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Sylvain CharleboisOur supply management regime in recent months, particularly in dairy, has been under fire as a result of recent trade talks with both Europe and the Asian-Pacific region. But the public discourse ignores the fact that Canadians are consuming less dairy products.

Recent Statistics Canada data show that from 1995 to 2014 per-capita consumption of milk in Canada fell by 18 percent to 74 litres a year. Taking into account population growth, Canadians consumed approximately 20 million litres less milk in just one year, between 2013 and 2014. As our domestic milk market shrinks, few are suggesting ways of stimulating flagging domestic demand for what is arguably the most natural, wholesome food product there is.

Milk consumption is facing many hurdles. Demographics are generally working against the dairy sector, as the average age of Canadians rises. In fact, Canada has more than five million consumers who are 65 years old, or older. Aging baby boomers will either reduce their consumption of milk or outright eliminate milk from their diet altogether.

Changes in Canada’s ethnic makeup are also having an impact. Immigrants come from several parts of the world where milk is not perceived as a food staple but a luxury product. As new Canadians settle in, their culinary traditions can only negatively influence domestic dairy consumption.

One other phenomenon hitting the dairy sector particularly hard, is the rise of veganism. A recent study done for the Dairy Farmers of Canada found that a significant portion of the drop is a result of consumers believing that industrial farming practices are unethical. Even if this movement remains marginal, it would be a mistake for the dairy sector to not consider animal welfare as an important issue.

Welfare program for dairy industry won’t save it by Sylvain Charlebois

The recent rise in food prices has eroded the food industry’s impenetrability. More consumers are feeling that they are part of the value chain and can vote with their food purchases. Our collective awakening has been spectacular and has caught many by surprise, including the dairy sector. Both distributors and processors have been exposed to market pressures for years. Now, these systemic pressures are catching up to primary production. And, yes, that includes dairy farmers.

We can always drink more milk and consume more dairy products to meet our daily recommended servings, as suggested by our government-sanctioned food guide. But looking at a variety of systemic pressures, a strategy purely based on ‘selling’ milk like the Dairy Farmers of Canada’s Get Enough campaign is simply silly. Year after year, dairy farmers spend almost $100 million in advertising just to reinforce the fact that we need to drink milk, and yet consumption per capita has continued to decline. Very few agricultural groups can afford such lavish campaigns.

Many Canadians are slowly figuring out ways to get protein, calcium and other nutrients from different sources. Many consumers have opted for alternatives such as almond, soy and rice milk. Unless the dairy sector gets more creative, this trend will continue. A shift from chain management to supply management is needed in Canada to better understand consumers. We have seen some innovation in Canada, but not nearly enough. Most new products were developed to respond to supply-focused needs and relied on a push-driven strategy. Better analytics, better research, and more market-based innovation can only lead to more prosperity for the sector.

Nobody knows if greater prosperity can be achieved with our current supply management regime. It is unfortunate that the Dairy Farmers of Canada seem to believe that the current approach is appropriate. It will only lead to further market contraction and fewer dairy farms. Since we have lost more than 108,000 dairy farms in Canada since 1970, it is high time for a different method.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

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