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CETA undermindes the Canadian dairy industry

As I write this column, federal minister of agriculture Lawrence MacAulay has just announced a government investment of $250 million over five years to help update equipment on Canadian dairy farms, and an additional $100 million over four years to assist with updating Canada’s aging dairy processing infrastructure.

This funding comes as a result of the recent signing by Prime Minister Trudeau of CETA, the Comprehensive Economic and Trade Agreement. Once ratified, the deal will usher in tariff-free imports of a wide range of goods between Canada and numerous European countries.    

For many sectors, this will be a positive. For the Canadian dairy industry, however – and specifically Canadian cheese-crafters – it’s a decided negative.  

As part of the deal, an additional 17,700 tonnes of foreign fine cheese will now be entering the Canadian market yearly. As Dairy Farmers of Canada noted in a recent press release, this is equivalent to the entire yearly production of the province of Nova Scotia and it will cost Canadian dairy farmers up to $116 million a year in perpetual lost revenues. This equates to a market loss of about 2%.

Critics of the Canadian dairy industry will view our lukewarm response to the recently announced funding with skepticism. They often view Canadian dairy to be a coddled industry, with what they consider to be unfairly protective measures due to our economic structure of supply-managed production.

But what many people fail to realize is that this is an industry that has built itself up via internal investment.

Across the border, the US Farm Bill offsets a good amount of the cost of production for many dairy farmers. In Canada, by contrast, our structure is self-supporting. The stability of supply management has fostered ongoing reinvestment amidst multiple generations of Canadian dairy farmers. The controlled aspects of the industry have fostered slow but extremely stable growth. Farmer dollars have built this industry up.

Now, factor this against the political climate of recent years.

First, dairy farmers have had to accept the impending market losses of CETA. This was soon paired with an intensive negotiation period for the Trans-Pacific Partnership. In the end, that deal granted an additional market loss of 3.24% should TPP move forward to implementation.  

These slices of the industry given away as part of trade agreements are worth vast amounts of money and – to some degree – our industry falls victim to foreign interests amidst these trade negotiations. Thankfully, with the impending Trump administration soon occupying the White House, as per his outward protectionist rhetoric, TPP appears to be quite likely dead in the water.  

Another common criticism by free-trade devotees critical of supply management is that the Canadian dairy industry doesn’t focus sufficiently on export markets. In regards to fluid milk, we operate as a domestic-focused market that provides high quality, locally supplied product to local consumers. When you drink milk, you are supporting your surrounding provincial communities and local economy.  

A quick glance at the current global dairy market and the foresight of our structure is clear. In England, their dairy industry is in literal free-fall with record numbers of farm bankruptcies as milk ships for less than the cost of production. This is a common issue around the world right now due to price volatility, a global pricing glut and significant issues of oversupply.  

In the US, the situation is equally challenging in certain regions. With funding under the US Farm Bill ever diminishing and a downward spiral of global prices in recent years, their outlook is bleak. Yet these are the very markets our critics feel we should be pushing to enter.

Moving forward, the underlying focus for Canadian dairy – as it should be in any well-run industry – is sustainability. Canadian dairy farmers want this industry to endure and prosper for generations to come. This is represented in the high quality standards adhered to in the dairy farming practices in this country. So, I urge you, have a glass of milk right now. Drink your milk. Drink Canadian.

Trevor Hargreaves is the director of producer relations and communications

for the BC Dairy Association.

Vol.102 Issue 12

CLBC Dec16 1.pdf