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Private Member's Bill Mr Kram. POLICY PROPOSAL MEMO FOR MEMBERS OF PARLIAMENT Reducing Dairy Waste While Strengthening Food Security: A Targeted Incentive to Redirect Unavoidable Milk Surplus to Food Banks Executive Summary Canada’s dairy system currently destroys or disposes of hundreds of millions to approximately one billion litres of raw milk annually due to quota constraints. This milk is already produced, already collected, and already classified as surplus. Its destruction does not enforce quota; it is simply the default disposal mechanism. This memo proposes a narrow, tightly controlled federal tax incentive and processing support framework that allows already-designated surplus milk to be converted into shelf-stable dairy products for Food Banks Canada and its affiliates; without altering quotas, prices, or market supply. The proposal reframes surplus milk from a waste-management problem into a food security, environmental, and reputational solution, while preserving the integrity of Canada’s supply-managed dairy system. The Problem 1. Large-Scale Food Waste Amid Rising Food Insecurity Food banks across Canada report record demand. At the same time, dairy surplus milk is destroyed at industrial scale. The optics and ethics of destroying edible food while food insecurity rises are increasingly difficult to defend publicly. 2. Surplus Milk Is Biologically Unavoidable Milk production is governed by lactation biology, not daily farmer choice. Once lactation is underway, the marginal cost of additional milk is largely sunk. Dumping is not a corrective measure—it is a disposal outcome. 3. Current Policy Has No Secondary Outlet for Surplus Surplus milk is already identified, tracked, and segregated. There is no authorized humanitarian or waste-reduction pathway at scale. Destruction remains the default because it is administratively simple, not because it is necessary. The Proposal A. Federal Tax Incentive (Cost-Offset, Not Revenue) Allow dairy farmers to claim a limited, standardized tax credit for surplus milk only after: It is officially designated as over-quota by the provincial board. It is transferred to a licensed processor. It is converted into food bank–eligible products. Key Point: This does not create profit, new income, or market substitution. It merely offsets unavoidable costs already incurred. B. Processing & Conversion Support Provide targeted federal support (or matching grants) to processors to: Convert surplus milk into powdered milk, evaporated milk, cheese, butter, or other shelf-stable forms. Prioritize products with long shelf life and minimal cold-chain requirements. C. Strict Safeguards (Quota Integrity Preserved) Eligibility limited to milk already classified as surplus. Annual caps tied to historical dumping volumes. No farmer discretion over donation quantity. No retail or export eligibility. Full batch tracking from farm → processor → food bank. Why This Does NOT Undermine Supply Management Quotas remain unchanged. Marketable supply remains unchanged. Prices remain unchanged. Enforcement remains penalty-based and data-driven. The only change is the final disposition of milk that would otherwise be destroyed. Supply management controls economic supply, not humanitarian redistribution. Benefits For Canadians Increased access to high-quality protein and nutrition for the food insecure. Reduced environmental waste (water, methane, energy). For Government Improved public confidence in supply management. Alignment with food security goals. Minimal fiscal exposure due to capped volumes. For Farmers No change in operations. Reduced reputational harm. Limited tax relief on unavoidable surplus. Recommendation That the Government of Canada: Pilot this program in partnership with Food Banks Canada and willing provinces. Fund processing capacity rather than increasing production. Review outcomes after 24 months.