Milk producers need to move on to their Plan B

Industry must have seen this Coming, Will Verboven says.

I expect most everyone, including the entire Canadian dairy industry, knew that the federal government was going to capitulate to more American dairy imports under a new trade agreement. That happened with the Canada EU trade agreement and the Trans-Pacific Partnership deal.

It’s always been a simple equation for NAFTA; political consequences from upsetting 10,000 dairy farmers are a lot less than that from hundreds of thousands of unemployed autoworkers. Considering that the agriculture community generally votes Conservative, they should be lucky the Liberal government didn’t give away even more concessions. There isn’t a lot of public-relations value for milk producers in whining about what was going to happen anyway. That negative approach doesn’t go over well with consumers who already don’t understand what supply management is — except that it seems to mean higher retail prices.

The industry should move aggressively with a Plan B to deal with new dairy imports, which will still amount to less than 15 per cent of their market — perhaps a national milk-production transformation. One presumes that the supplymanaged commodities — dairy, eggs, and poultry — with their sophisticated marketing expertise would have developed merchandising strategies in anticipation of the loss of market share from trade agreements. Surely, they were not relying completely on their highly effective lobbying machine that has seen every provincial and federal political party and government toe the line in favour of supply management.

Producers of supply-managed commodities need to be reminded that the right to operate their production- and price-control marketing scheme is not a God-given entitlement. It was given to them 50 years ago by the people of Canada under federal and provincial enabling legislation. I would suggest such legislation would never be considered in today’s political and economic situation. Having said that, supply management has proven to be one of Canada’s best food marketing systems — it provides top quality and fairly priced food products positively benefiting producers, processors, marketers and consumers.

One only has to compare it to the milk production and marketing disaster in the American dairy industry. Their system assures ruinous production prices and wasted surpluses all subsidized by U.S. taxpayers. Some naive folks consider that a good system for Canada. It’s more a short-term pain for long-term pain marketing system. The brain trust in the supplymanaged commodities needs to come up with a long-term strategy. Realistic compensation should be the main route to retire any excess production. It should be specifically targeted to buying out willing producers in Quebec and Ontario where the majority of inefficient small-scale milk producers operate. It will work; there are successful precedents.

Alberta should re-evaluate its position in national supply-management schemes, specifically in dairy production. Unlike B.C. and Eastern Canada, Alberta has the space, feed and expertise in large-scale livestock operations that could see significant expansion in more cost-efficient milk production. From an economic reality, more of the dairy industry needs to move west. However, the biggest roadblock to real change in supply management in dairy is intransigence in altering the distribution of quotas across Canada. That has to do with provinces protecting their own interests — but is it fair that Quebec controls up to 40 per cent of milk production whilst having only 23 per cent of the population? Focused regional compensation could force that production level back to a fairer share for other provinces. Can it be done?

In the past, Alberta has forced changes to increase its share of the national chicken production quota by threatening to withdraw from the national scheme. Is it far-fetched to take that perspective? How about this for an Alberta discussion strategy — Quebec doesn’t want our oil — well, we don’t want their dairy products. It would be a good start to reforming national supply management — a 50-year-old agreement that needs to be modernized and soon.

Quebec doesn’t want our oil — well, we don’t want their dairy products.