Dairy Commission Borrowing Cap Raised to $500M

Summary#

This short bill raises how much the Canadian Dairy Commission (CDC) can owe at one time on federal loans and a line of credit. The new combined cap is CAD $500 million. The bill does not change taxes, benefits, or dairy prices. It only changes the CDC’s borrowing limit to run its programs.

• Raises the CDC’s total outstanding borrowing cap to $500 million (Bill s. 16(2)).
• Applies to loans from the Minister of Finance and draws on a line of credit (Bill s. 16(2), 16.1(2)).
• Does not set any new spending by itself; it authorizes borrowing up to the cap (Bill s. 16(2)).
• Does not change consumer prices or farm payments directly; any effect depends on future CDC actions under existing law (Bill text).
• Increases the federal financial exposure tied to CDC operations up to the new cap (Bill s. 16(2)).

What it means for you#

• Households

  • No direct change to grocery prices, taxes, or benefits. The bill only changes the CDC’s borrowing limit (Bill s. 16(2)).
  • Any indirect effects on dairy availability or stability would come from how the CDC uses its existing tools to buy, store, or sell dairy products, not from this bill alone (Canadian Dairy Commission Act, functions; Bill s. 16(2)).

• Dairy farmers

  • The CDC will have more borrowing room to run market-balancing activities, such as purchasing and storing dairy products when there is temporary oversupply. This could help stabilize farm demand during shocks, if the CDC chooses to use the added capacity (Canadian Dairy Commission Act, mandate; Bill s. 16(2)).

• Dairy processors

  • Potential for increased CDC-backed purchases or inventory programs during supply swings, depending on CDC decisions. The bill does not set new program rules or prices (Bill text).

• Federal government and taxpayers

  • Higher potential exposure: up to $500 million outstanding in CDC loans and line-of-credit draws at any time (Bill s. 16(2)).
  • Any interest costs or repayment timelines will depend on how much the CDC borrows and on its operating revenues. The bill does not specify these details (Bill text; Data unavailable).

• Provinces, territories, and municipalities

  • No new mandates or reporting duties in the bill (Bill text).

Expenses#

Estimated net cost: Data unavailable.

• The bill authorizes the CDC to have up to CAD $500,000,000 outstanding on federal loans and a line of credit. This is a cap on borrowing, not a direct appropriation (Bill s. 16(2)).
• No official fiscal note identifying expected drawdowns, interest costs, or repayment schedules was located. Data unavailable.

Proponents' View#

• Provides the CDC with enough financial flexibility to manage temporary surpluses by buying and storing dairy products, which can reduce waste during market disruptions (Canadian Dairy Commission Act, functions; Bill s. 16(2)). Assumes the CDC uses the added capacity.
• Supports stability for dairy farmers under supply management by enabling timely CDC interventions without creating a new grant program; funds are loans or credit that must be repaid (Bill s. 16(2), 16.1(2)).
• Minimal immediate budget impact because the bill sets a borrowing limit rather than direct spending; costs arise only if and when funds are drawn (Bill s. 16(2)). Assumes prudent borrowing and repayment from CDC operations.
• Keeps existing governance structure intact; no complex new programs to implement, only a higher ceiling on existing tools (Bill text).

Opponents' View#

• Increases federal financial exposure by allowing up to $500 million outstanding to the CDC; taxpayers bear risk if the CDC cannot repay in full (Bill s. 16(2)).
• Borrowing entails interest and storage costs when used to finance inventories, which could add ongoing expenses; the bill provides no cap on such operating costs or metrics for performance. Data unavailable for expected costs (Bill text).
• Could entrench market interventions that may keep consumer prices higher than under less-managed systems; the bill does not include safeguards to limit duration or scale of interventions. This is an assumption about market effects; the bill itself does not set prices (Bill text).
• Transparency and oversight are unchanged; the bill adds no new reporting on borrowings or inventory strategies, making it harder to assess effectiveness or value for money (Bill text).