Trade, supply chain challenge dairy producers

There are 12,500 dairy producers in Canada, who provide milk to three major processors, who in turn supply product to four main retail chains.

Who has the power?

Alberta Milk chair Tom Kootstra says the dynamics of the dairy industry require producers to co-operate if they want to achieve their goals in relation to powerful forces in the rest of the supply chain.

“I would submit to you that if 12,500 dairymen are not organized, four major retailers and three major processors will have a strong influence over us,” Kootstra said in an interview after an address to Alberta Milk’s southern region producers in Lethbridge.

He spoke of “the new market environment” for producers that involves increased imports under trade agreements and continued defence of supply management.

The Comprehensive Economic Trade Agreement (CETA) that Canada signed with Europe will see 17,700 more tonnes of access for European cheese into Canada, said Kootstra. Some 16,000 tonnes of that will be for specialty cheeses, and the rest for industrial cheese used in the food service sector.

“At both the federal and the provincial level, our elected officials, our MPs and MLAs, continue to point out to us that Canada has an opportunity also to export into the European community and they’re challenging us to find ways to capitalize on that market,” Kootstra told producers.

The Trans Pacific Partnership is another trade agreement closely watched by the industry.

“To date we have consistently been assured by the negotiators and the government that they are doing their utmost to protect the pillars of supply management,” said Kootstra.

“But I would be foolish to say that I have no concern.”

Kootstra said the supply management system is often viewed as antiquated, but its record of providing price stability is evident.

“The people that are voicing displeasure with the system often promote free market. What is free market?” he said.

“Supply management is nothing more than an orderly marketing system where the production of an agricultural product meets the domestic demand.”

The United States allows fewer dairy imports than Canada does, said Kootstra. In New Zealand, which is often touted as having the model for a free market, one company, Fonterra, controls 95 percent of production.

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