The OECD’s 2025 agricultural scorecard urges Ottawa to soften long‑standing support for dairy, poultry, and eggs. In the Canada chapter, the organisation says producer support in these supply‑managed sectors still distorts trade and keeps domestic prices elevated relative to market signals.
The suggested pathway is not a shock therapy. It is gradual and paired with productivity aims. The timing lands as grocery inflation cools but remains a political issue.
What Reform Could Mean For Prices
Supply management, which balances supply and demand through quotas, price setting, and import controls, is designed to stabilise farm income and ensure steady supply for consumers, according to the Farm Products Council of Canada.
The OECD argues these protections restrict market responsiveness and raise prices, then recommends more production and less price support over time.
In its words, “Reforms should be undertaken, involving larger production quotas and gradual reduction of price support.” For TSX names tied to dairy inputs, such as processors and packaged food makers, any shift would filter through to procurement costs and pricing strategies. For grocers, competitive dynamics could sharpen if wholesale prices adjust.
Ottawa Signals Support, Eyes Trade
Even as the OECD pushes reform, Ottawa is still backing supply‑managed processors, including a C$397.5 million program meant to modernise plants and offset trade impacts. The political framing remains clear. “Canada’s supply management system is the backbone of rural communities across the country and supports countless Canadian family farms,” the Honourable Lawrence MacAulay said.
Ottawa has defended its discretion over dairy tariff rate quotas under the CPTPP, stressing that rules allow Canada to set allocation policies, as it asserted in a September 5, 2023 Global Affairs Canada statement. One should expect any reform path to be sequenced alongside trade commitments and rural politics, which would be a very slow process.
Market And Policy Watchpoints
The near‑term question is pass‑through. If price supports ease, do retail prices adjust, and how quickly? Margins for processors could face a reset before efficiencies arrive. The OECD is also pressing for more focus on long‑term climate adaptation in agriculture, meaning more investment in resilient practices and innovation.
At the same time, the Competition Bureau has pushed to open the grocery market to more players, arguing that stronger rivalry can help on affordability, as set out in its grocery competition recommendations. Taken together, these signals point to pressure for efficiency, transparency, and discipline on pricing. For Ottawa, the balancing act is reform without destabilising rural economies.
