Dairy Farmers Hit Again with New Trade Agreement

The Canadian government again secured a trade deal by sacrificing another vital part of domestic supply management, said the National Farmers’ Union, after the news that NAFTA will be replaced with the new USMCA, the US Mexico Canada Agreement.

“Since 1969 Supply Management has awarded Canadian dairy and poultry farmers a fair return for producing sufficient quality and quantity without over-production. Ever since Canada engaged in negotiating trade agreements the system has been weakened by allowing more production from elsewhere to enter the Canadian market at prices below the cost of production, an unfair trade practice known as dumping,” said dairy farmer Jan Slomp, Vice President Policy for the NFU.

The Canadian government has agreed to end Class 6 and 7 milk pricing in the USMCA deal. These discount classes were created recently as a last resort to push back against milk being illegally imported from the US in the form of “diafiltered milk”. This was necessary because the federal government refused to step up with proper border control to stop the imports. 

The NFU says processors used American diafiltered milk as high-protein ingredient in cheese and yogurt to replace Canadian milk. Class 6 and 7 allowed Canadians to sell high protein ingredients at a price that allowed them to compete with American dairy processors. Now, Canadian farmers are being punished for competing, and Americans will again flood the market with discounted diafiltered milk. The result will be reduced production on Canadian farms and fewer viable dairy farms in Canada.

During TPP negotiations Canada gave away access to over 3.25% of our domestic market in the supply managed dairy, poultry and eggs sectors to the 11 countries involved, with the USA as one of those countries. After President Trump took the USA out of the TPP, Canada concluded virtually the same deal with the remaining 10 countries.

Now, in the USMCA Canada has given an additional over 3.25% of the Canadian market to the USA, on top of stopping farmers from competing with the American imports to provide high-protein ingredients to Canadian processors. 

“In saying that they support supply management and making deals like this, the Canadian government is completely two faced,” said Prince Edward Island dairy farmer and NFU member Doug Campbell.

“This is not a win-win situation,” Jan Slomp pointed out “According to a CBC report, a Trump administration official boasted that they achieved a better deal on dairy for the Americans than the Obama administration have been able to get under the TPP.” 

“We take no comfort in promises of compensation,” continued Slomp. “In the Comprehensive Economic Trade Agreement with Europe, the Canadian government, granted additional access for 17,500 tonnes of European cheese in the Canadian market. In the wake of CETA the compensation packaged offered to Canadian dairy farmers is a boondoggle. CETA shrinks total revenue available to Canadian farmers, yet the subsidy is given to the farmer that expands. To expand when revenue is diminished is a rather reckless business decision. It is a recipe for pushing more farmers out of business, not compensating them for a wrong-headed trade decision.

“To add insult to injury,” he warned, “it is Canadian dairy farmers who take the brunt of low prices resulting from the skim milk surplus, while miraculously, processors qualify for CETA compensation package money which they use to capitalize on the lower-priced skim milk, as if that alleviates farmer’s losses. Successive Conservative and Liberal governments in Canada have protected supply management while causing a death by a thousand cuts. If this is support from a supply management-friendly government, who needs an enemy?”



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