Canada's Food Crisis: Trump Tariffs Hit April 2nd, Supply Management Under Fire

Vance Crowe [00:00:04] Welcome back to the podcast. I'm glad you're here today. I'm gonna break from doing my normal in-depth interviews with somebody or sharing one of the talks I gave recently because I think there's a subject that needs to be discussed. Many people in agriculture know about April 2nd as Liberation Day, and the rest of the United States has barely seen this as a blip on their radar. But when I was up in Canada just a couple of weeks ago, this is all everyone was talking about. In fact, it had been talked about so much that people were throwing up their hands and saying, I wish we weren't only talking about tariffs. But I think this is an important and probably momentous event that's about to happen. We could see this being one of the most consequential decisions in modern history because it's going to change our relationships, not just with Canada and Mexico, but with countries all over the world. And it isn't just the United States pushing on these other countries. Now, places like Canada and India are taking advantage of the uncontrolled situation and making their own bed to be able to sleep in in the future. So I wanted to find somebody that could come on and illuminate this subject in a way that nobody else could and that brought me to Sylvain Charlebois, otherwise known as the Food Professor on X. Now, I'll tell a little bit about how I encountered him in the episode, but I have to say there are very few people that have studied this issue quite as deeply as he has. And what we are going to hear now is a 30 minute conversation where we discussed what's going to happen, how did Canada get into this position, and how is this all going to play out between the two partners?

Vance Crowe [00:01:43] The food professor is an extraordinary commenter and actually has an amazing podcast called What Else But The Food Professor. So I hope you enjoy this conversation. I hope it illuminates what's about to happen and I think that everybody should mark this in their journal because there is the possibility that the world will never be the same after we have altered our trade relationships so dramatically as we are on April 2nd. We're gonna get to that in just a moment. But I did wanna mention about Legacy Interviews. We are just five weeks away from Mother's Day. And if you've been thinking about giving your mother something special, something she will never forget and something that would honor the years of sacrifice and dedication she gave to you, your family and her community, then consider doing a legacy interview. A legacy interview is where I sit down with your loved ones to discuss their life stories, where their ancestors came from, their childhood, how they spent their working years, their marriage, how they raise kids, and the wisdom that they've learned along the way. Many people that get this at the Mother's Days gift often realize, ah, this'll also be a way to get Dad to come down and tell his stories too, because you can do a full day legacy interview where I'll spend a couple of hours with your mother, getting her stories, with your father, getting his stories, and then we bring them both together and I record them as a couple. This is an extraordinary experience and the end result is an heirloom that you'll be able to pass on to future generations. Just imagine you with your kids, watching their grandparents tell the stories of their lives so that your kids can know you a little bit better, and you will always have that crystal clear memory of your parents and all the things that happened to them.

Vance Crowe [00:03:25] If you're interested in learning more, go to Legacy Interviews dot com. Alright, without further ado, let's head to this interview with the food professor. So the way that I found out about who you were was I was at the Grain Farmers of Ontario and your name got brought up I think on the stage and there were like kind of murmurs and you definitely have a polarizing impact on Canadian farmers. I think the supply managed people are, they were a little bit b bristly about you.

Sylvain Charlebois [00:03:52] Of course. Well, you were in Ontario and supply management is a big piece of, of, of the ag economy in that province. And it's the same in Quebec. And I do have some, some really specific opinions and and views on supply management. I actually do think it hurts agriculture in general. I'm not, I'm not, I'm not for abolishing the whole system 'cause there is, there is a legacy there that we need to recognize. We are north of, of the United States, and in the United States you have, you have hundred thousands of very competitive, efficient dairy farms. So overnight, if you were to abolish supply management, you would basically see the entire dairy sector in Canada collapse. And I'm not sure there's some appetite for that in Canada. So you have to think about some sort of bridge strategy from what we have now, which is highly inadequate to and not modern at all, to something more efficient, more competitive over time. And a couple of years ago we actually published a paper in a, in an academic journal and the title was called Supply Management 2.0. And that basically was the roadmap for the sector to become more competitive. So the course system would remain, but you would actually make some adjustments on, on the pricing formula. You would reform the Canadian Dairy Commission. You would certainly want to recognize opportunities outside of Canada as well. 'cause I do think that we produce good quality or products in Canada, but we just do it for ourselves.

Sylvain Charlebois [00:05:27] And so over time, that led to a, a very opaque system and no, really, nobody really understands the system altogether. So more transparency would probably allow cadence to understand what's at stake here.

Vance Crowe [00:05:41] I don't think any Americans had any concept of supply management or interprovincial tariffs until Trump mentioned tariffs. Yeah. But if you're in the United States right now, unless you are a grain trader, almost no one in the United States is talking about the tariffs that are gonna be implemented tomorrow. And when I was up in Canada, everybody was talking about them. Yeah. Why, why do you suppose is such a giant difference between our two countries?

Sylvain Charlebois [00:06:05] Well, 'cause we're, we're the tenant and the US is the landlord. I mean, let's be honest here. That's what I said on stage last week to poor producers. We, our, our biggest competitive advantage as a country was to be north of a, a, a superpower called the United States. And, and we don't necessarily appreciate that now as much because of some of the, some of the challenges that President Trump is, is throwing at us. And a lot of people don't like it. It's funny because about a month ago I was actually with grain growers in Mexico, and I do find that Mexicans have a totally different attitude towards what's happening. They're, they're basically getting the same shocks as we are, but their attitude is completely different. And I do hope that at some point in Canada specifically, instead of just focusing on emotions and, and the psychology of trades, I'm hoping that at some point the, the, the, the reasoning around dealing with this new administration would be, would be, would become more rational. That's what we need in Canada. And, and we also have to look at the global, at the global landscape. We have terrorists against China. We started a war against China. Now they're actually implemented terrorists against us. We have terrorists against India. They've actually applied terrorists on lentils in Canada. Canada's a bit of a mess geopolitically. So I, I know there's a lot of tension given to the Trump administration, but we have no lessons to give to anyone on earth about geopolitics at all.

Sylvain Charlebois [00:07:43] We're, we've been outplayed by the Mexicans several times. Trump has been in power and we are not played by the Chinese as well, several times the Indians as well. So we need to really start looking at ourselves in the mirror right now.

Vance Crowe [00:07:55] Well, maybe a good place to start with that conversation is how is Mexico responding to this in a way that's different than the Canadians?

Sylvain Charlebois [00:08:02] Well, I mean they, I, it's funny, I, one, one Mexican grower when I was there made a comment that stuck with me. He basically said, well, you're going through your wall moment with the 51st state. 'cause back in 2016, if you remember, it was all about the wall, right? Between Mexico. And, and they actually were very upset. And you saw boycotts and people were en rage. But President Sheinbaum is very, very rational, very objective about what's happening. She doesn't agree at all with President Trump, but she wants to work with him. And that's the most important thing. And I I, in our case, it's the same thing. We need to work with the Americans. We need to, 'cause we deal with the Americans and, and so we are stuck with our geography. That's not gonna change. We, we can't move Canada. So we have to work with the Americans no matter what President Trump has in mind. But as we move forward, we have to keep in mind that America is 20, 25% of the world economy. That, that that's something you cannot change.

Vance Crowe [00:09:04] Yeah. It seemed to me that when Trump first kicked off this 51st state, it was an attempt to really needle the liberals. And I think that he was unprepared for the kind of pendulum swing. It went first, like, oh, towards the conservatives and then swung way back when Carney came in. I don't have any sense for where your election is headed. Do you think this is playing out the way Trump expected or what do you think's going on there?

Sylvain Charlebois [00:09:28] Well, I, I don't think that Americans understand Canada and vice versa by the way goes both ways, just so you know. 'cause America, I actually work at Texas a and m and I go there on a regular basis. And I can tell you really both countries don't han entertain each other. But let me give you like in a couple of sentence what has happened. Canada is inherently a liberal country. If you, if you look at our history throughout like 150 years, we're inherently a liberal country. We will elect a conserve party to clean things up. So that's what we've done. So when we think there's too much corruption, too many problems economically, we elect conservatives. But in times of crisis, and I would say that this is certainly one of them, we go to the center and we, we tend to be very risk averse as an electorate. And so my guess what has happened the last several weeks is that well, everyone really disliked Trudeau, even the liberals. But now he's gone. And the liberal government, which has a huge margin of error compared to the conservatives, they can make mistakes. They can, they can paint, can be awful, and they can still win. And that's, that's how I define Canada. But because of the crisis, because of the uncertainty, people are going center and they're looking at the liberals and they don't see the same problems anymore. Problems have disappeared along with Trudeau and Mark Carney has a, I would say an impressive resume.

Sylvain Charlebois [00:11:05] But he's, he's relatively unknown. If you actually read his material last 20 years, it's not what he has delivered in the last three weeks. He's very different. I mean he basically hijacked the conservatives playbook around capital gains taxes and everything that is really conservative. He basically took all that and, and made his made made that his own. And people are buying into it without knowing really who he is. So I think there is a risk factor, but based on what he has said in the last three weeks, apparently Canadians actually like that and they feel reassured that a centered government is the way to go to deal with, with the Trump administration. I think that's really what's going on right now. But I wouldn't be surprised if that's something that actually caught the Trump administration by surprise. 'cause it's, it's hard to understand if you're not in Canada.

Vance Crowe [00:11:59] Y Yeah, absolutely surprised me. And then I would say largely the number of people that I know from Canada are from the West and so far more conservative, far more feeling beaten down by the east. And so when they talk about Carney winning, this is like Trudeau 2.0, maybe even a more sophisticated, faster moving Trudeau. So I hear talk of,

Sylvain Charlebois [00:12:20] I can understand the skepticism and the doubt because I mean it doesn't, I read, I've actually met Mark Carney and his wife, his wife has a podcast and she invited me on his her podcast. And so I knew who they are, I know who they are and I'm, I personally am not comfortable with their approach. But in the last three weeks I would actually vote for him. So this is the question. I mean, if he gets elected, is he gonna deliver on what he has said the last three weeks or will he go back to his own? His old self. Trudeau was elected as a center, as a centered leader and a leading a centered government. But he went way left once he got elected and never looked back. So that's scaring a lot of people, especially people out west.

Vance Crowe [00:13:11] Yeah, I mean I hear talk of, you know, if, if Carney gets in then our move, our next move is secession. It is to become 51st, maybe even the 52nd state, Alberta and Saskatchewan. Is that just people on the right that are, you know, extreme or do you feel that might be an entire Western belief system?

Sylvain Charlebois [00:13:29] Well I've, I I think, I mean probably 90% of Albertans are angry are and not satisfied and concerned about the future of our country. But would that be enough to secede? I'd say probably about 20% of Albertans. I mean, based on, I'm just basing myself on, on polls that I've seen 20, 25%. But I, I lived out west for many years, raised my kids there as well. I totally get the western view of Central Canada. Absolutely get it. And I'm in the Atlantic here. The problem with the Atlantic is that all, it's very liberal. We just play along and, and that's about it. But out west they have the economic power. They can actually make things happen. They pay bills for Canadians. The Atlantic is a poor region. So we just follow along. That's economically we don't have much of a choice. But out west I can under absolutely understand and appreciate why there's so much anger. And your experience in Ontario? Well, Ontario is central Canada. I lived in Ontario. I work at the University of Guelph, which was about two hours away from where you were in London and beyond Ontario. There's not a whole lot that people know about. Really. They don't understand the West. I actually once had to explain to a colleague with a PhD what Potash was. Yeah,

Vance Crowe [00:14:56] Well I mean, and their take on what's going on in politics is totally different. I mean, I was sitting at a dinner and I, I think somehow the trucker rally, convoy, whatever you wanna call it, got brought up. And I assumed that farmers like this would be like farmers out west. No,

Sylvain Charlebois [00:15:12] No.

Vance Crowe [00:15:12] Some of them viewed it as a strong insurrection, as a major misstep, as an occupying of the capitol on par with January 6th in the United States. And I was completely unprepared for that perspective. It's my own shortcoming for not understanding the sophistication of Canadian politics. But it blew my mind.

Sylvain Charlebois [00:15:30] Keep in mind that this is the first election we're going through, during which a lot of money, millions of dollars are given to media so they can do so, so reporters can do their jobs. It's really odd what's going on right now. So we have a program to, to support media, it's worth $800 million. So we're giving the CTV global. And of course CBC is a, is a crown corporation. The, the people Ontario listen to the CBC quite a bit more than out west or even in, in, in the Atlantic. And, and you can feel that influence. I actually give talks all over the country. I'm in Ottawa this week, I was in London last week. And, and every time I go on stage, I I, I remind myself of where I am. 'cause it it will have an impact on what I say to and or at least how I say it.

Vance Crowe [00:16:28] You know, one of your things that you do on x you posted a photo of oranges that had a little t next to their price tag, which I thought, whoa, what's going on here? Talk a little bit about that. And is that just at Loblaws or is this a wider trend?

Sylvain Charlebois [00:16:45] Just a Loblaw initiative. And as you know, Loblaws is our number one grocer here represent about 30% of the, of the markets, which is a unique, as in the US the number one grocer is Walmart. And Walmart is at about 20%, if I recall correctly. So Loblaw is massive. It's huge. It's the largest private employer in the country. And they've been blamed for a few years now for profiteering. And, and I've actually defended them. 'cause I look at, I look at financial reports, I, I never, I've never seen any evidence of gouging at all. Margins are very low. But people didn't believe it. They believed, and I can tell you the media, going back to the media, a lot of reporters just believed that gouging was actually a real thing. And I think they got tired of it. And now they're much more proactive now. And when they actually see like a, a wave coming in that could actually push prices hard, they're, they're being, they're being very proactive. And so I, I've actually disputed the strategy. I I I don't get the t thing. I honestly, 'cause first of all, you need to understand what the T stands for. Two, you need to understand what counter tariffs, not tariffs, counter tariffs, how they work, how they impact prices. And we all know people in the food, in food distribution like you and many of your listeners would understand that it's not just a tariff products that are gonna go up in price. It's, it's basically everything. 'cause you're not looking, consumers don't look at just prices. They look at deltas between prices.

Sylvain Charlebois [00:18:18] So if one product goes up because the tariffs, other products go up and of course the Loblaw policy doesn't look at ingredients and there are a lot of ingredients coming in to Canada that are tariff. But if it's a made in Canada product, there's a little maple leaf. There's no tea, there's no tea besides, so I think the tea approach is, is is to kind of avoid the blame game, but also it's to kind of cater to the nationalistic rhetoric that we hear a lot right now.

Vance Crowe [00:18:49] Well you had made the point about the, the other tariffs that are going on that are gonna impact food. So if you impact aluminum, that's gonna impact the price of a can and that is gonna get tacked on to the price that somebody's paying. So being able to track how the tariffs impact prices is gonna be very, very difficult On top of just the other challenges that you have with the Loonie valuation against the US dollar.

Sylvain Charlebois [00:19:13] Oh yeah, absolutely. And, and this is the one thing that Keynes aren't talking about, the American dollar is, is is off to its worst start since 2008. And we all know what happened in 2008 and our dollar is valued the same versus the greenback as it was six months ago. That means, so your dollar is getting weaker, but no one is actually banking on our own dollar as well. And so we're, we're in trouble in 2008, if you recall, as the American economy was really challenged by everything that went on there, our dollar went over par. Like it went over a dollar. Not this time, not this time. And so of course all of imports are gonna remain quite expensive and we import for probably about $70 billion worth of, of food. It's all negotiating American dollars. All of that is gonna become, is gonna remain quite expensive. And so that's why I always laugh about this anti 51st state movement in Canada because I mean, I'm not, don't get me wrong, I'm not for the 51st state. I'm proud to be a Canadian, but having an American currency may not be all bad. You know, it does bring some benefits and I'm, I'm not sure Canadians have actually entertained that thought all that much.

Vance Crowe [00:20:38] Yeah, I mean my sense is the US their current banking policy is to try and bring the value of the dollar down so that way they can do more exports.

Sylvain Charlebois [00:20:47] There's no doubt in my mind. So again, there, there's a lot of name calling going on against President Trump. There's a lot of judgmental reporting going on versus Donald Trump. I I, I don't think he's crazy. I actually think that that he do, he does have a strategy. It's, it's becoming clear to me. I don't agree with the strategy. I'm not sure it's going to work. But I do think he has a strategy. I think his team has a strategy. It is just, the problem is that he will bring down many of the economies, including Canada's,

Vance Crowe [00:21:24] Yeah, I mean just, I think it might be a war of attrition. You had posted just a couple of days ago about the food prices rising in Canada just in the last year, cantaloupe up 34%, avocados up 25%. Those may be not that big of a deal because you can go without them, but ground beef up 15%, eggs up 10%. Like people that were already struggling with inflation, not able to buy houses in Canada already paying carbon taxes. Very difficult position. If you keep raising food prices, that's where people feel it the most acutely. And how long can you go on if your prices keep going up?

Sylvain Charlebois [00:21:58] That's, that's why I'm very concerned about Canada's strategy around, around the Trump administration and, and, and the tariff war going, going at war against, nobody will win a tariff war. Not, not even the Americans, but still, you can't go against the number one commune world and expect some sort of rivalry with a dollar for dollar approach. I mean that's, that's, that's being delusional. And so I I'm very concerned because it will impact prices of the grocery store. It will impact food affordability in Canada. And I'm not entirely convinced that people understand that. And so obviously I I'm very concerned about, about this approach right now.

Vance Crowe [00:22:42] Yeah. When, when you talk about people not understanding it, I think that's one of the big reasons it's not being talked about in the United States. I mean in the United States we have all kinds of things going on. They're unveiling unprecedented amounts of fraud and social security there, deporting gang members to El Salvador, they're,

Sylvain Charlebois [00:22:59] There's lots going on.

Vance Crowe [00:23:00] There's a lot going on. So if you're a news station and you wanna explain how do tariffs impact, you know, you and how long will that take? I mean, it's just too complicated. And on top of that, then you've got the complications with, so what is the government gonna do about it? And this question, it's not very well formulated, but a couple of weeks ago, didn't Canada give, was it $6 million to farmers to help them through this? Is was that the right amount?

Sylvain Charlebois [00:23:26] Well, yeah, so, so China, as you know, this is the beauty of, of, of, of China and its geopolitics. They're, they're very, very smart people. Of course, I don't agree with their politics, but I mean they decided, so in October, Canada, along with the Biden administration, the then Biden administration, the then Prime Minister Trudeau decided to actually implement tariffs on Chinese EVs along with the Biden administration to create this North American fortress. And since October, and this is the one thing you probably wouldn't have seen in Ontario where you were, I mean, they don't see the point, they don't see, they don't see the problem because our, the automotive sector is very important in Ontario. But out west they're crying foul, of course. So they created this fortress and everyone was holding its breath waiting for China to respond. They never responded until, until Mark Carney's appointment as liberal leader and prime minister on March 9th. Beautiful. So basically 25% against lobster, we sell, we export for $3 billion of lobsters to China every year. They're not happy. Okay. A hundred percent on canola. Okay. Not all, not canola sea, but still it's a clear signal. Canola, Canada oil clear symbol there. And of course pork is also hit by, by tariffs as well. And of course I was with the pork folks in Ontario and they weren't necessarily pleasing and we started the war.

Sylvain Charlebois [00:24:59] And so in response to, to help farmers the day before the election, Kody Blois, the minister of our agriculture, who I know decided to top up the AgriStability program from three to 6 million to help out farmers. Here's the problem, very few farmers actually use the program. They just don't, 'cause it doesn't work for them. And it's hard to qualify. And if you do qualify, you can actually lose if you miss a payment. Rules are incredibly strict, too strict that no farmers actually use a grease stability. So it was really shot in the dark. It was just so, it was just simply just noise to reassure the public. So people thought felt, well that's enough. That's great. From $6 million, that's a lot of money for a farmer. While it's not gonna be useful. Well, meanwhile, promise of Carney, while the car industry is facing, not paying or being subject to tariffs, the car industry is facing tariffs on April 2nd and he offered a $2 billion package to the car industry. And that's why out west people are upset because it's, it's two ways of dealing with issues that aren't necessarily equal. Really.

Vance Crowe [00:26:20] Yeah. And when you compare the amount of support like that versus the United States, I mean they haven't even gotten done giving out $10 billion to farmers for last year's supposed underperformance. Now they're already talking. Brooke Rollins just last week said, Hey, if these tariffs impact farmers, we're gonna make sure we give more support, which means more dollars going straight to farmers. So if you're doing a war of attrition, US farmers are gonna get a lot more support from the government than Canada.

Sylvain Charlebois [00:26:45] From the politics, from a political perspective. I mean, when you look at Washington versus Ottawa, the pecking order is completely different. When you look at ag in particular. So Secretary Collins, sorry, Rollins or Collins

Vance Crowe [00:27:02] Uhs.

Sylvain Charlebois [00:27:02] Yes, Rollins. Sorry, I I had a blank there. The, so Secretary Rollins basically is really up in a pecking order in Washington compared to our own ag minister. Just to give you an example, when Mark Carney was, was sworn in as Prime Minister, he sworn in his cabinet and the last person to be sworn in was the MR of ag. So it's ag is an afterthought and you can see that whenever there's a crisis, whenever there's a problem in Ottawa, ag is just not up there at all. It's just not up there at all. A lot of different issues actually come first and, and that's hurting our farmers.

Vance Crowe [00:27:42] Well, with the last few moments we have remaining Liberation Day for the United States. It's not Liberation Day for Canada. What do you think happens in the 24 or 48 hours after this? This goes into effect.

Sylvain Charlebois [00:27:56] Well, you tell me. I mean it's just, I, and, and this is probably what, like universally, I think everyone doesn't appreciate this, this, this hesitance. I mean, I, I think people will appreciate the strategy as long as we know what the strategy is. 'cause right now, like especially in ag and food, I mean the, the hesitance, the Ford buying, you know, what's going on right now? 'cause a lot of companies are just Ford buying. They're just waiting and there's a lot of inventory out there. I mean, our GDP went up in January just because people were forward buying. I mean, there's a lot of inventory out there just because people don't wanna pay tariffs. So we don't know what the tariffs are gonna be, what products are be impacted by tariffs. This uncertainty needs to stop. If, if, if America wants tariffs, just go ahead, just go right ahead. We'll deal with it. But the uncertainty is really hurting. So I, I think I'm hoping that Liberation Day will bring more clarity to the tariff strategy that's coming out of Washington.

Vance Crowe [00:29:07] Well, Professor Charlebois, you have a podcast. Would you tell people about your podcast and where else they can find out more about you?

Sylvain Charlebois [00:29:14] Yeah, absolutely. So we've had a podcast for about five years now. It's one of, it's actually the top Canadian podcast under management in Canada. So we rival Harvard Business Review, McKenzie, all those firms. And so we're pretty happy about that. It's called the Food Professor and it's a weekly program and so it goes live on every Thursdays.

Vance Crowe [00:29:38] Well, I love it. And you are one of the most prolific tweeters on XI I'm really glad I was warned to stay away from you because that was all the signal I needed to be like, oh, that's a guy I'm gonna follow.

Sylvain Charlebois [00:29:49] Who told you that?

Vance Crowe [00:29:51] Some farmers in Ontario. Yeah, there's

Sylvain Charlebois [00:29:53] Farmers. Now listen, I I wasn't Guelph and I, I am from Quebec and I am and I, I I I totally understand you, you see with supply management, you're not allowed to say anything. It's the code of silence. I am, I am outspoken, which is why I'm often singled out. 'cause most academics can't speak up and won't speak up 'cause it's very dangerous. The very lobby in particular is incredibly powerful. They hire hundreds and hundreds of people, but they have 72 people on payroll just to manage their reputation. That's all they do. 72 people. So these people are well equipped.

Vance Crowe [00:30:32] Well, I would absolutely love to have you on. I'm so glad you were willing to do this right on the, the steps of this big momentous day. And thank you. We'll have you on again soon.

Sylvain Charlebois [00:30:42] Thank you for having me. Take care.