The current economic, marketing and policy constraints facing the animal production industry in Canada are examined. An historical review indicates the consequences (sometimes unintended) of economic or policy changes in the past in the areas of land settlement, marketing and grading. Natural factors constraining production such as gestation periods and climate and human factors such as consumption potential both physically and socially are considered. Government policy is identified as a key determinant in the animal production industry and an alternative explanation of the activity of government in the economy is outlined. The effect of economic and policy variables including interest rates, feed prices, economies of scale, productivity gains, trade policy, tax policy, grain and livestock marketing and stabilization on animal production are described. Throughout, the importance of government policy in determining the development of the animal production industry is emphasized. The major areas of tax policy and grain support programs in Western Canada are key determinants of regional livestock production patterns. The future of these policies is uncertain and this uncertainty is a major constraint to animal production in Canada. Uncertainty has always been a major constraint on animal production. Producers have developed mechanisms to deal with market variation, biological factors such as disease, fluctuating interest rates and the whims of the environment. However, a major source of uncertainty has not been addressed: — government policy. In part, this uncertainty is due to the on-again, off-again policies governments have followed. But history indicates it is foolish to believe that all important variables are within the control of government. Policy evolves through a political process that often reflects the interests of special interest groups rather than the long-term interests of producers or consumers. Change occurs slowly, impeded by resistance from those in favored positions within the current system. Policy uncertainty remains as a key variable to be addressed by the livestock industry in Canada. Key words: Animal production, economic constraints, policy constraints, policy uncertainty