August 5, 2020

 

Dairy farmers in Manitoba, Canada, worry over US trade agreement's impact on Canadian market

 

 

Market share lost to foreign imports may render Canadian dairy farming less viable for the next generation, said David Wiens, chair of Canada's Dairy Farmers of Manitoba (DFM).

 

"It makes it more difficult to bring in the youngest generation when the industry has been starved in the way of growth," Wiens told the Manitoba Co-operator.

 

The ratification of the Canada-United States-Mexico Agreement (CUSMA), which replaced NAFTA, has a negative impact on Canadian dairy. The agreement widens US dairy market access in Canada through tariff-rate quotas, eliminates milk classes six and seven (which comprised skim milk components used to process dairy products, and made them cheaper for domestic producers), and sets global export thresholds for milk protein concentrate, infant formula, and skim milk powder. Any exports above the threshold are levied.

 

As such, CUSMA causes the Canadian dairy sector to lose its competitiveness with the American dairy industry," Wiens said. The deal would provide US producers an estimated 3.6% of the Canadian dairy market.

 

"(Manitoba producers) share in all those markets," added Wiens. "It will impact all of us." One consequence is that displacement from American products means a dairy farm would produce slightly less milk.

 

"Where normally we would have growth, we don't have growth. Where normally we have areas where things plateau for a while, well, we'll actually have to reduce our production," Wiens said. "That has a huge impact on farms."

 

Dairy farmer Jill Verwey said trade losses, combined with losses from the COVID-19 pandemic, meant her family had to be circumspect with expansion plans. Verwey, who owns a mixed farm near Portage la Prairie, said they were expanding the dairy portion of the farm due to its higher return on investment, but will likely slow that plan down.

 

"Any additional access to any supply-managed sector is, I guess, going to tie our hands as producers to reinvest, and for us to retire and pass that on to the next generation," Verwey said.

 

Early this year, Canada's federal Ag Minister Marie-Claude Bibeau promised compensation for losses suffered under CUSMA. However, the timeline for the compensation has yet to be determined.

 

"Now we know what we have in front of us and they already know about the compensation for the first two agreements (CETA and CPTPP). The compensation for the new NAFTA will come soon as well," Bibeau told reporters following a speech to the Dairy Farmers of Canada.

 

"We're committed to protecting supply management, the system and to make these compensations."

 

- Manitoba Co-operator