Manitoba’s dairy farmers are beginning to find their footing in a new world that, for the first time in decades, includes significant dairy product imports.
That was the message a three-producer panel shared with the Manitoba Co-operator, at the recent Dairy Farmers of Manitoba (DFM) annual convention.
A year ago those same producers spoke to the Co-operator, saying they felt like powerless pawns in a larger game.
Today they could be described as ‘cautiously optimistic’… despite potentially losing close to 20 per cent of their market if permitted imports translate into products at the grocery store.
But despite that, Alain Phillipot, of St. Claude, said he sees a heartening silver lining — an outpouring of support from Canadian consumers for domestic dairy producers.
“Canadians have shown huge support for supply management,” said Phillipot. “After the USMCA trade deal, when negotiations began, we saw an uptake on the Blue Cow.”
That logo was a voluntary marketing campaign, where dairy producers requested processors include the logo on their label to denote the milk was from Canadian farmers. Initially processors were reluctant because they felt the logo would crowd out other information on the label.
But because of a grassroots demand to know where their milk was coming from, most of these producers have now come around and include the logo on their packaging.
Matt Plett, of Blumenort, said that while the market losses weren’t welcome, at least now the major trade deals have been negotiated, which leaves some sense of predictability.
“In one sense, it’s easier to plan because it’s done,” he said. “We have figures. We know roughly what the market is going to do.”
Matt Plett says there’s a bit more certainty for dairy producers this year.
But he also noted he’s been surprised and disappointed before, such as when the Comprehensive and Progressive Agreement for Trans-Pacific Partnership deal was signed. At that point he says he “… breathed a sigh of relief,” because he thought that was the end of trade negotiations.
“But very shortly thereafter, it came up that NAFTA needed to be renegotiated. From our perspective that came out of nowhere,” said Plett.
“So, I would say that feeling that we’re out of the woods and that this is behind us, won’t come back too easily.”
The losses have been very real, with estimates varying a bit, but hovering around the 20 per cent loss of market share, if the various tariff-free import allocations are fully filled.
DFM chair David Weins pegs the total lost market share at around 18 per cent, over the past several years.
Carol Boonstoppel, a dairy farmer from Grunthal, says she’s already seen European cheese being used as a loss leader to bring customers into grocery stores.
“I’ve seen (social media) posts,” she said. “‘Gouda cheese is on sale this week at Sobeys, go get your wheel or two.’”
Her concern is people will only buy so much cheese.
“If they’re going to buy a kilo of European cheese, we just lost our Canadian cheese market share.”
Phillipot noted that this was the first year that the Europeans filled their quota from CETA.
“We’ve got 17,000 tonnes competing with Canadian cheese,” he said.
That’s been offset, at least partially, by the first instalment of a $1.75-billion, eight-year plan to compensate farmers for market losses under the trade deals.
While that was welcome, Phillipot says it doesn’t match what was given up.
“What we’ve lost is forever. That’s never going to come back to Canada,” he said. “That production is lost for us. That means jobs are lost in the processing sector. The compensation will never make up what was lost.”
While the big trade deals are out of the way, Boonstoppel pointed out that there are still agreements being negotiated.
She was speaking specifically about MERCOSUR (Argentina, Uruguay and Paraguay) and the Pacific Alliance (Chile, Mexico, Colombia and Peru).
“We had our prime minister say that there will be no more concessions made to the domestic dairy industry, but we’ve heard this before,” she said. “It still feels like there is a dagger held over us.”
She and her husband are looking at exiting the industry in the next 10 or so years with hopes that their children will take over.
“But it’s a little hard to encourage your kid to join an industry where we are unsure that what we have today will be there in 10 years for them,” she said. “Do you encourage your kid, even though they love the job, to go into something where they may face bankruptcy in 10 years?”
Phillipot agreed, saying history has proven dairy producers can’t take the government of the day’s word at face value.
“We’ve learned over time that in trade negotiations you become poker chips at the table when they start trading; and trading isn’t always transparent,” he said.
“You don’t always know what’s going on behind closed doors. Sometimes they think they’re doing something that’s helping you.”
Alaine Phillipot says he and other dairy producers were heartened by an outpouring of support from Canadians over the past year.
photo: Reuters/Rod Nickel
He cited, for example, that policy-makers claimed to have “saved supply management,” but noted the view from the farm level was far different. There they’re seeing market share surrendered domestically, while at the same time the government is agreeing to other side agreements that shut them out of potential export markets.
Phillipot was specifically speaking about the scrapping of the “Class 7” designation. Class 7 was a new milk class Canada had recently added to address the surplus of non-fat milk solids.
“So we lost three per cent of our market and now we’re not able to make it up on the export market,” he said. “They shrunk our market and then bound us to an agreement that doesn’t allow us to sell our protein concentrates. It becomes very difficult.”
Politically the picture is definitely beginning to lighten, the panel participants said.
One of the biggest victories came in the October federal election, when Maxime Bernier, the most vocal opponent of the industry’s supply management system, lost his Quebec seat to a former dairy farmer.
“To me, Canadians have clearly shown they trust us and they’re behind us and we want to be good stewards of that trust,” said Plett. “Also, the fact that a former dairy farmer beat Max Bernier in his own riding, I find encouraging.”
But despite receiving the public’s support as well as the support of the four major political parties, dissenting voices on supply management are still there. And it wasn’t lost on them that Bernier came very close to strengthening those voices when he came within a hair’s breadth of winning the Conservative party leadership race. However, Phillipot was quick to point out that, while it wasn’t the only plank in his platform, it was the issue that sank him, in the end.
“I don’t think we should ever feel safe because then you start to take things for granted,” cautioned Plett, though he did agree the major parties have all clearly demonstrated their support.
“I think it was good that, in his own riding, Bernier was easily beaten by a Conservative despite splitting the (small-c) conservative vote,” Plett said. “The fact that he raised this as a wedge issue and subsequently lost the Conservative party leadership and then his own seat, are promising things. But the ideas are always out there.”
In the end the Canadian consumer was the greatest source of optimism for these farmers.
“I’m more confident now than I was before because we’ve seen Canadians back us up,” said Phillipot. “After this election, it became clear that people are behind us. That’s what’s going to count in the end.”
He said he is currently investing in his dairy now and that his son will be entering the business soon.
“I believe there is room for him and that he’s got a future,” Phillipot said.
Boonstoppel is also feeling a little more positive, for similar reasons.
“The Canadian consumer has really stepped up to the plate,” she said. “We’ve actually seen a market increase of consumers wanting our Canadian product. As long as we have a Canadian consumer who’s willing to buy our product, we’ll be here.”
Plett is in a bit of a different position than Alain and Carol because his kids are a bit younger.
“We’re not really at that crossroads yet of what the future holds,” Plett said. “But I’d probably echo their sentiments. In one sense, nothing’s changed. UMSCA has not been ratified yet, so how that will end up looking is a still up in the air. But the support that Canadians have shown towards the dairy industry is encouraging.”
Phillipot summed up the mood when he said challenges weren’t unique to the dairy sector.
“Challenges exist no matter what industry you’re in. We’re in a good industry and there’s a lot of camaraderie in the dairy industry,” he said. “These challenges always need to be dealt with but we’ve shown the ability to do that in the past and I trust that we’ll figure it out for the future as well.”