Don’t give our milk money to bully south of border
The United States has long been fond of a “bigger is better” economic model. In an increasingly globalized economy, the dedication to carving out new markets to justify growth is a growing liability across the border. In the U.S., a combination of large dairy farms paired with ongoing technological improvement has created an ever-increasing surplus of U.S. milk.
They make far more than they can consume domestically and dumped (i.e. wasted) 43 million gallons of it in 2016, with the situation worsening ever since.
The U.S. also offsets the cost of their agricultural production under the U.S. Farm Bill to the tune of a projected $956 billion per decade. Why is food south of the border so cheap? Because the Farm Bill uses U.S. taxpayer dollars to artificially lower the cost of these products. This, in turn, gives the U.S. a global export advantage by allowing their agri-products to market globally, often below the actual cost of production.
That’s long been a U.S. trade strategy: Achieve new open borders with tariff-free exports, then swamp these markets with an artificially lowered costing-model.
There is no Canadian Farm Bill. In Canada, the agricultural model is structured to foster stand-alone sustainability. It’s been very successful at this by utilizing the economic structure of supply management for sectors such as dairy, egg and poultry in Canada. The system closely regulates production and focuses on servicing existing domestic consumer demand. Supply management regulates price and fosters limited wastage.
In support of the economic model, Canada has one of the most healthy and sustainable dairy industries in the world, if not the only one. Meanwhile, dairy farms in much of the U.S. are struggling to survive against an ever-declining profit model despite drawing billions from the U.S. Farm Bill under various market supports.
In testament to this, while U.S. President Donald Trump churns out inaccurate propaganda from his Twitter account, several dairy states recently invited Canadian dairy representatives to attend U.S. dairy meetings to help them sum up our system. The reason? The U.S. dairy industry needs our system of supply management.
Wisconsin alone produces more milk than the entire Canadian dairy industry. Is nominal dairy access into Canada really going to solve their overproduction issues? No, of course not. An Economics 101 student could confidently figure that out 20 minutes into their first class. For Trump, however, following this false line of commentary cranks up support from his nationalistic yet under-researched support-base.
Trump, in his typically brazen fashion, called Prime Minister Justin Trudeau “dishonest and weak” last weekend via Twitter. My take is that what’s really “dishonest and weak” is Trump’s entire approach to goodfaith trade negotiations.
Canada imports five times more dairy from the U.S. than it exports south of the border. When Trump came into office, one of his first executive orders was to drop U.S. participation in the Comprehensive and Progressive Trans-Pacific Partnership Trade agreement.
That deal, strongly heralded by former U.S. president Barack Obama in the months before Trump’s rise to power, granted 3.25-per-cent additional market access to the Canadian dairy market. This is new access, which Trump doesn’t have access to after wilfully passing on being part of the deal.
Effectively, he passed up the access one week, then complained that he didn’t have it the next.
All of this being the case, Canada’s federal government knows that it’s dealing with a wild card negotiator and federal officials have been wise in proceeding cautiously and strategically. Trudeau has fiercely defended supply management as part of efforts to strongly defend our Canadian national interests.
Part of our national identify is to stand up for what’s right and make difficult decisions. Right now, that clearly means holding our ground, standing up to Trump and drinking an extra glass or two of Canadian milk. Trump is acting like a bully. Just because the bully wants your milk money, doesn’t mean you should give it to him. Trudeau is holding his own very well amid the schoolyard politics of these NAFTA negotiations.