Dairy farm­ers need sup­port as their world changes

Journal Pioneer - - EDITORIAL - Sylvain Charlebois is pro­fes­sor in food dis­tri­bu­tion and pol­icy, fac­ulty of man­age­ment, Dal­housie Univer­sity.

It was not the G7 most ex­pected. Not even close. But should we be sur­prised? As U.S. Pres­i­dent Don­ald Trump causes havoc and lashes out on Twit­ter against Cana­dian dairies, Canada is be­gin­ning to re­al­ize that there may be no NAFTA 2.0 af­ter all. Wash­ing­ton is ap­par­ently aim­ing for two sep­a­rate deals, but over the last few months those pay­ing at­ten­tion have rec­og­nized how our sup­ply man­age­ment scheme, which pro­tects dairy farm­ers, can grad­u­ally adapt to the new global com­pet­i­tive re­al­ity. It is hap­pen­ing with­out a re­vised pol­icy frame­work, and with no vi­sion or any strat­egy for the sec­tor; our Amer­i­can friends are clearly not play­ing along. Some re­ports sug­gest that milk prices at far­m­gate have started to drop in many prov­inces, in­clud­ing Que­bec. For years, the pric­ing formula to com­pen­sate dairy farm­ers was cen­tred on av­er­ages, with no in­cen­tives for farm­ers to be­come more mar­ket-driven. This seems to be chang­ing. If in­dus­trial milk prices drop, dairy farm­ers will ei­ther need to rein­vest or exit the in­dus­try al­to­gether. Forc­ing farm­ers to make a strate­gic de­ci­sion on whether or not they should serve the econ­omy is im­mensely de­sir­able, long over­due, and needs to con­tinue. This will al­low mo­tived dairy farm­ers to grow and re­ceive proper recog­ni­tion by our sys­tem. But growth is not just about pri­mary pro­duc­tion; it is also about pro­cess­ing. Re­cently, Coca-Cola an­nounced it would in­vest $85 mil­lion in its Peterborough-based Minute Maid plant to man­u­fac­ture its Fair­life brand in Canada. Fair­life is an ul­tra fil­tered, lac­tose-free milk that con­tains nine es­sen­tial nu­tri­ents with more than 50 per cent more pro­tein and 50 per cent less su­gar than tra­di­tional milk. This is a highly in­no­va­tive prod­uct for the Cana­dian mar­ket. In re­turn, farm­ers will tem­po­rar­ily of­fer Coca-Cola a spe­cial price for its milk. This in­vest­ment was pos­si­ble due to the will of On­tario dairy farm­ers to in­crease pro­cess­ing ca­pac­ity in the prov­ince and to sup­port what is seen as an in­cred­i­ble op­por­tu­nity to re­pur­pose a floun­der­ing prod­uct. Milk con­sump­tion per capita in Canada has been drop­ping for decades, and Coca-Cola’s ap­proach could en­tice many con­sumers to re­turn to it. While this amounts to just 35 jobs, they none­the­less sup­port the fu­ture po­ten­tial of dairy pro­cess­ing in our coun­try. In the past, sim­i­lar projects were de­nied by dairy farm­ers who be­lieved it would dis­rupt our quota sys­tem, which is de­signed to sup­ply only what we need. In con­trast, for­eign in­vestors like Coca-Cola seek re­li­able ac­cess to cheaper milk in order to main­tain their com­pet­i­tive­ness. New classes of in­dus­trial milk are be­ing cre­ated to ac­com­mo­date pro­ces­sors; the pres­sure is on, and the re­sult­ing changes are wel­comed. Un­der the Com­pre­hen­sive Euro­pean Trade Agree­ment and Trans-Pa­cific Part­ner­ship, the Cana­dian dairy mar­ket is be­com­ing in­creas­ingly ac­ces­si­ble. These deals have cre­ated an op­por­tu­nity in our quest to main­tain a per­fect equi­lib­rium be­tween sup­ply and de­mand; yet noth­ing is done to sup­port our dairy in­dus­try, to make it more com­pet­i­tive mov­ing for­ward. Sup­ply man­age­ment in the present is es­sen­tially a mi­rage, an unattain­able ideal. Af­ter decades, de­spite the over­whelm­ing po­lit­i­cal hypocrisy, many Cana­dian dairies are fi­nally show­ing signs of com­mon sense. How­ever, Que­bec re­mains idle; painfully and stub­bornly idle. Other prov­inces ap­pear to see the writ­ing on the wall and are tak­ing spe­cific, tar­geted mea­sures to demon­strate how sup­ply man­age­ment can change. Some sug­gest sup­ply man­age­ment could be­come a bar­gain­ing chip with the U.S. for this round of ne­go­ti­a­tions. By the looks of it, it al­ready is, and many are brac­ing for sig­nif­i­cant changes. This was very pre­dictable. None­the­less, to show real lead­er­ship in for­eign trade pol­icy, Ot­tawa will need to give some thought on how to sup­port our dairy farm­ers as their world is be­ing dis­rupted.

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