With U.S. President Donald Trump’s “America First” rhetoric, it looked like NAFTA renegotiations would end in a stalemate.
However, Canadian giveaways to appease Trump are keeping talks for a reformed North American Free Trade Agreement alive.
Farmers and consumers must not be complacent regarding the federal government’s political commitments to defend supply management against Trump’s demands.
Supply managed farmers produce the required quantities in exchange for a farmgate price that reflects the cost of production.
The system creates stability in the farming community, eliminates the need for government farm bailouts, allows processors to maximize plant capacity, reduces food miles and prevents waste. Consumers are offered a wide range of quality products at prices on par with countries without supply management.
Farmers who work with animals, soils and plants have a limited ability to control production when prices are low. While it can make sense for individuals to increase production to maintain income, when everyone does the market is glutted and prices drop. A vicious circle of overproduction and declining prices becomes a crisis.
Systemic overproduction has produced crises everywhere dairy farmers produce for the international market.
In dairy exporting countries without supply management, massive permanent government bailouts are paid to prevent disasters.
Canada’s supply management system is a beacon of success, increasingly recognized and envied around the world as an elegant solution to overproduction, price volatility, and rural economic vitality.
The European Parliament is presently dealing with a resolution to reintroduce supply management after abandoning it in 2012, as member states increasingly see no other solution.
Yet our political leadership has a history of trading it away in bits and pieces.
When the World Trade Organization was founded in the 1990s, Canada was forced to replace five percent of our domestic market with imports. Since then, American processors have used tariff loopholes to export dubious new products into Canada. Canada did not enforce border control measures and sat idly by while these imports caused havoc.
Farmers were forced to manage the situation by absorbing quota cuts and providing discounts to Canadian processors. Consequently, the farmgate price is now well below the cost of production formula Canada committed to when to the system was established.
Upon signing the Comprehensive Economic Trade Agreement with Europe, Canada agreed to import 17,000 additional tonnes of European cheese, taking the production of 400 Canadian farms out of our economy. Although significant here, it will do nothing to help European dairy farmers swamped by overproduction.
With the Trans-Pacific Partnership, the Canadian government agreed to gradually increase imports for all supply-managed products and immediately eliminate tariffs for milk protein imports displacing even more Canadian poultry, eggs and dairy.
Although many U.S. dairy farmers and other experts acknowledge that the problems in the U.S. dairy industry are due to overproduction and that access to Canada’s market will not solve their problems, a few people are always willing to lobby on behalf of processors and traders with the expectation of future rewards.
American excess production would fill the Canadian market overnight, while our retailers could continue charging current prices.
Farmers, rural economies and the Canadian public have a lot to lose if our dairy sector is sacrificed to appease Trump.
Canada should proudly uphold our supply-management system for the great policy innovation it is. We must not allow NAFTA negotiators to give away our dairy, poultry and egg farms with a wink and a nudge by chipping away at supply management’s foundations to the point that it can no longer stand.
Jan Slomp farms at Courtenay, BC and is the National Farmers Union’s 1st Vice President (Policy).