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Americas


October 2, 2018

 

Revised US-Canada trade deal a bad news for Canadian dairy
 

 

After more than a year of tensions arising from NAFTA renegotiations, the US and Canada finally agreed to an updated trade agreement - now known as the United States-Mexico-Canada Agreement - which would give US dairy farmers a 3.6% access to the Canadian dairy market.

 

However, the agreement also bypasses Canada's protectionist dairy policies - a chief grievance of US President Donald Trump - which could mean hundreds of millions in lost revenue for Canadian producers, CNBC reported.


As a result of the new deal, Canada's dairy farmers will face an unwelcomed development : the removal of the country's domestic milk pricing price. This action was derided by Pierre Lampron, president of Dairy Farmers of Canada, as Ottawa's willingness to "sacrifice domestic dairy production when it comes time to make a deal."


In addition, the Canadian dairy trade group voiced concern that the deal would sink the local dairy sector into a crisis, putting the jobs of more than 220,000 Canadians at risk.


At the moment, Canada's supply-management programme enables provincial dairy marketing boards to determine local dairy prices. The federal government, for its part, monitor national production and demand, and calibrate policies with provincial boards and sets production quotas.  


The new agreement is expected to curtail advantages enjoyed by Canadian farmers under the supply-management system, and while it will not be removed, some producers doubted that the government's offer of  compensation would help. 


Also, the future removal of Class 7 policy - which supports Canadian milk prices in competing with cheap supplies from the US - appears to deliver a more serious blow. This arrangement, which will be implemented under the revised deal, would render it "impossible" for Canadian farmers to "export protein-based dairy products," one farmer complained.   


On the other hand, Class 7 has been criticised by US leaders as Ottawa's move to impose 270% tariff on milk and an opportunity for the country to create a glut in domestic milk supply and then dump highly subsidised milk products overseas.


Meanwhile, the revised trade agreement has roused opposition in social media which demands a boycott of imported US dairy products.


While the provisions in the updated deal would likely be implemented in the coming years, it is awaiting ratifications in Canada, Mexico and the US, Canada Prime Minister Justin Trudeau said.


"But what I can say is, free trade in North America, a trading zone that accounts for more than one-fourth of the world's economy with just 7% of its population, is in a much more stable place than it was yesterday. We now have a path forward," he added.


- CNBC

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