Historically, Canada was positioned as a dairy exporter, particularly of cheese. In the period following World War 2, a confluence of factors (including improved milking technology and competition from margarine) created chronic surpluses and depressed prices. As the public costs of mitigating this situation increased, supply management was conceived as a way to address the surpluses and
low farm prices. The system has had to evolve to address a range of domestic and trade changes. The current milk supply management operates under three “pillars”: production controls (quota), administered pricing, and import controls. As conditions have changed, regulations under supply management have changed. As it has evolved, this regulation has extended beyond the necessary and created unintended operating costs and burdens. The challenge for the Canadian dairy industry and policy-makers is to retain the elements of supply management that maintain its functions and purpose, while allowing changes in other elements.