NAFTA 2.0 could spell trouble for dairy sector

Stakes high for supply management as talks begin, writes Sylvain Charlebois.

Some have claimed that supply management was established as a social contract between farmers and consumers. Our heavily criticized quota regime to support dairy, egg and poultry industries in Canada was set up decades ago to protect strategic agricultural sectors by implementing high tariffs on imports. Farmers produce what we need and import little from abroad — simple.

There is nothing like it in the Northern Hemisphere — at least not anymore, since Europe got rid of its system back in 2015. A textbook case for food sovereignty. But if there indeed ever was a social contract, it may need to be re-drafted.

According to a recent Angus Reid poll, barely four per cent of Canadians can adequately describe what supply management really is. Worse, 52 per cent of Canadians believe beef is supply-managed, when it is not. What is more, 51 per cent of Canadians believe milk is not supply-managed, when in fact dairy represents about 80 per cent of the entire system. Dairy Farmers of Canada, arguably the strongest lobby group in the country, has published several polls over the years showing opposing evidence, that Canadians are in fact supportive of the system. Regardless, given its complexity, one thing is certain: Most of us are simply clueless about the mechanics behind supply management.

As a result, supply management has become a sort of a political mirage over the years. Most holding public office have told us it is good for us and for our economy, without fully explaining the rationale. Few politicians have also sought to demonstrate the indirect costs of hanging on to such a system: Lost opportunities, lack of innovation to support trade with other countries, and so forth. In dairy, the system operates in complete obscurity, where decisions are made by dairy farmers, for dairy farmers. In the meantime, Canadians comply with this system, without knowing all the facts. Other than Maxime Bernier, who paid the price for becoming the first person in public office to do so, nobody has dared question the logic.

That said, with Health Canada sending signals that it wants its next food guide to encourage Canadians to adopt a plant-based diet, the writing seems to be on the proverbial wall. With the support of sound research over the years, we now know that inciting adults to drink milk is just not on anymore.

While science has evolved, the dairy industry has not, and Ottawa knows it. The Canadian dairy sector has survived in spite of itself, without trying to think about milk in a different light. It doesn’t want to compete because it has never really had to. As borders around the world were opening, dairy farmers were divorcing themselves from the Canadian population using rhetoric and condemning anyone displaying discontent for the system.

As a nation, despite our collective ignorance regarding supply management, we have never discussed this very issue as much as we have lately. Quite fascinating. We even saw the president of the United States acknowledging its existence for the first time back in April, in dairy-friendly Wisconsin. Since then, messages from the United States have been mixed, and the Trudeau government seems to be preparing for several possible scenarios.

Consumers implicitly trust farmers, so why would they begin to doubt them now? But with the NAFTA discussions that started Wednesday, stakes appear to be much higher for all of us. With NAFTA 2.0, some are starting to wonder if compromising the future of many economic sectors in order to safeguard supply management is worth fighting for. According to the same Angus Reid poll, most Canadians are willing to sacrifice supply management to get a good deal with the Americans and Mexicans. This spells trouble for dairy farmers, and that’s unfortunate.

Dairies in Canada are holding their collective breath since it is the only option they have given themselves. Not very strategic.

Let’s hope NAFTA 2.0 will be kind to them, despite their decades-long intentional inertia.

Sylvain Charlebois is dean of the faculty of management and professor in food distribution and policy at Dalhousie University.