Dairy farmers were seething, but grain and meat producers were optimistic Monday after the announcement a North American trade deal had finally been reached.
Dairy Farmers of Canada launched a Twitter campaign against the new United States-Mexico-Canada Agreement, even though Prime Minister Justin Trudeau and Foreign Affairs Minister Chrystia Freeland promised compensation.
“A handful of dollars doesn’t replace the livelihood of dairy farmers,” said one tweet.
A handful of dollars doesn’t replace the livelihood of dairy farmers.
— DFC PLC (@dfc_plc) October 1, 2018
DFC president Pierre Lampron said the Canadian government once again sacrificed domestic dairy production for a trade deal.
“Today the message sent to our passionate, proud and quality-conscious farmers and all the people who work in the dairy sector is clear: they are nothing more than a bargaining chip to satisfy (U.S.) president (Donald) Trump,” he said in a statement.
During a news conference in Ottawa, Trudeau described the concessions as “not ideal.”
Under USMCA, the U.S. will gain 3.59 percent market access for dairy products and Canada will give up its Class 6 and Class 7 milk pricing systems.
The agreement also expands American access to the Canadian egg and poultry market.
“That’s curious, because the U.S. poultry industry didn’t particularly ask for that,” said Al Mussell, of Agri-Food Economic Systems, a research organization in Guelph.
While all stakeholders had yet to examine the details of the agreement, and it needs to be ratified by all three countries, initial reaction was as expected.
Grain-based organizations welcomed the certainty of continued trade and equal grading systems in Canada and the U.S.
Cereals Canada president Cam Dahl said ongoing stability within a modern agreement is key. The agreement includes chapters on biotechnology and new plant breeding techniques, for example.
“USMCA also sets the stage for equal treatment by the Canadian grading system for farmers on both sides of the Canada/U.S. border,” he said in a news release. “This is a modernization that addresses issues that did not exist when the original NAFTA was drafted.”
The Canadian Meat Council said the deal’s importance can’t be understated.
“The North American meat industry is fully integrated, and having uninterrupted access across the three countries is critical,” said board chair David Colwell.
The Canadian Pork Council said the agreement comes at a time when producers are grappling with low prices and market uncertainty; USMCA represents stability.
Securing duty-free access for Canadian beef was important, said the Canadian Cattlemen’s Association, as was maintaining a dispute settlement provision.
CCA said new chapters on regulatory practices and competitiveness “provide an institutionalized pathway” to continue the objectives of continuous improvement.
But for the supply-managed sectors, the deal is a blow. Alberta Milk called it a dark day.
SaskMilk chair Mel Foth, who milks about 600 cows near Hague, said he was discouraged and disappointed.
“We’re letting the Americans dictate our dairy policy,” he said. “The Americans don’t let us dictate their dairy policy.”
He said producers like him have invested time and money to expand and improve production only to let Americans take the market share. A new barn under construction on his farm would allow him to milk up to 800 head, but he says it’s likely to remain unfilled now.
He doesn’t put any faith in promises of compensation for lost market share, saying they are just words.
“We didn’t get into the dairy industry to get compensated in that manner. We want to earn a decent living,” Foth said.
The loss of Class 7, an ingredients class, will affect the whole industry, and processors in particular, he said.
“There is processing that may not and probably will not transpire,” he said.
The Dairy Processors Association of Canada said the government had not stood up for the sector as promised but undermined it instead.
It said decreased domestic production due to the market access granted in the three major trade agreements signed in the last few years will result in losses of more than $2 billion. The changes in policy under USMCA will stifle innovation and stunt market growth, causing further losses, DPAC said.
“USMCA is definitely the wrong deal for Canada’s dairy sector — its farmers, processors and the thousands of hard-working Canadians they employ,” said DPAC chief executive officer Mathieu Frigon.
Dairy processing is the second largest food processing industry in Canada, employing 24,500 people.
DPAC added it expects to be part of a new working group Freeland announced during a news conference.
Freeland said industry consultations “have convinced us to form a new working group with stakeholders in the industry to formulate a strategy that will allow us to maintain the vitality of our dairy industry for today and the future.”
She said government support for the sector has never wavered and the agreement preserves and maintains supply management.
“It means some freer access to markets, similar to what was agreed upon in CETA (Comprehensive Economic and Trade Agreement with the European Union) and the TPP (Trans Pacific Partnership, now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or CPTPP) but the future of (supply management) is not challenged,” she said.
“To mitigate the impact of these changes the government has promised our producers that they will be fully and fairly compensated for all loss of market shares.”
Meanwhile, egg and poultry producers are projecting decreased production and the loss of farms as a result of USMCA.
The Canadian Hatching Egg Producers aren’t directly affected by additional access but said they are likely to be affected by chicken imports.
Chicken Farmers of Canada said its members are relieved that more than a year of uncertainty is now over even as the USMCA grants access to an additional 12 million kilograms of chicken.
CFC said the government now needs to turn its attention to other issues costing chicken producers money, such as how some processors import broiler chickens and falsely declare it spent fowl.
Mussell said stakeholders need time to pore over the text of the agreement to better determine how they will be affected. Increased dairy market access was expected, he said, but the loss of Class 6 and 7 will take a bigger bite out of the industry.
The question of whether the federal government can simply end Class 7, which was an agreement between provinces and processors, still has to be answered.
Class 6 was Ontario’s provincial class to sell milk proteins, a new class of ultrafiltered milk, at world prices and therefore be competitive. Class 7 was the national version of that.
Class 6 allowed for the sale of domestic dairy ingredients at international prices, rather than at higher domestic prices.