Why Is Cheese So Expensive in Canada?

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It's a struggle most Canadian dairy lovers are familiar with: Cheese up there is so expensive that a pound of cheddar can end up costing more than a pound of steak. Our neighbors to the north aren’t exaggerating when they complain about steep cheese prices—costs are sometimes three times higher than comparable products sold in the States, and it’s not because the Canadian air makes cows pump out liquid gold. It’s all thanks to a little something called supply management.

Supply management is a blanket term used to describe the policies regulating Canada’s dairy (and egg and poultry) markets. The dairy industry works differently in Canada than it does in other cheese-loving parts of the world. Both the European Union and the United States subsidize their dairy farmers—the Canadian government does not. Instead, they use other ways to get farmers the financial support they need.

Minimum price-setting for domestic dairy products keeps cheese prices above a certain mark, while strict quotas and high taxes on imports keep foreign competition under control. International cheeses account for a tiny fraction of the market, so cheese made in France, Italy, and other places abroad is difficult to find outside specialty shops. The result is more profits for Canadian producers taken straight from the consumers’ pockets come check-out time.

When supply management was introduced to Canada in the 1960s and '70s, it served a clear purpose. The policies were put in place to protect farmers from unpredictable market fluctuations and keep their livelihoods secure. Since then many of the small family farms that were originally protected under the laws have been replaced with factory farms, and the relevance of supply management is now a topic of hot debate.

The laws aren't terribly popular among citizens (even police officers have been known to help smuggle cheese across the border), and it's not just because of the high grocery bills. Opponents argue that the regulations are bad for innovation, free trade negotiations, and restaurateurs. Canadian farmers still insist the benefits outweigh the costs. On the Dairy Farmers of Canada’s web page, they write:

"While farmers around the world face unexpected and inexplicable wild market fluctuations, Canadian farmers sell their milk at constant and stable prices. As a result, Canadian dairy farming is one of the few agricultural sectors that are self-sufficient – providing income security for farmers and requiring no government subsidy. This means Canadian farmers can invest in their farms, communities and Canada."

Because farmers hold significant power in Canadian politics, supply management boasts supporters from every major party. But not all hope is lost for Canadian connoisseurs of affordable cheese. Progress on their front was made last year when a trade deal was signed slightly increasing the quota on foreign dairy imports. Consumers may benefit from the resulting price cuts, while Canadian farmers and processors will receive $4.3 billion from the government over 15 years to make up for the revenue loss. So next time you enjoy a plate of poutine, feel free to be a little less conservative with the cheese curds.