If the federal government does not move quickly to plug the supply management loopholes that importers of butteroil have been using to bring a cream substitute into the country, supply management will be threatened, the Saskatchewan government says.
In a letter to the Canadian International Trade Tribunal, which is considering whether the dairy industry should be protected from imports of a butteroil-sugar blend used in some ice cream making, Saskatchewan agriculture minister Eric Upshall sided with dairy farmers.
He said tariff protection was offered to the dairy sector to help it adjust to trade liberalization pressures unleashed by the 1993 world trade agreement.
Read Also
Agriculture ministers agree to AgriStability changes
federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
Now, by creating a new blended product, importers have been able to bypass dairy tariffs because Revenue Canada decided it is not a protected dairy product.
“The federal government’s unwillingness to reclassify the butteroil-sugar blend appears inconsistent with their historical treatment of both the sector and such imports, setting a dangerous precedent as new products are developed,” Upshall said in a letter made public by the CITT during its two-week public hearing on the butteroil issue.
The tribunal completed public hearings last week and will report to the government on options by the end of June.
Dairy farmers want the butteroil blend declared a dairy substitute, which should be blocked by border tariffs.
Dairies and ice cream makers want the imports to continue and the border to become even more open to cheaper dairy substitutes, which would allow more cheaper foreign products to compete with Canadian products.
Typical of the dairy argument was a letter to the CITT from Armin Quickert, president of Reid’s Dairy Products from Belleville, Ont., agriculture minister Lyle Vanclief’s home town.
Protected by system
He said Ontario dairy farmers have shown no interest in making processors in the province competitive “because there was no apparent need to do so under supply management.”
But that must change.
“The problem with blends is here to stay and is simply a natural legal outcome of the existing system,” he wrote. “The simple solution is ‘compete’. It brings out the best in people.”
But Upshall suggested the issue is one of buying time for the industry.
New world trade rules and the next round of negotiations starting next year “may result in increased competition for the dairy sector,” he wrote.
And the leak which has developed in the protective tariff wall undermines the ability of dairy farmers to prepare for change and more competition.
“Failure to control the imports of dairy blends at this time limits the ability of the sector’s participants to effectively manage that transition,” said Upshall. “I would urge the CITT to take a close look at the classification of butteroil-sugar blends.”
