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… if we want to keep (the quota system) we have to make sure it's serving the country well Sylvain Charlebois, scientific director of the Agri-Food Analytics Lab at Dalhousie University

“I’m not saying we should get rid of our quota system, but if we want to keep it we have to make sure it’s serving the country well,” he said. “Some dairy farmers are doing very well and reinvesting in their farms and becoming more competitive, but others are just drifting and that’s costing a lot of money. If farmers want to stay in the industry they should be made accountable for their productivity or they should be enticed to exit.”

The market access granted under Canada’s latest trade deals represents a direct loss of profits that the government promised to cover, said Murray Sherk, chair of the board for the Dairy Farmers of Ontario.

“Dairy doesn’t like to look to the government for payments; we’d rather have the market share but we’re very pleased with the package,” he added. “And supply management provides a system of predictable pricing that encourages farmers to invest more in their operations, to be more efficient.”

The extra cash flowing into dairy farms comes when they are already overcapitalized — creating a problem for the next generation of farmers, said Al Mussell, research lead at Agri-Food Economic Systems in Guelph, Ont. Indeed, though an ideal return on assets like land and equipment is roughly five per cent, the data suggest Canadian farmers are currently realizing returns of just two to three per cent.

“They’re over-capitalized and drowning in their own capital,” Mussell said. “That might not seem like a problem but it’s sitting there in the land and all these assets. When it’s time to transfer the farm to the next generation, how are they going to afford it?”