Life with­out sup­ply man­age­ment: We will all pay

The Glengarry News - - The Opinion Page - richard@glen­gar­rynews.ca -- Richard Ma­honey,

Life with­out quo­tas will not only be dif­fi­cult for farm­ers. Tax­pay­ers will be ex­pected to cush­ion the blow that Cana­dian agri­cul­ture will ul­ti­mat­ley suf­fer when the sup­ply man­age­ment sys­tem is even­tu­ally dis­man­tled.

“The Cana­dian govern­ment con­ces­sions equate to death by a thou­sand cuts” has been the re­frain from the dairy in­dus­try after the Amer­i­cans gained a larger slice of the mar­ket un­der the new Canada-US-Mex­ico trade deal.

We will also be sub­jected to more Amer­i­can wheat, poul­try and eggs. More com­pe­ti­tion ought to be good news for con­sumers, yet, there is no guar­an­tee that our gro­cery bills will drop sim­ply be­cause there are more Amer­i­can flags on the shelves.

In fact, Cana­dian tax­pay­ers will be foot­ing the bill for the new trade agree­ment.

The fed­eral govern­ment has al­ready pledged that it will pro­vide “fair com­pen­sa­tion” for dairy pro­duc­ers by the pact takes ef­fect.

The On­tario Premier has vowed, “We're go­ing to hold the fed­eral govern­ment ac­count­able to en­sure our dairy farm­ers are fairly com­pen­sated.”

So, re­gard­less of the im­me­di­ate ef­fects of the new tri­par­tite deal, we will cer­tainly be ex­pected to fork out lots of money to sup­port our milk pro­duc­ers.

How­ever, this com­pen­sa­tion will be a pit­tance con­sid­er­ing the huge sums gov­ern­ments will be forced to dole out as the sup­ply man­age­ment sys­tem is slowly but surely elim­i­nated.

“This deal not only gives more ac­cess to the Cana­dian dairy mar­ket, while lim­it­ing our abil­ity to pro­duce and ex­port home-grown dairy prod­ucts; this deal lets the Amer­i­cans dic­tate our dairy poli­cies,” Dairy Farm­ers of Canada has com­plained. “Fairer trade is about win-win re­sults. If our govern­ment fought for a good deal for Cana­dian in­dus­try, it wasn’t dairy.”

The na­tional or­ga­ni­za­tion warns: “This is a bad out­come for dairy farm­ers and the whole dairy sec­tor. The govern­ment has con­ceded ac­cess to our do­mes­tic mar­ket to the US, af­fect­ing our abil­ity to pro­duce Cana­dian milk. By do­ing so, it is slowly bleed­ing Canada’s dairy sec­tor.”

And, “The 220,000 Cana­dian fam­i­lies who de­pend on dairy for their liveli­hood (on farms, in pro­cess­ing plants and re­lated jobs) feel they were used as a bar­gain­ing chip to con­clude this agree­ment.” Farm­ing and milk pro­duc­tion are still big in these parts. As we re­cently re­ported, lat­est fig­ures show that in Stor­mont-Dun­dasGlen­garry, the agri­cul­ture in­dus­try em­ploys about 2,610 peo­ple. In North Glen­garry, farm­ing ac­counts for ten per cent of the work force.

One in ten jobs here is di­rectly linked to milk pro­duc­tion, a busi­ness that gen­er­ates about $260 mil­lion in rev­enues ev­ery year in Stor­mon­tDun­das-Glen­garry and Prescott-Rus­sell. Fi­nan­cially, milk pro­duc­ers have been do­ing all right. A sam­pling of 70 dairy farms from across the prov­ince found that the aver­age net in­come was $128,230 in 2017, up from the aver­age of $90,114 in 2016. Since 2012, the aver­age profit had been drop­ping. While the av- er­age net in­come in 2008 was $117,860, it rose to $178,601 in 2012 be­fore de­creas­ing to $154,894 in 2013, $146,907 in 2014 and to $132,879 in 2015.

The suc­cess­ful busi­ness model has been propped up by con­sumers for too long, crit­ics of quo­tas have con­tended.

While sup­ply man­age­ment has been a sa­cred cow in farm­ing coun­try, the “milk car­tel” has come un­der in­creas­ing fire on sev­eral fronts in re­cent years.

The votes are in the cities, where many peo­ple are con­vinced that they are be­ing gouged. Farm­ers have lit­tle say in de­ter­min­ing the price of milk. Dairy Farm­ers of On­tario reg­u­lates prices paid to dairy farm­ers but the mar­ket­ing board has no con­trol over pric­ing at the re­tail or restau­rant level. The farmer’s slice of a pizza is about four per cent and the pro­ducer’s share of a glass of milk in a restau­rant is about ten per cent, less than the stan­dard tip for servers. “Cana­dian dairy farm­ers and Canada’s econ­omy thrive be­cause of sup­ply man­age­ment. The sys­tem gen­er­ates eco­nomic ac­tiv­ity across Canada. It also doesn’t cost the govern­ment or the tax­payer a penny to op­er­ate,” reads the pro-quota proa­ganda.

On the other hand, the U.S. dairy in­dus­try heav­ily re­lies on ex­port mar­kets, and is de­pen­dent on mas­sive govern­ment sub­si­dies at fed­eral, state and lo­cal lev­els.

Canada’s farm sizes are also smaller than typ­i­cal U.S. dairy farms. The aver­age farm size in Canada is 75 cows and in the U.S., it is 234 cows. Canada has about 11,000 dairy farms while the U.S. has about 40,219.

An­other fac­tor: Amer­i­can dairy farm­ers are legally al­lowed to use re­com­bi­nant bovine so­ma­totropin, or rBST, a syn­thetic ver­sion of a nat­u­rally oc­cur­ring growth hor­mone. They use it to in­crease their herd’s milk pro­duc­tion. rBST is il­le­gal in Canada, and al­though Health Canada has de­ter­mined it does not pose a health risk to hu­mans, it has stated it neg­a­tively af­fects cow health.

Yet such facts are ob­scured when high-stake in­ter­na­tional trade talks oc­cur with a coun­try that is ruled by an un­pre­dictable yet “sta­ble ge­nius.”

The lat­est round of ne­go­ti­a­tions, which re­sulted in fur­ther ero­sion of sup­ply man­age­ment pil­lars, ham­mered home such how small Canada is when com­pared with the United States.

While Pres­i­dent Don­ald Trump seems to be ob­sessed with dairy du­ties, Canada’s milk out­put, which rep­re­sents a drop in the North Amer­i­can bucket, was in hind­sight a mi­nor con­sid­er­a­tion when crush­ing auto tar­iffs hung over the heads of Cana­dian ne­go­tia­tors.

The Amer­i­cans have al­ways been able to push us around and we have al­ways been forced to grin and bear it.

After all, they may be big bul­lies, but they do buy 75 per cent of our ex­ports. So, we must take some con­so­la­tion in know­ing that our rep­re­sen­ta­tives at the bar­gain­ing ta­ble may have bent but did not break.

The lat­est trade deal bought Cana­dian farm­ers some time, time to pre­pare for the in­evitable -- life with­out quo­tas.

Amer­i­cans are big bul­lies but they still buy 75 per cent of our ex­ports.

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