By Christopher Kelly-Bisson (@chrysbisson)

Images of cows and tractors on Parliament Hill may make a lot of people question how milk has suddenly become such a hot election issue. Supply management seems to have popped out of nowhere but it is an issue that has lingered quietly beneath the surface of the Canadian political dialogue for decades.

Farmers first organized in the 1930s under the Canadian Dairy Farmers Federation, which quickly gained tremendous lobbying power over the Federal Government. The globalization of commodity milk markets in the 1950s created price instability that led Canadian farmers to pressure the government to establish the Canadian Dairy Commission.

Canada’s supply management system for dairy was first established in 1970 under the National Milk Marketing Plan coupled with a new substantial regime of tariffs on imported dairy products.

The system works with the Federal Government monitoring demand and then setting a national production quota. Quotas are then delegated to the provinces to sell to farmers. This quota system ensures that milk that is produced comes as close as possible to the amount that will be purchased so that the commodity price remains stable. Tariffs on imports then ensure that foreign dairy producers will not undercut the domestic price.

The Canadian supply management system proved its worth when Canadian dairy producers were relatively sheltered from the collapse of the global milk market due to oversupply in the mid-1970s. However, farmers were still heavily hit by the collapse and demanded a subsidy from the Federal Government. When the P.E. Trudeau Administration refused to subsidize losses in the dairy industry, angry farmers demonstrated their power in Quebec by lending massive support to the election of the first Parti Québécois government in 1976.

Global milk markets eventually recovered and Canada’s supply management system remained unchanged with the exception of quota increases in line with demand growth. The system managed to resist threats to increasing pressure from free-market ideology in government until fairly recently.

The Bloc Québécois even managed to pass a bill in the House of Commons in 2005 ensuring that Canada would not compromise its supply management system at the World Trade Organization (WTO) ministerial negotiations in Hong Kong. It was starting to appear that even amid the dizzying canter towards neoliberalism that took place under Mulroney and the Chrétien-Martin Liberals, the Canadian supply management system was a sacred cow among public institutions.

This even appeared to be the case for the Harper Government. They took steps to gain entrance into the ongoing negotiations for a Pacific-ring free-trade zone in 2010, insisting that Canadian supply management would not be a barrier. However, Canada’s entrance into the negotiations was rumoured to have been blocked by the United States and New Zealand due specifically to concerns over their supply management and tariff system.

In early 2012 – after a few years of pressure for Harper to secure a spot in the treaty – cracks began to appear in the government’s commitment to supply management with reports emerging and senior government sources confirming to the CBC that the government might be willing to compromise in order to enter into negotiations.

A year later, a breakthrough was made in a trade deal with the European Union (EU), the Comprehensive Economic and Trade Agreement (CETA), with an agreement in principle signed between Canada and the European Commission. Canadian supply management was not compromised in the agreement; however, concessions were made allowing European producers access to 2 per cent of the Canadian cheese market.

To compensate for the loss in domestic market share and to compete with subsidized European dairy imports, Canada implemented a $400 million subsidy for cheese producers. New Zealand and the United States then immediately took the case to the World Trade Organization, which ruled against Canada for violating trade laws regarding subsidies.

In 2014, the Russian trade embargo on the EU and the Chinese economic crisis resulted in a reduction in dairy exports from Europe. This coincided with the EU’s decision to scrap their 30-year-old supply management system and resulted in massive farmers’ protests in France and Belgium throughout the summer of 2015. France ended up having to subsidize producers in the order of €1 billion and to place a one year hold on debt repayments. However, this did nothing to stabilize falling prices. When the subsidy period runs out, farmers will once again be left exposed to global markets.

Watching the events in Europe unfold, the Harper Government found itself in a very awkward position. In the early summer of 2015, the United States began to grow frustrated over the lack of progress over the TPP and suggested that they might go ahead with the treaty with or without Canada.

By August, there was strong suspicion that a concession on supply management was imminent. Conservatives were certain that this proximity to a breakthrough in TPP negotiations would secure an election-ready victory on which they could run in the 2015 election campaign. However, negotiations hit various snags and the Conservatives found themselves in the dubious position of negotiating a trade deal during an election campaign, which is arguably against the caretaker convention of incumbent governments – which even New Zealand pointed out.

In September, Quebec farmers were getting worried about the imminent compromise and began mobilizing. They demonstrated on Sept. 26 on the lawn of the CBC headquarters in Montreal, the same day that the French-language election debates took place. News emerged the next day that the Canadian concessions submitted to the TPP would include 9 to 10 per cent market access for American dairy exports. This outraged dairy farmers in Ontario and Quebec, which is when they decided to organize a massive demonstration of tractors, cows, and spilled milk on Parliament Hill on Sept. 29.

That weekend in Atlanta, negotiations concluded with a deal signed the morning of October 5. Harper immediately announced in a press conference the terms of Canada signing the agreement: a 3.25 per cent concession of foreign dairy access to Canadian markets and a $4.3 billion subsidy for quota price losses over the next ten years. While the deal will certainly have a significantly negative impact on the Canadian dairy industry, many farmers were saying that this was a minor victory since the damage could have been worse.

Looking at the relative success of dairy farmers to protect supply management seems unique when seen through the lens of Canadian labour history. How were dairy farmers able to avoid the worst of neoliberal violence with such success through only a handful of spontaneous demonstrations? Their success can only be understood through the history of agricultural institutions, lobbying, and dairy farmer mobilization.

Collective dairy organizations are deeply embedded within the economies of Quebec and Ontario. Supply management is also woven throughout Canadian and provincial agricultural institutions resulting in an agricultural class suffused with a value for price stability rather than farm subsidies. Dairy farmer organizations have also been very successful in lobbying efforts with the Conservative Government. Finally, patriotic perceptions of “terroir” – that agricultural production holds a uniquely special quality to local identity – in Quebec has made dairy a cultural institution in the province/nation.

This all results in a class power among dairy farmers that is influential on a large number of potentially Conservative-voting Eastern Canadian ridings, specifically in areas where Harper is targeting his campaign, such as the Greater Toronto Area, Quebec City, and the Beauce. The timing of the election in addition to the Conservative Party’s close race with opposition parties has forced Harper to make concessions on his neoliberal agenda in accelerating Canada’s position in a globalized free-market economy. As a result, supply management remains safe for now but is nonetheless in a very compromised position, one that may find farmers feeling the heat of greater price volatility which could very well result in the closure of thousands of farms.

This article first appeared in The Leveller Vol.8, No.2 (October 2015).