Dairy industry leaders were on Parliament Hill last week complaining yet again about the federal government’s refusal to deal with a six-year-old problem of dairy substitutes entering the country without adequate tariffs.
They got some support from frustrated MPs on the House of Commons agriculture committee.
Canadian Alliance MP David Anderson said it is part of a Liberal government pattern to say it supports supply management while letting it be undermined.
“They are dismantling it step by step,” Anderson said.
Ontario Liberal Rose Marie Ur insisted it is time for action.
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“I can’t believe we’re still at the table discussing this after six years,” she said.
“This needs to be resolved.”
The main target of Dairy Farmers of Canada is the import of cheap butteroil in a butteroil-sugar blend that gets around supply management protections and competes with Canadian cream and butter used in ice cream making.
DFC president Leo Bertoia said butteroil imports displace $27 million worth of domestic butterfat sales, equivalent to production from 270 dairy farms.
“That is like wiping out Saskatchewan’s dairy industry,” said Bertoia, a Langham, Sask., dairy producer.
However, Agriculture Canada trade official Rory McAlpine noted that it is a small percentage of the industry’s $4 billion in sales.
Nonetheless, the federal government is poised to propose a solution.
Last week, trade minister Pierre Pettigrew promised that Ottawa will be outlining plans within weeks.
An interdepartmental working group has studied the issue since last August and its report is being considered by Pettigrew and agriculture minister Lyle Vanclief.
Pettigrew said last week that the Canadian International Trade Tribunal ruled several years ago that Canada could not impose a tariff on the sugar-butteroil blend because there has not traditionally been a tariff. The Federal Court upheld the ruling.
However, that has not ended the political problem the Liberals face as they are accused of allowing market access for a subsidized import product that takes up to 30 percent of the Canadian ice cream market and undermines supply management.
It is a designer product, created after 1994 World Trade Organization tariff rules were established to protect supply management by ensuring that any product with 50 percent dairy content would be considered a dairy product subject to tariff.
Butteroil-sugar is designed with 49 percent butteroil to avoid the rule. It is separated from the sugar base after import and the butteroil is used in lower-priced ice cream brands.
Dairy farmers insist the government could create a new tariff line to stop the butteroil import if it wanted. It would take political direction to overcome bureaucratic resistance and if the decision is challenged at the WTO, so be it.
“Time is running out on this issue,” said Bertoia. “If action isn’t taken soon, there will be action taken by dairy farmers.”
But DFC also said it will oppose one rumoured government solution – imposition of special protections that would allow restrictions on imports for up to four years.
“We would oppose special measures out of hand,” said DFC executive secretary Richard Doyle, because they would be a temporary solution.
As industry increasingly creates new products aimed at skirting Canadian protections, the Canadian government must show it is willing to protect supply managed sectors with permanent tariffs, he said.
“They should do it. We are not afraid of taking our case before a (WTO) tribunal.”
