Last month the federal government announced another “compensation” package for dairy farmers.
Canadian dairy farmers have been deprived of 3.5 percent of our dairy market to European cheese under the Comprehensive Economic and Trade Agreement with the European Union, 3.5 percent more to Comprehensive and Progressive Agreement for Trans-Pacific Partnership countries, and under the U.S.-Mexico-Canada Agreement, dairy farmers will lose an additional 3.9 percent of Canada’s market.
The USMCA also removes our dairy sector’s ability to counter the U.S. dairy industry’s aggressive dumping of high-protein milk ingredients into Canada, and it gives the United States the power to monitor and approve changes to Canadian dairy policy.
The $98 million “compensation” package will inevitably pit dairy farmers against each other because funds are being provided to help automate and computerize farms, which will increase production in a shrinking market. This is a recipe for farm consolidation, price depression, job loss, a downward spiral in local economies and further dispossession of the next generation of aspiring farmers.
It is hard to imagine how it is possible to compensate for the damage done by recent trade agreements.
The Alberta government recently announced it will impose production discipline on the province’s oil companies to bring the price of bitumen-based oil above its cost of production — essentially supply management for the energy sector. Why is it so difficult for the federal government to understand the importance of supply management in agriculture?
The eagerness to sign the deeply flawed USMCA must be viewed in light of the Barton report.
Shortly after the 2015 federal election, Finance Minister Bill Morneau created the Advisory Council on Economic Growth and appointed Dominic Barton, global managing director of McKinsey & Company, as its chair. The council’s February 2017 report claimed Canadian agriculture had under-used potential and recommended it be “unleashed” by eliminating trade barriers, facilitating corporate investment and stimulating production for export.
Such measures obviously work very well to increase returns to venture capital, stock markets and other financial derivatives favoured by international investment firms — and which clearly benefit a select international elite.
Barton recommends the opposite of supply management. He calls for an increase in output so that more can be exported regardless of price while facilitating imports of the same commodities. This is not only a price-depressing mechanism that harms farmers, but it also reduces quality as trade agreements lower standards to open the door for more imports.
We need to turn away from Barton and look instead at policies implemented by U.S. President Franklin D. Roosevelt to understand what truly spurs on a rural economy. After years of crippling low prices for farm produce, U.S. Agriculture Secretary Henry A. Wallace implemented parity pricing for all farm commodities in 1932. This turned around a chronic downward spiral and fired up a grassroots-driven economic engine.
Parity pricing paid farmers a living comparable to unionized industrial workers. Processors and traders were levied when they paid farmers prices below the calculated cost of production. The funds collected were used to pay farmers not to produce the commodity until prices reached or exceeded the cost of production. These measures gave farmers market power by giving correct signals to produce more or less according to supply and demand. Since 1969 Canadian supply management has worked like Wallace’s parity pricing intervention.
Starting in the mid-1980s, free trade agreements have steadily increased agricultural output while net farm incomes have declined. Policies implemented for Canadian agriculture in general are disastrous and the compensation packages offered dairy farmers are insulting. It’s time to put the brakes on Canadian rural decline, make a U-turn on the USCMA and stop sacrificing the rural economy.
Vancouver Island dairy farmer Jan Slomp is a former president of the National Farmers Union.