Global market now open for dairy

Rules changing under trade deal

Canada is opening the taps to dairy from foreign competitors as part of the Trans- Pacific Partnership deal and some say the leak could mean the beginning of the end for supply management.

Details of the TPP released Monday include allotting 3.25 per cent of annual production to foreign dairy products entering Canada, to be phased in over the next five years with an increase in exports from the 11 other TPP countries that will annually displace about 250 million litres of Canadian milk.

“There seems to be this slow erosion of our supply management principals, which is really based on one premise: producing what we need domestically, and that’s it,” said Sylvain Charlebois, a professor at the University of Guelph’s Food Institute.

“This gives dairy farmers the opportunity to shift their model in order to compete in the global market place, which is something they’ve never had to do before.”

The supply management system controls levels of milk production by tying it to Canadian consumer demand and limiting foreign competition through high tariffs.

This new deal will give $ 4.3 billion in federal government compensation to Canadian dairy and poultry farmers in order to offset losses to foreign competition. For a typical dairy farmer, that works out to about $ 165,600 over 15 years.

“We have promised that we would keep our system of supply management and we have assured now that we will have free trade access to most of the global economy in the Asia- Pacific, in the Americas and in Europe while making sure we are able to maintain our system,” said Prime Minister Stephen Harper after the TPP was signed in Atlanta Monday morning.

Many in Canada’s dairy farming industry reacted with trepidation, following fierce opposition during TPP negotiations to any measure that could threaten the supply management system.

“We obviously would have preferred that no additional market access be conceded in the dairy sector,” said DFC president, Wally Smith, in a news release Monday. “However, we recognize that our government fought hard against other countries’ demands, and have lessened the burden by announcing mitigation measures and what seems to be a fair compensation package.”

There are about 12,000 dairy farms across Canada, about half of which are in Quebec.

La Coop federee, the largest agrifood organization in Quebec, says it is “disappointed” with the deal and is calling for additional studies on the long- term affects to supply management.

Before the TPP, 10 per cent of the Canadian dairy market was open to foreign markets.

In addition to the 3.25 per cent more dairy allowed into the country, another two per cent — about 17,700 tonnes of cheese a year — would be permitted under the CETA agreement with Europe, currently under negotiation.

“The Canadian government had promised to fully protect supply management. This is the second time in two years we are paying the price of a free- trade agreement,” said Bruno Letendre, president of the Quebec milk producer’s association.

Canadian consumers typically pay higher dairy prices than much of the world. Charlebois says competition from new imports could force the regional dairy industry to find ways to lower production costs and pass on the savings, though there are no guarantees.

“Prices may drop at the beginning but then actually increase afterwords. It really depends on what kind of reform we actually implement,” he said.

“The truth of the matter is that we just don’t know.”