In September 2012, police in Canada’s Niagara region announced that they had busted a cross-border smuggling ring. The contraband? Cheese.
This international criminal conspiracy was not exactly sophisticated, as it came out at trial. It involved people buying cases of cheese in the United States, driving them back across the border into Canada without declaring the goods, and selling the ill-gotten product to local pizzerias. This “Mozzarella Mafia” scheme lasted for years, during which the ringleader, himself a police officer, pocketed an estimated U.S.$165,000 in profit. The reason this was so lucrative was Canada’s agricultural policy known as “supply management,” which results in milk and cheese prices that are as much as three times higher in Canada than in the United States. If this rings a bell, it might be because President Donald Trump has repeatedly attacked Canada during NAFTA talks over the past year for being “unfair” to American dairy farmers.
Canada’s supply-management system dates back to the 1970s. It first encompassed dairy and was later expanded to eggs and poultry. Strict production quotas limit the domestic supply of these products and raise prices, while tariffs of about 250 percent to 300 percent keep cheaper American dairy effectively out of the market. Paying more for dairy isn’t something voters clamor for, but the system has remained in place for decades thanks to the power of the Canadian dairy industry, widely acknowledged as the most fearsome lobby group in politics. Its deep pockets and ability to mobilize voters in key areas have made challenging supply management a politically risky bet. But this cozy arrangement could soon be coming to an end. Supply management is at the center of the biggest political shake-up in Canada in more than a decade, which could lead to the formation of a new breakaway political party that fractures the opposition Conservatives and all but guarantees Justin Trudeau another term as prime minister in next year’s elections. And the only person who could break the iron grip of the dairy cartel on Canadian politics could be Trump. Welcome to the strange world of Canadian dairy politics.
Federal elections in Canada usually come down to which party can win the two most populous provinces, Ontario and Quebec. It just so happens that the dairy industry is also centralized in those provinces, making politicians loath to challenge the system. And while the industry’s PR depicts dairy farmers as running mom-and-pop operations, most dairy farmers are millionaires. All three major national political parties still fall over themselves to sing the praises of the quota system, from the socialist-leaning New Democratic Party through the centrist Liberals led by Trudeau and all the way to the supposedly free market Conservatives.
That is, until recently.
After the Conservatives were kicked out of office in 2015 by Trudeau’s Liberals, the party set about finding a new leader to replace former Prime Minister Stephen Harper, who had managed to keep a fractious coalition of free marketeers, social conservatives, and old-line Tories more or less placated while sharing the spoils of government for a decade. But with the party out of power, those fractures came back to the fore. The race for party leader that followed in 2017 included 14 candidates from various wings of the party, conjuring images of the crowded GOP primary debates in the U.S. the previous year. There was even a reality-TV star turned candidate in the form of Shark Tank judge Kevin O’Leary, although he fared significantly worse than Trump.
The surprise front-runner ended up being Maxime Bernier, a square-jawed French Canadian politician with a libertarian streak whose previous claim to fame was forgetting sensitive government documents at the home of a girlfriend who had links to organized crime. The central message for Bernier’s campaign was his ardent desire to scrap the supply-management system, and it seemed to resonate. Suddenly he was the man to beat—and beaten he was.
In a party convention to elect the new leader, Bernier saw his early lead get whittled away in successive rounds of runoff voting. On the 13th and final ballot, he lost by a razor-thin margin of 51 percent to 49 percent to Andrew Scheer, the dimple-cheeked establishment candidate who mounted a come-from-behind victory with the backing of none other than the dairy lobby. Scheer later joked about the power of Big Milk at the annual Ottawa Parliamentary Press Gallery Dinner, the Canadian equivalent of the White House Correspondents’ Dinner, where party leaders are expected to deliver self-deprecating speeches to an insider crowd. His biggest laugh of the night came when he said that, despite rumors to the contrary, he was not beholden to any special-interest groups, then proceeded to chug from a carton of milk.
While Bernier stayed quiet for a while, he soon became a thorn in the side of the new leader by continuing to voice his opposition to supply management, accusing dairy farmers of having infiltrated the Conservative Party to elect his rival. He also dabbled in some disturbing anti-immigration rhetoric. It all came to a head last month when Bernier dramatically announced he was quitting the Conservatives to form a new right-wing political party. A Conservative Party policy convention held that same weekend was thrown into chaos as a result, where delegates now wondered how Trudeau could possibly be stopped from re-election while the vote was split on the right. Meanwhile, in a comedic turn, a dairy lobbyist’s misplaced notes revealed an apparent backroom deal with the party leader to prevent any resolutions against supply management from ever becoming party policy, describing Scheer as a “safety net” against grassroots opposition. The briefing book even included a photo of Scheer drinking from that milk carton.
What all this means for Canadian politics is still unclear, but early polling suggests a new party led by Bernier could draw enough support to act as a spoiler for the Conservatives in next year’s federal election. More disturbingly, “Mad Max’s” pledge to reduce immigration to Canada could give voice to the country’s far-right forces, who see him a useful vehicle for their divisive politics. For now, Bernier is still mainly consumed by his opposition to the supply-management system, calling it a “political hijacking” in a recent newspaper opinion piece.
Surprisingly, the issue of the dairy lobby’s power could end up being resolved by Donald Trump. Canada’s dairy tariffs have been a key sticking point in ongoing talks between Canada and the U.S. over the renegotiation of NAFTA, and Trump has been attacking Canada’s protectionist policies since late last year, specifically singling out the dairy industry. It’s the perfect talking point for the president, who has upended numerous international relationships based on his belief that the United States is being taken for a ride. While Trump is usually wrong on the specifics of, say, NATO spending or trade deficits, he’s right about Canadian dairy. “Canada charges the U.S. a 270% tariff on Dairy Products! They didn’t tell you that, did they?” the president tweeted recently.
Many Canadian conservative pundits have been quietly hoping that Trump brings about the end of supply management once and for all, something the country’s leaders have been unable to do on their own. They might even escape the wrath of Big Milk by pinning the blame on an even more powerful force: the bullying American president.