. They tend to give them overwhelmingly 00:14:41.279 --> 00:14:44.500 to domestic processors, existing players. Who 00:14:44.500 --> 00:14:47.220 might prefer to use Canadian milk anyway? Precisely. 00:14:47.220 --> 00:14:49.320 Rather than giving them to companies whose main 00:14:49.320 --> 00:14:51.899 business would be importing. So the negotiated 00:14:51.899 --> 00:14:54.419 access gets effectively neutered by the allocation 00:14:54.419 --> 00:14:57.200 method. The U .S. has even won dispute panels 00:14:57.200 --> 00:14:59.980 on this, lost one too. But the source says it's 00:14:59.980 --> 00:15:02.899 resulted in virtually zero real change in market 00:15:02.899 --> 00:15:05.299 penetration. So it's not just trade rules, it's 00:15:05.299 --> 00:15:07.539 the systems fundamentally clashing. That's the 00:15:07.539 --> 00:15:09.799 argument. Like the source says, you can't fix 00:15:09.799 --> 00:15:12.039 a vacuum leak on your milking system with diplomatic 00:15:12.039 --> 00:15:14.860 talks. The underlying mechanics are incompatible. 00:15:14.960 --> 00:15:16.600 That brings us back to another point of contention, 00:15:16.700 --> 00:15:19.659 the cost to the consumer. The shell game, as 00:15:19.659 --> 00:15:21.220 the source calls it. Yeah. On the surface, it 00:15:21.220 --> 00:15:23.559 looks simple. Milk costs Canadians, what, about 00:15:23.559 --> 00:15:26.899 $4 .81 a gallon? Americans pay around $3. Case 00:15:26.899 --> 00:15:29.340 closed, right? Canada's expensive. But the source 00:15:29.340 --> 00:15:31.740 says, hold on. Don't just look at the sticker 00:15:31.740 --> 00:15:34.019 price. It's like assuming the cheapest bag of 00:15:34.019 --> 00:15:35.899 feed is always the most economical choice for 00:15:35.899 --> 00:15:38.200 your cows. You got to look deeper. And the deeper 00:15:38.200 --> 00:15:41.559 dive reveals. That critical data point. The 2015 00:15:41.559 --> 00:15:45.320 analysis suggesting 73%, nearly three quarters 00:15:45.320 --> 00:15:48.259 of total U .S. dairy farmer returns came from 00:15:48.259 --> 00:15:50.779 government support programs. That was estimated 00:15:50.779 --> 00:15:54.860 at $22 .2 billion in subsidies that year. Wow. 00:15:55.840 --> 00:15:58.600 73%. Compare that to Canada, the source points 00:15:58.600 --> 00:16:00.970 out. Farmers there get their income directly 00:16:00.970 --> 00:16:03.789 from the marketplace via regulated pricing, which 00:16:03.789 --> 00:16:05.850 includes their cost of production. There aren't 00:16:05.850 --> 00:16:08.110 those massive direct government price subsidies 00:16:08.110 --> 00:16:10.210 flowing in the same way. So the source flips 00:16:10.210 --> 00:16:13.289 the script. The question becomes, who is really 00:16:13.289 --> 00:16:15.549 paying more for their milk? Is it the Canadian 00:16:15.549 --> 00:16:18.490 consumer paying directly at the till? Or is it 00:16:18.490 --> 00:16:20.710 the American taxpayer, whether they drink milk 00:16:20.710 --> 00:16:23.049 or not, funding the system through federal programs 00:16:23.049 --> 00:16:26.149 like DMC or the price floors in the FMMOs? And 00:16:26.149 --> 00:16:29.960 the answer is complicated. Very. The source concludes 00:16:29.960 --> 00:16:32.120 it depends entirely on your situation, your tax 00:16:32.120 --> 00:16:35.299 bracket, how much milk you buy, and also what 00:16:35.299 --> 00:16:38.539 you value more as a society. Food security and 00:16:38.539 --> 00:16:41.539 farmer stability or pure market efficiency. They 00:16:41.539 --> 00:16:43.419 use another analogy there too, right? Yeah, like 00:16:43.419 --> 00:16:46.120 choosing between investing in a super precise 00:16:46.120 --> 00:16:49.059 TMR feeding system versus managing pastures. 00:16:49.200 --> 00:16:51.659 One has high upfront costs and controls. The 00:16:51.659 --> 00:16:53.980 other is variable, maybe cheaper sometimes, different 00:16:53.980 --> 00:16:57.590 risks. No single right answer for everyone. Okay, 00:16:57.629 --> 00:17:00.629 shifting gears a bit. The source flags an uncomfortable 00:17:00.629 --> 00:17:04.170 reality facing both systems right now. A shared 00:17:04.170 --> 00:17:06.450 crisis. The generational transfer issue? Yeah, 00:17:06.549 --> 00:17:08.490 this is a big one. The source is pretty blunt. 00:17:08.589 --> 00:17:12.049 They say both systems are, in a way, aging out 00:17:12.049 --> 00:17:14.849 of existence. Oof, how so? Well, for Canada, 00:17:14.950 --> 00:17:17.890 it comes back to those quota values. While they're 00:17:17.890 --> 00:17:20.329 great equity for existing farmers, they create 00:17:20.329 --> 00:17:22.289 what the source calls insurmountable barriers 00:17:22.289 --> 00:17:24.829 for young people trying to get in without... 00:17:25.079 --> 00:17:27.140 inheriting the farm or having access to millions 00:17:27.140 --> 00:17:29.559 in capital. Starting from scratch is almost impossible 00:17:29.559 --> 00:17:32.259 financially. That's the picture painted. And 00:17:32.259 --> 00:17:34.700 for the U .S., what's the barrier there? Market 00:17:34.700 --> 00:17:38.339 volatility. The source argues that the constant 00:17:38.339 --> 00:17:40.539 risk, the high chance of those negative income 00:17:40.539 --> 00:17:43.119 years we talked about, makes dairy farming an 00:17:43.119 --> 00:17:46.180 impossible business plan for many young entrants. 00:17:46.299 --> 00:17:49.599 Unless you inherit significant assets or have 00:17:49.599 --> 00:17:52.380 an unusually high tolerance for financial risk, 00:17:52.640 --> 00:17:55.519 maybe even an irrational one. So it's not that 00:17:55.519 --> 00:17:57.460 young people don't want to work hard. No, the 00:17:57.460 --> 00:17:59.720 source is clear on that. It's not about willingness 00:17:59.720 --> 00:18:02.640 to work. It's that the entry points are structurally 00:18:02.640 --> 00:18:06.140 broken in different ways. Canada, financially 00:18:06.140 --> 00:18:09.099 impossible for many. U .S., economically irrational 00:18:09.099 --> 00:18:11.920 without a huge safety net. And while both systems 00:18:11.920 --> 00:18:14.319 are wrestling with these internal problems, succession, 00:18:14.660 --> 00:18:17.980 costs, innovation, the source throws a curveball. 00:18:18.079 --> 00:18:19.759 They say the really big disruption is coming 00:18:19.759 --> 00:18:21.539 from outside. Yeah, this is the part that should 00:18:21.539 --> 00:18:23.539 probably keep people up at night. They argue 00:18:23.539 --> 00:18:25.380 that both systems are kind of navel -gazing, 00:18:25.380 --> 00:18:28.500 debating internal rules while a tidal wave is 00:18:28.500 --> 00:18:30.599 building offshore. And they list the specific 00:18:30.599 --> 00:18:33.339 threats, things that bypass the traditional cow 00:18:33.339 --> 00:18:36.609 model entirely. Like what? Okay, first. Plant 00:18:36.609 --> 00:18:40.029 -based alternatives. Already grabbing significant 00:18:40.029 --> 00:18:43.630 consumer trial 20, 30 % in some surveys. People 00:18:43.630 --> 00:18:45.369 are trying them. We see that on the shelves. 00:18:45.630 --> 00:18:48.569 Then precision fermentation. This is the tech 00:18:48.569 --> 00:18:50.829 that can create identical dairy proteins way. 00:18:51.230 --> 00:18:54.430 Casein in a lab using microbes. No cows needed. 00:18:54.630 --> 00:18:57.400 Wow. Identical proteins. And looking further 00:18:57.400 --> 00:19:00.440 out, but developing fast cellular agriculture, 00:19:00.759 --> 00:19:03.579 actually producing real milk from cell cultures 00:19:03.579 --> 00:19:05.880 in a bioreactor. And the source points out the 00:19:05.880 --> 00:19:07.660 money flowing into these alternatives, right? 00:19:07.759 --> 00:19:10.980 Absolutely dwarfs traditional dairy R &D budgets. 00:19:11.099 --> 00:19:13.700 Investment is pouring into alt proteins. So what's 00:19:13.700 --> 00:19:15.200 the impact of all this, according to the source? 00:19:15.480 --> 00:19:18.220 The critical point is... These new technologies 00:19:18.220 --> 00:19:21.339 don't care about supply management quotas. They 00:19:21.339 --> 00:19:24.339 don't need huge land bases for economies of scale 00:19:24.339 --> 00:19:26.900 like traditional dairy. They operate on totally 00:19:26.900 --> 00:19:29.579 different principles. Meaning, the source argues 00:19:29.579 --> 00:19:32.480 they render both the Canadian and the US systems 00:19:32.480 --> 00:19:36.339 equally obsolete. Trying to defend either system 00:19:36.339 --> 00:19:38.359 against this kind of fundamental technological 00:19:38.359 --> 00:19:41.140 shift. It's like trying to protect the jobs of 00:19:41.140 --> 00:19:43.240 people milking by hand when the milking machine 00:19:43.240 --> 00:19:46.319 was invented. The game itself is changing. That 00:19:46.319 --> 00:19:48.000 really reframes the whole debate, doesn't it? 00:19:48.019 --> 00:19:50.180 Protect this system or that system. Yeah. What 00:19:50.180 --> 00:19:52.339 if both are facing the same existential threat? 00:19:52.500 --> 00:19:54.180 Exactly. But the source doesn't just leave you 00:19:54.180 --> 00:19:56.920 hanging there in despair. They offer a way forward, 00:19:57.039 --> 00:20:00.140 a strategic framework, things successful farms 00:20:00.140 --> 00:20:02.579 should focus on no matter which system they're 00:20:02.579 --> 00:20:05.440 stuck in or operating within. Okay. What's the 00:20:05.440 --> 00:20:08.799 framework? Three main areas. First, focus like 00:20:08.799 --> 00:20:11.380 a laser on what you can control. The fundamentals. 00:20:11.660 --> 00:20:14.849 Yep. Milk quality parameters, consistency. cow 00:20:14.849 --> 00:20:17.450 comfort, longevity metrics, driving operational 00:20:17.450 --> 00:20:20.809 efficiency everywhere, feed, labor, energy, resource 00:20:20.809 --> 00:20:23.829 optimization. Nail these basics. They're universal. 00:20:24.069 --> 00:20:26.390 Makes sense. What's second? Diversify your risk 00:20:26.390 --> 00:20:28.289 strategically. And this looks different depending 00:20:28.289 --> 00:20:30.849 on where you are. For Canadian farmers, maybe 00:20:30.849 --> 00:20:33.349 it's leveraging that quota stability. Use it 00:20:33.349 --> 00:20:34.930 to make those long -term investments we talked 00:20:34.930 --> 00:20:37.210 about, sustainability, maybe even some on -farm 00:20:37.210 --> 00:20:39.630 processing. Things that are harder to finance 00:20:39.630 --> 00:20:42.630 when income swings wildly. Okay. And for U .S. 00:20:42.630 --> 00:20:45.279 farmers? Develop multiple revenue streams. Don't 00:20:45.279 --> 00:20:48.039 be solely reliant on that volatile commodity 00:20:48.039 --> 00:20:51.000 milk check. Maybe it's custom work, niche products, 00:20:51.359 --> 00:20:55.539 agritourism, renewables. Get creative. And for 00:20:55.539 --> 00:20:58.079 both systems, invest in tech that reduces your 00:20:58.079 --> 00:20:59.660 dependence on labor because that's only getting 00:20:59.660 --> 00:21:01.779 tougher and more expensive. Got it. Control the 00:21:01.779 --> 00:21:04.039 controllables, diversify risk. What's the third 00:21:04.039 --> 00:21:07.079 leg? Build adaptive capacity. This means keeping 00:21:07.079 --> 00:21:10.420 your finger on the pulse. Monitor consumer trends. 00:21:10.539 --> 00:21:13.359 What do people want regarding health? sustainability 00:21:13.359 --> 00:21:16.099 convenience don't ignore it be market aware and 00:21:16.099 --> 00:21:18.480 build relationships with your processor explore 00:21:18.480 --> 00:21:20.680 opportunities for differentiated products not 00:21:20.680 --> 00:21:24.279 just lowest cost commodity and critically Invest 00:21:24.279 --> 00:21:27.420 in data systems. You need good information to 00:21:27.420 --> 00:21:29.720 make fast, smart decisions when things inevitably 00:21:29.720 --> 00:21:32.079 change. What's really interesting is the source 00:21:32.079 --> 00:21:34.079 observes that the most successful farms, the 00:21:34.079 --> 00:21:36.099 ones really thriving in both Canada and the U 00:21:36.099 --> 00:21:38.619 .S., they're already doing this stuff. Yeah, 00:21:38.680 --> 00:21:41.319 implicitly or explicitly, they share these traits. 00:21:41.440 --> 00:21:43.180 It's fascinating. What are those shared traits? 00:21:43.480 --> 00:21:45.839 Intense focus on the fundamentals they control. 00:21:46.380 --> 00:21:50.200 Quality. cow comfort, efficiency. They find ways 00:21:50.200 --> 00:21:53.000 to diversify or manage risk within their system's 00:21:53.000 --> 00:21:55.940 constraints, using quota stability in Canada, 00:21:56.160 --> 00:21:59.079 finding other income in the U .S. They invest 00:21:59.079 --> 00:22:02.400 in their people. Big one. Skilled, motivated 00:22:02.400 --> 00:22:05.500 teams run farms, not just systems. People are 00:22:05.500 --> 00:22:08.940 key. And maybe the biggest trait, they adapt. 00:22:10.149 --> 00:22:12.650 They're always looking, learning, adjusting. 00:22:12.990 --> 00:22:15.230 It goes back to that neighbor's grass idea, doesn't 00:22:15.230 --> 00:22:17.049 it? Right. It's not greener because the system's 00:22:17.049 --> 00:22:19.089 magic. Yeah. The successful farms are just using 00:22:19.089 --> 00:22:21.069 smarter management tailored to their reality. 00:22:21.309 --> 00:22:23.509 Exactly. And the source's big conclusion about 00:22:23.509 --> 00:22:25.880 the path forward is this. The future belongs 00:22:25.880 --> 00:22:28.259 to farms that learn from the best of both worlds. 00:22:28.400 --> 00:22:30.640 How do you mean? Combining that long -term thinking 00:22:30.640 --> 00:22:33.160 and stability that quota can provide with the 00:22:33.160 --> 00:22:35.420 relentless focus on efficiency and innovation 00:22:35.420 --> 00:22:38.420 that competition can drive, it's like breeding. 00:22:38.640 --> 00:22:41.880 Right. You want proven reliability, but you also 00:22:41.880 --> 00:22:44.579 need cutting -edge genetics for progress. You 00:22:44.579 --> 00:22:47.529 need both. But the source is really clear. The 00:22:47.529 --> 00:22:50.410 answer isn't for Canada to become the U .S. or 00:22:50.410 --> 00:22:52.930 the U .F. to adopt supply management. Absolutely 00:22:52.930 --> 00:22:55.609 not. They stress that point hard. Solving either 00:22:55.609 --> 00:22:58.069 system's problems isn't about copying the other 00:22:58.069 --> 00:23:01.549 guy. The solution is forward, not sideways. The 00:23:01.549 --> 00:23:04.029 real story, then, isn't the decades -old SM versus 00:23:04.029 --> 00:23:07.049 free market debate? No. The real story, according 00:23:07.049 --> 00:23:09.670 to the source, is how everyone individual farms 00:23:09.670 --> 00:23:12.150 entire systems adapts when the fundamental rules 00:23:12.150 --> 00:23:14.849 change. Like when new tech comes along and potentially 00:23:14.849 --> 00:23:18.279 makes the old way obsolete. the test wow okay 00:23:18.279 --> 00:23:20.559 this deep dive pulling from the source material 00:23:20.559 --> 00:23:23.480 yeah it's given us a huge amount to process some 00:23:23.480 --> 00:23:26.140 pretty challenging ideas it really has and the 00:23:26.140 --> 00:23:27.779 source doesn't let you off the hook easily it 00:23:27.779 --> 00:23:30.359 ends by posing some final really critical questions 00:23:30.359 --> 00:23:32.380 directly to you the listener questions about 00:23:32.380 --> 00:23:34.259 your farm's future yeah they cut right to the 00:23:34.259 --> 00:23:37.539 core for you the canadian farmer they ask In 00:23:37.539 --> 00:23:39.839 this world of improving affordable plant -based 00:23:39.839 --> 00:23:43.339 options, how long can you realistically ask consumers 00:23:43.339 --> 00:23:46.440 to pay significantly more at the checkout to 00:23:46.440 --> 00:23:49.680 subsidize farmer stability? Tough question. And 00:23:49.680 --> 00:23:52.279 for you, the American farmer, how sustainable 00:23:52.279 --> 00:23:55.160 truly is a system that seems to rely on negative 00:23:55.160 --> 00:23:58.940 average farm income most years, requires billions 00:23:58.940 --> 00:24:02.059 in taxpayer support, and pushes relentless consolidation 00:24:02.059 --> 00:24:05.059 just to function? It may be the biggest question. 00:24:05.400 --> 00:24:07.640 hitting both sides of the border. How does either 00:24:07.640 --> 00:24:09.839 of your current systems really adapt or even 00:24:09.839 --> 00:24:12.720 survive when the basic premise that dairy products 00:24:12.720 --> 00:24:15.579 fundamentally require dairy cows starts to become 00:24:15.579 --> 00:24:18.119 technologically optional? What's your farm's 00:24:18.119 --> 00:24:20.700 actual concrete strategy for navigating this 00:24:20.700 --> 00:24:22.519 post -traditional dairy world that's clearly 00:24:22.519 --> 00:24:24.319 starting to take shape? Because the source is 00:24:24.319 --> 00:24:26.259 emphatic. It doesn't matter if you milk 50 cows 00:24:26.259 --> 00:24:28.960 or 5 ,000. Thinking about that future, planning 00:24:28.960 --> 00:24:30.920 for it, that's the most important conversation 00:24:30.920 --> 00:24:33.799 you should be having right now. Look. This industry 00:24:33.799 --> 00:24:36.180 has shown incredible resilience before, right? 00:24:36.440 --> 00:24:40.160 We went from hand milking to robots, local markets 00:24:40.160 --> 00:24:43.599 to global trade, eyeballing bulls to genomic 00:24:43.599 --> 00:24:47.559 deep dives. Change happens. But that past survival 00:24:47.559 --> 00:24:50.160 doesn't guarantee future survival for every single 00:24:50.160 --> 00:24:52.720 farm. Things change. And the final word from 00:24:52.720 --> 00:24:54.980 the source is pretty clear on who wins. Yeah. 00:24:55.359 --> 00:24:57.720 The farms that thrive won't be the ones clinging 00:24:57.720 --> 00:24:59.940 to and defending the past. They'll be the ones 00:24:59.940 --> 00:25:02.720 actively building the future, investing in adaptation. 00:25:03.140 --> 00:25:04.960 Regardless of which side of that border they 00:25:04.960 --> 00:25:07.420 happen to be on. That's the challenge and the 00:25:07.420 --> 00:25:10.180 opportunity. A powerful place to leave it. Thanks 00:25:10.180 --> 00:25:12.240 for joining us for this deep dive. That wraps 00:25:12.240 --> 00:25:15.019 up today's deep dive into the great dairy divide 00:25:15.019 --> 00:25:18.579 between Canada and the United States. If this 00:25:18.579 --> 00:25:20.960 analysis challenged your thinking about dairy 00:25:20.960 --> 00:25:23.480 systems, and it should have, then we've done 00:25:23.480 --> 00:25:26.960 our job. The reality is, both systems are facing 00:25:26.960 --> 00:25:29.240 disruption that makes their current philosophical 00:25:29.240 --> 00:25:32.460 differences pale in comparison to what's coming. 00:25:33.119 --> 00:25:35.799 Whether you're operating under supply management 00:25:35.799 --> 00:25:39.299 or free market conditions, the farms that thrive 00:25:39.299 --> 00:25:42.619 will be those that stop defending the past and 00:25:42.619 --> 00:25:45.700 start building the future. Want to continue this 00:25:45.700 --> 00:25:51.019 conversation? Head over to www .thebullvine .com 00:25:51.019 --> 00:25:53.829 where you can read the full article. access additional 00:25:53.829 --> 00:25:56.390 resources, and join the discussion with dairy 00:25:56.390 --> 00:25:59.369 professionals from across North America. You'll 00:25:59.369 --> 00:26:02.789 find detailed analysis, industry insights, and 00:26:02.789 --> 00:26:05.369 the kind of forward -thinking content that keeps 00:26:05.369 --> 00:26:07.769 you ahead of the curve. Don't forget to subscribe 00:26:07.769 --> 00:26:10.789 to the Bullvine Podcast wherever you get your 00:26:10.789 --> 00:26:13.869 shows. And if today's episode got you thinking, 00:26:14.029 --> 00:26:16.869 share it with someone in your operation who needs 00:26:16.869 --> 00:26:19.940 to hear this perspective. Remember, the dairy 00:26:19.940 --> 00:26:23.180 industry has survived transitions from hand milking 00:26:23.180 --> 00:26:26.640 to robotics, from local sales to global markets, 00:26:26.779 --> 00:26:30.319 from visual breeding to genomic precision. But 00:26:30.319 --> 00:26:33.019 survival isn't guaranteed for every operation. 00:26:33.299 --> 00:26:36.119 The question is, are you ready for what comes 00:26:36.119 --> 00:26:39.099 next? This has been the Bullvine Podcast. I'm 00:26:39.099 --> 00:26:41.960 your host, and until next time, keep questioning, 00:26:42.140 --> 00:26:44.660 keep innovating, and keep building the future 00:26:44.660 --> 00:26:46.339 of dairy. Thanks for listening.