Actually, this isn’t a myth, but it is extremely misleading. It is a useful soundbite for supporters and politicians. Between 2010 and 2016, U.S. exports into Canada of ultra-filtered milk did indeed increase. This was because the Americans developed a new dairy protein product that could be used in processing butter and cheese, which was not covered by the original high tariff rules. Our own Canadian processors (including Agropur, one of our largest which, ironically, is a co-operative owned by a third of Canada’s dairy farmers) ramped up their purchases of the cheaper product from the U.S., and bought correspondingly less from Canadian producers. Under pressure from the dairy lobby, Ontario and then Canada reacted with the establishment of a new “Class 7,” to displace these cheaper U.S. imports with heavily subsidized pricing of milk for processing. To be clear, the U.S. dairy farmers are no angels in this debate. Their complaint of having to cut production is only because they had ramped it up in recent years to fill this loophole. They are only cutting back to the levels they were at a few years ago. But what happened with Class 7 is a symptom of the larger problem of supply management. Issues related to ultra-filtered milk and the imposition of Class 7 for Canadian milk are complex – they are symptoms of our system. And it is key to remember that the amount of dairy traded between the two countries is tiny compared to overall production. Most importantly, we do not sell much dairy to the U.S. simply because our system’s inflated prices aren’t competitive.
