More problems emerge for Canada's dairy farmers in Canada-EU trade agreement

Saturday, January 11, 2014

by JIM ALGIE and SUSAN MANN

The Canada Europe Trade Agreement (CETA) almost inevitably will influence planned revisions this year to milk quota policy, newly-elected Dairy Farmers of Ontario vice-chairman Ralph Dietrich said Friday.

Exactly how the agreement will change things is hard to say. But trade issues loom large among farmers working within Canada’s supply-managed farm commodity systems.

Elected to the Dairy Farmers vice-chairmanship, Thursday, Dietrich told a farm meeting in central Bruce County, Friday, he and other Dairy Farmers board members were “shocked” and “surprised” by details of federal government announcements in October over potential increases of European dairy imports.

The Ontario board has joined active national lobbying to seek an administrative role for farmers in the import allocation process and to lengthen the period for implementation of the new deal to as much as 10 years. The agreement has yet to be ratified by European Union member countries or by Canadian provinces; but Dietrich figures the provinces are on side already because of gains in other parts of the economy.

It’s a clear hit for dairy, however, particularly for fine cheese production based mainly in Ontario and Quebec. From existing import quota at 20,000 tonnes, CETA raises the limit to 37,700 tonnes. That represents about 63 per cent of the fine cheese market, Dietrich told farmers during Dairy Day sessions at Grey-Bruce Farmers Week in Elmwood.

“There are huge, huge implications,” Dietrich said. He estimated lost quota based on new imports could amount to a cut of about 2.25 per cent.

It’s one reason Dairy Farmers board members voted initially against a proposed milk price increase to take effect Feb. 1. They later agreed with the move based on production cost calculations and the votes of other provinces.

“I believe it’s a mixed blessing,” Dietrich said of the pending price increase. “There’s a price point where you lose your consumer,” he said.

“We have to be careful we’re not getting to that price despite the fact out production costs are going up,” Dietrich said.

Dairy supply management in Canada faces a further challenge from current talks on the Trans-Pacific Partnership. Negotiators have announced general agreement in most areas of trade except agriculture, Dietrich said.

He fears the CETA example may suggest to dairy exporters such as the United States, Australia and New Zealand that “Canada is backing down on supply management.”

Dietrich operates a 90-cow milking operation near Mildmay and represents DFO members in Bruce and Grey counties. Two former board representatives for the area, Bruce Saunders and the late Ken McKinnon, also held executive board offices with the provincial milk board.

Quota policies introduced four years ago to limit prices and to simplify the participation of newcomers joining the province’s milk supply are due for review this year. Speaking with farmers, Dietrich emphasized the need for them to consult their county milk committee members about adjustments they hope to see.

Interviewed later, Dietrich said recent trade developments will likely add pressure to the quota review process.

“Supply management in my opinion has to change; nothing remains the same,” Dietrich told reporters in Elmwood.

“We have to be cognizant of government. Government is who we rely on for supply management security,” Dietrich said. However, he also said further adjustments in quota policy will depend on milk producers.

“When we are involved in our quota policy we have to take into consideration the government interpretation of what we do . . . But it’s an industry decision,” Dietrich said.

“The producers need to make the decisions, not the board and I can tell you this, it’s not going to be unanimous.”

photo: Bill Emmott

On Thursday at the provincial commodity organization’s annual meeting in Toronto, chair Bill Emmott told delegates it isn’t clear how much use Canada will be able to make of the new duty free access for Canadian beef in CETA.

Canada has been given new access for 64,950 tonnes of beef in the agreement but the Europeans have requirements for beef free of the growth additive, ractopamine, along with other restrictions.

Emmott told delegates 30 per cent of all beef in Canada comes from dairy animals and that number is even higher in Ontario.

Canadian farmers use genetically modified crops to feed their animals and there are also restrictions on GM crops in Europe, he noted. Those restrictions may put limits on the actual amount of beef farmers can export.

General manager Peter Gould said in his report the announcement by the Canadian government this past fall that the agreement contained a provision doubling the amount of tariff-free cheese the European Union could export to Canada was “unexpected and a clear signal that the dairy sector needs to improve its working relationship with the federal government and redouble efforts to ensure that supply management is not traded away in future negotiations.” BF