Dairy industry protections draw ire, praise

The worldwide success of Canada’s dairy processors is getting attention inside and outside the country.

However, what does that success signify about Canada’s dairy industry?

It’s something that draws different reactions.

“One of my big problems is that the Canadian (companies), Agropur and Saputo, they are making a lot of money because of this supply management system,” said U.S. representative Collin Peterson, a Minnesota Democrat.

“And they can’t reinvest it in their own industry because they won’t allow them to grow,” which has resulted in the first and third largest dairy processors in the United States being Canadian.

According to Saputo, the company is one of the world’s 10 largest dairy processors, the third largest in Argentina, the fourth largest in Australia and the third largest cheese producer in the U.S.

Peterson said a shielded Canadian industry has allowed companies to grow in a protected environment and then buy processors in open markets such as the U.S, which doesn’t seem right.

However, that seems just fine to Alberta dairy farmer and Alberta Milk chair Tom Kootstra.

He said supply management hasn’t been bad for companies in Canada, and their expansion outside Canada isn’t a sign that supply management has caused domestic stagnation. Instead, it is just a matter of size and potential.

“They’re moving into the U.S. because it is a larger market,” said Kootstra.

“The Canadian market is mature.”

Montreal-based agriculture policy analyst Bertrand Montel doesn’t see Canadian dairy companies’ international success as necessarily a sign of success for Canadian supply management. The companies have grown and thrived, but the Canadian dairy industry and market are stagnant.

Success outside Canada is a result of the companies choosing to use their profits outside of Canada’s stagnant industry.

“Most of their profits will be made abroad and most of their investments will be made abroad,” said Montel.

He said there seems to be an assumption that Canada’s dairy industry can’t survive without supply management, but he doesn’t believe that’s true. The major dairy processors aren’t looking to disappear, and he doesn’t see why Canadian dairy production can’t be world competitive.

“Looking at what is happening in California and the western U.S., with water assets and water management (beset by drought), Canada has some assets that are of interest to investors,” said Montel.

The Trans Pacific Partnership is seen as a threat by defenders of supply management, including most dairy farmers, but he said the agreement could lead to investment coming into Canada’s dairy industry rather than causing Canadian dairy money to flow out of Canada as it is now.

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