A sign featuring an image of Canada's Prime Minister Justin Trudeau is seen as dairy farmers protest against imported milk products in front of Parliament Hill in Ottawa.

Canada's heavily protected dairy industry is again the target of New Zealand dairy companies which have joined US, Australian, European, and Mexican dairy organisations in taking a case against Canada to the World Trade Organisation.

Dairy Companies Association of New Zealand (DCANZ) wants the WTO to take action if Canada continues with a planned extension to its dairy trade protections.

They say an agreement between Canadian dairy producers and processors would provide an incentive to substitute Canadian dairy ingredients for imported dairy ingredients and would unfairly subsidise exports of Canadian dairy products.

The agreement would provide a guaranteed price for milk used to manufacture ingredient dairy products, including skim milk powder and milk protein concentrate, which is below Canada's cost of milk production, and which matches the lowest globally traded reference price for these products.

"This will result in trade diversion and global price suppression. It contravenes Canada's WTO obligations and undermines the intent of the TPP agreement that Canada signed earlier this year", DCANZ executive director Kimberly Crewther said.

A 2014 paper written by Canadian academic and former Liberal MP Martha Hall Findlay says it costs a Canadian family about $300 a year to prop up the dairy industry.

The Canadian government slaps on quotas of 246 percent for cheese, and almost 300 percent for butter.

Outside key dairy electorates, the supply management system that protects farmers is not popular.

"The economic and stability benefits of trade will only be realised if all countries back political rhetoric up with action. This starts with honouring existing commitments under the WTO and other agreements," Crewther said.

Canada was lambasted by the New Zealand farming lobby at the time of last year's TPP negotiations in Hawaii for standing in the way of a good deal for dairy.

New Zealand has previously taken and won a WTO case against Canada for use of illegal export subsidies.