International dairy groups take aim at Canadian dairy industry

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In public relations double-speak, when someone claims that someone else is making "outrageous claims" as did a spokesperson for the Dairy Farmers of Canada, it really means "they've nailed us to the wall and we are so-screwed".

In addition, and not reported in the above story, is the claim by the foreign dairy interests that Class 6 (in Ontario) and Class 7 (in Quebec) milk is being sold, by farmers, at less than the cost of production which is, apparently, a significant trade no-no on the part of Canada because anything sold, by producers, at less than the cost of production cannot ever end up being exported.

The "smoking gun" and what hoists Canada on our own petard is, of course, all of our nauseating folderol and flapdoodle about supply management being based on the "cost of production" and the ludicrous impossibility that the same milk from the same cow on the same farm simultaneously has two different costs of production depending whether it is used in Class 6 or some higher class for which farmers get paid more money.

"Oh what a tangled web we weave, when first we practice to deceive" - Walter Scott

Stephen Thompson, Clinton ON

Quote from Stephen "anything sold, by producers, at less than the cost of production cannot ever end up being exported." Exactly, that is what the U.S. claims they do. Unfortunately, the long standing U.S. Farm Bill encourages subsidies, predominately grain subsidies to illegally "dump" ever increasing grain surpluses on the rest of the world.

What basically the US is saying is we don't want Canada using that milk that we pump across the border under the diafiltrated label to compete with us in third country markets, no matter how small amount that might be.

In other words to have the best of both worlds, with of course the ability to subsidize their export milk to the hilt and at the same time limit competition of imported milk products far more effectively than Canada's Supply Management ever has or ever could and of course they will probably want a ruling immediately if not sooner.

The mantra of "cost-of-production" has long-been used by dairy and poultry farmers to justify their ability to screw consumers, but it's now a double-standard that has come back to bite them, and it looks good on them.

The Dairy Farmers of Ontario (DFO) knew the risks of being taken to task by foreign dairy interests when they created their "finger-in-the-dike" Class 6 (world price) category, but out of a sense of what could have only been greed and desperation, they went ahead and did it anyway. And, not surprisingly, the basis for the objections raised by foreign dairy interests appears to turn on the definitional absurdities inherent in the term cost-of-production when it applies to Class 6 milk sales.

The letter states that one example of the "deeply problematic policy approach by Canada" is the following:

"Ostensibly temporary special classes of milk pricing, such as Class 6 in Ontario which offers Canadian processors non-fat milk solids, at subsidized prices well below the domestic cost of production, for ingredient applications like skim milk powder, MPC and ultra-filtered milk."

The underlying issue is that Canadian dairy processors were importing dairy ingredients from the US at prices reflecting the US cost-of-production which, by definition, does not attract anti-dumping duties, but they are now being offered Canadian product at the same price which is well-less than the Canadian cost-of-production fabricated in the back rooms and/or boardrooms of DFO and DFC (Dairy Farmers of Canada) to keep supply management on life-support.

This means that, thanks to the absurdly-high cost of supply managed production when compared to the real-world cost of production in the US (where debt per cow doesn't get above $3,000 per cow), the US isn't dumping milk but Canada is, and not to foreign processors, but to our own.

While that might not seem to be so bad because it gives the appearance that nobody but Canadians would be adversely affected, the letter notes that the creation of Class 6 type milk categories:

".....subsidizes the export of Canadian dairy products to unfairly compete with our products in third country markets."

And yet, in response, the best the DFC can muster is to warble and bleat that its critics are making "outrageous claims" as if that sort of verbiage will disguise the outrageous, greedy and desperate actions behind the creation of Class 6 milk in the first place.

What's most nauseating of all is that Canada will undoubtedly spend oodles of money (which could be better spent re-establishing AgriStability margins) defending dairy farmers from the folly of their own greed, duplicity and slipperiness and all the while, Canadian dairy farmers will continue to claim that they receive no money from the government.

More to the point, if only half the time, effort and money was spent, by government, on our livestock sector as is spent defending the folly of supply management, we wouldn't need either AgriStability or RMP.

Stephen Thompson, Clinton ON

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