At Quebec’s largest agricultural fair, dairy farmer Andrew Shufelt is trimming and brushing the coat of an Ayrshire named Princess to get her ready for a cattle judging competition.
“We’re selecting for animals that produce a lot of milk,” said the fifth-generation farmer from Brigham, Que. “If you leave your animals at home you can say you have good cattle, but if you don’t bring them out, you’ll never know.”
Andrew Shufelt prepares his cow Princess for competition at the Expo-Agricole in St-Hyacinthe, Quebec July 25, 2015. Christinne Muschi for National Post
But this year, farmers are worried about more than just the quality of their cattle as lawmakers from several countries — including the U.S. — call on Canada to dismantle its protectionist supply management system for dairy, egg and poultry, or face being shut out of the upcoming 12-nation Trans-Pacific Partnership.
“The consumer has a reasonable price for their milk and the producer gets (paid) a reasonable price,” said Shufelt. “If we were getting the same price as our neighbours to the south were getting, I think we would go out of business.”
From July 28 to 31, trade ministers sit down in Hawaii for what could be the final negotiations in the massive trade pact that covers 40 per cent of the world’s economy and gives access to a market of 800 million consumers in countries that include Japan, Australia and New Zealand.
The TPP will eliminate 90 per cent of trade barriers between members of the Asia-Pacific bloc, which is why other countries are pressuring Canada to scrap dairy production quotas reinforced by triple-digit tariffs that largely seal the industry off from the rest of the world.
But that puts the government in an awkward position, especially in an election year. Les Producteurs de lait du Québec says the dairy industry adds $19 billion every year to the country’s GDP, and provides 214,000 jobs with 49 per cent of all Canada’s dairy farms in Quebec.
“If tomorrow you end supply management as it is, you will basically see an entire economic sector collapse,” said Sylvain Charlebois, a professor at the University of Guelph’s Food Institute. “Our farms aren’t efficient enough and they aren’t competitive enough.”
“If you actually find a dairy farmer who would be in favour of ending supply management, I would question his or her sanity.”
Last Friday, in fact, about 600 farmers from across Quebec showed up for a rally in Sainte-Marie-de-Beauce, a riding with a high concentration of the province’s dairy farmers and the headquarters for Conservative Minister of State (Small Business and Tourism, and Agriculture), Maxime Bernier.
During the protest the MP climbed onto the bed of a pickup truck being used as a stage and addressed the crowd, promising them the government would protect the supply management system.
And when Outaouais-Laurentides farmer Réal Gauthier presented Bernier with a bucket filled with keys representing the businesses that would be forced to close if supply management was eliminated, the MP insisted he keep the bucket.
“This policy has existed for a long time, and we are going to continue to preserve the policy.”
Still, Gauthier said he was not convinced, as few details have been shared about how about the government plans to drive this hard bargain.
“I don’t think the government will follow through on what it is saying,” said Gauthier.
Big companies also seem to be bracing for a change in the regulations.
The CEO of the largest dairy producer in Canada, Saptuo Inc., has emphasized it is not lobbying to either dismantle or preserve the system. But he said that a “liberalized” system could allow Saputo to grow at home.
“If things would open up in Canada, we’re very well-placed to take advantage of whatever opportunities that might be there,” Lino Saputo Jr. told Reuters in February.
The Montreal-based company has already expanded through acquisition in the United States, Argentina and Australia, and is eyeing other locations.
Agropur, a co-op of 3,400 dairy farmers that has come out strongly against eliminating supply management, also seems to be uncertain about what’s next.
“We became the player we are today within the context of supply management so our organization is very comfortable with the system we have in place,” said Dominique Benoit, vice president of institutional affairs and communications at Agropur.
But Agropur, too, has operations in the U.S., which Charlebois says is common among large Canadian dairy companies trying to protect themselves against an end to supply management.
“If you look at acquisitions in recent years, they are certainly hedging against it,” said Charlebois. “There’s lots of hypocrisy going on here, let’s face it.”
Christinne Muschi for National PostSpectators watch a dairy competition at the Expo-Agricole in St-Hyacinthe, Quebec.
Charlebois himself advocates for changes to the supply management system, which he says has trained farmers to become effective cost managers but poor marketers.
He proposes pricing that is based on the top performing farms, not the average producer as it is now. He also recommends reducing some tariffs on imports and creating a second set of quotas reserved specifically for the export market.
“Canada cannot afford to look at the parade pass by. We need to be involved (in the TPP) and review our position on supply management. I don’t think we have much of a choice,” said Charlebois.
He also believes large processors like Saputo, Agropur and Parmalat could benefit from eliminating supply management if they could buy milk in bulk at a lower cost, though there is no guarantee where prices would move.
Among independents, only one farmer approached by the Financial Post spoke in favour of changes to the supply management system – and only on condition of anonymity, for fear of being ostracized by the tight-knit dairy community.
He said the quota system does protect Canadian farmers and factories – but has failed to protect them from imports. Or to help them sell their milk elsewhere. Under the current system, exports have remained under $300 million a year for the past decade, while imports reached a peak of $900 million in 2014 over the same period.
The end of supply management would hurt his business in the near future, the farmer said. But Canada could eventually become competitive on the world market.
Source: Financial Post
