OECD recommends Canada reform supply management policy

Cows are seen in a dairy farm in Granby, Que., Wednesday, Feb. 5, 2025. THE CANADIAN PRESS/Christinne Muschi

A report from the Organisation for Economic Co-operation and Development says Canada should gradually reduce the price support it provides to dairy, poultry and egg producers and focus on long-term climate adaptation for the agricultural sector.

The “Agricultural Policy Monitoring and Evaluation 2025” document released last week looks at 54 countries around the world and offers specific recommendations.

In the chapter dedicated to Canada, the OECD notes government support for the agricultural sector made up 8.2 per cent of gross farm receipts, a measure of revenue, between 2022 and 2024 and that level has been stable over the past decade. That’s less than half the level of two decades earlier and below the OECD average of 13.2 per cent.

However, the report points to outsized support in a few sectors — dairy, poultry and eggs — that it argues distorts production and trade, and inflates domestic prices.

Canada’s supply management policy controls production and imports of those products to prevent big price swings. It’s been one of the flashpoints in Canada-U.S. trade turmoil this year.

“These forms of protection hinder market responsiveness and discourage innovation in those sectors,” the OECD said in its report.

“Reforms should be undertaken, involving larger production quotas and gradual reduction of price support for greater efficiency and diversification into higher value products.”

The report noted Canada’s average tariff rate on agricultural products was 14.4 per cent, well above 2.2 per cent for non-agricultural products.

Canada can in theory charge tariffs of about 250 per cent on U.S. dairy imports over a set quota under the Canada-U.S.-Mexico trade agreement. But a U.S. dairy industry group has said that country has never come close to reaching that threshold.

Also in the report, the OECD said climate action “remains a key challenge for Canada’s agriculture,” noting that sector is largely exempt from the country’s emissions pricing schemes.

“As the frequency of weather-related adverse events increases, short-term risk management, already well developed, and medium-term support for resilient practices and innovation need to be complemented with more transformative longer-term strategies,” it said.

“Resources could be directed toward improving the long-term adaptive capacity of farmers and transforming production systems, alongside monitoring implementation progress in adaptation policy.”

This report by The Canadian Press was first published Nov. 3, 2025.

Lauren Krugel, The Canadian Press