Dairy farmers say denting supply-management will be ‘devastating’

MONTREAL — Nearly 1,000 kilometres from Washington, where a team of top Canadian negotiators sit in 11th-hour NAFTA discussions, Peter Strebel works under a cloud of concern at the rural Quebec dairy farm his father founded in 1976.

The Quebec milk producer is worried that rumblings that Canada might sacrifice part of the sacred cow of supply management as a concession in trade negotiations with the United States would “punish” the dairy industry, open the floodgates to American milk products and prompt thousands of farm closures north of the border.

“There would be lots of bankruptcies. It would be devastating,” he said from his farm south of Montreal. “We’ll probably have to cut back on investment, maybe lay off a couple [of] workers. I don’t know how it would be done.”

Canadian dairy operates under a supply management system, in which farmers are protected from competition because the government blocks out foreign production with high tariffs and sets quotas to limit production and prevent market saturation. With traditional market forces removed, the government decides how much farmers are paid for their production, helping to keep farmers’ incomes stable.

The protectionist policy, a staple of Canadian agriculture for more than 40 years, has come under periodic attack from U.S. President Donald Trump.

And as trade talks hit a fever pitch ahead of a pending deadline today, Strebel and others fear that the Canadian government is ready to make concessions on dairy.

More than 15 per cent of the Canadian dairy market is already opening up to imports under terms of the Trans-Pacific Partnership signed in March. Any further dents to supply-side protection would imperil the business, said Strebel.