As delegates from Canada and the European Union continue negotiations of the comprehensive economic and free trade agreement in Brussels, supply management in the Canadian dairy industry appears to be secure.
From his farm near Chemainus on Vancouver Island in British Columbia, long-time dairyman Wally Smith points out the need for Canadians to uphold the current business model of what he calls orderly marketing in Canadian dairy.
Courtesy of Creative Commons. By Martijn vdS
“Farmers across the world are in dire straits,” said Smith, whose farm has been in his family since 1959. “We hope that our system will remain in tact.”
Supply Management
Smith, who maintains a herd of nearly 70 cows, feels that the current dairy business model administered by the B.C. Milk Marketing Board maintains viability for Canadian producers throughout economic turbulence, and also ensures that dairy prices for consumers are standard across the country.
Since the early 1970s, the marketing board has regulated milk production through quotas that balance production and consumption throughout the year. It also licenses producers, transporters and processors, and establishes the price that processors pay farmers for their milk, while preventing foreign products from being dumped into Canadian markets.
Politics and Agriculture
“The B.C. dairy industry operates on a good business model,” said Steve Thomson, B.C.’s minister of agriculture and lands, in an emailed statement. “Our dairy industry is profitable, well-capitalized, and produces a safe and high-quality product. The strength of this industry shows that supply management works.”
Despite the will of provincial leaders, the ultimate decision to ratify the agreement with Europe is for the federal government to make, but the provinces and their respective marketing boards are stakeholders in the process.
Thomson said that provincial officials continue to raise their concerns that supply management should remain intact throughout the trade negotiations with Europe.
On March 3, in the Speech from the Throne, the Conservative government signaled its continued support for supply management.
“Our Government will continue to support Canada’s farmers by ensuring freedom of choice for grain marketing in Western Canada and strongly supporting our supply-managed sectors at home and in international negotiations,” read Michaelle Jean from the government-prepared speech.
On January 15, while at the University of British Columbia, federal Liberal leader Michael Ignatieff weighed in on the subject. Ignatieff said that his party supports access to free markets, but he said that free trade should not be absolute.
“We believe that free trade is good for jobs, good for employment, and good for creating new markets,” said Ignatieff. “But we want to make sure that vital Canadian interests are protected.”
“One of the big concerns that we have is to do with supply management,” said Ignatieff referring to Canadian farms. “We want to make sure those are not damaged by free trade negotiations. So free trade yes, but let’s get those negotiations right.”
Free trade
The free trade negotiations between Canada and the E.U. are part of a multi-session commitment targeted at reducing trade barriers and promoting economic growth for both parties. The Canadian government expects the comprehensive trade agreement to boost Canada’s economy by $12 billion annually.
The second round of negotiations began in January in Brussels, and three additional sessions are planned by fall of 2010. Despite focus on industries such as aerospace, chemicals, beef, wheat, wood products, fish, and automotive vehicles, there is little political appetite in Canada to compromise supply management in dairy for the sake of freer trade.
Dairy is the third largest agricultural industry in Canada contributing over $13 billion in annual sales.
While supporters point to the stability of supply management, the dairy industry in Canada has been in retreat. Since 2001, there has been an overall decrease in Canadian milk producers by 18 per cent.
More than just economics
Regulation in Canadian dairy is about more than price standardization and production quotas. Smith said that current Canadian laws ensure that dairy products sold in Canada are not chemically supplemented with controversial hormone treatments aimed at increasing milk production.
“There are no hormones being used anywhere in Canada,” said Smith, stating that farmers must adhere to strict guidelines set by the Canadian Food Inspection Agency regarding the medical treatment of their herds, and farmers would be in violation of Canadian law if non-compliant.
Smith concedes that at the end of the day it is the federal government that makes the decisions, but as a stakeholder, he considers the dairy industry to be a healthy and sustainable model no matter what the negotiators decide.
“We think it’s still early, and we are certainly monitoring it,” said Smith, before returning to his morning tasks on his farm on Vancouver Island.
