The devastation hitting American dairy farmers is a perfect reason to defend a Canadian system that shields its dairy farmers from market volatility, says the chief dairy farmer lobbyist.
The world dairy price crash has left many American dairy farmers questioning their future and the American farm support system liable for a huge taxpayer support payment, said Dairy Farmers of Canada president Jacques Laforge.
“I have been talking to some producers I know in California and they tell me prices are not even covering feed costs now,” said the New Brunswick dairy farmer. “Farmers there are suffering huge losses.
Read Also
Interest in biological crop inputs continues to grow
It was only a few years ago that interest in alternative methods such as biologicals to boost a crop’s nutrient…
“I think the demand on public funds if they want to keep their dairy industry afloat will be huge,” he said. “We are talking billions of dollars.”
Laforge said dairy producers in many states are asking about the Canadian system that keeps prices high and incomes stable while controlling imports and allowing pricing based on production costs.
“There really is a lot of interest in that now from producers in a number of states,” said the DFC president.
World dairy prices have plunged by up to two-thirds in recent months because of excess supply and the introduction of export subsidies by the European Union.
In the United States, the surplus has been made worse by an assumption that five percent of production would be exported at 2007 record-high prices.
Instead, world prices have fallen and Americans export at a loss or do not export at all, contributing to the domestic surplus.
American dairy industry leaders have said they are in crisis and need help.
As farmgate dairy prices have dropped in the past several months, the American retail dairy price also has been dropping sharply, although not as much as the decline in farmers’ prices.
An American dairy industry cry for help because of fluctuating world prices came the same week that the conservative Fraser Institute renewed its long-standing call for an end to supply management.
In the report, ostensibly about the need to reform Quebec’s “ill-conceived” farm policies, Fraser Institute senior policy analyst Jean-Francois Minardi wrote that supply management forces consumers to pay higher prices for dairy products and eggs while stifling farm innovation.
“If Quebec and the rest of Canada dismantled their supply management system and completely eliminated government subsidies to farmers, the resulting competition would generate higher productivity growth and consumers would benefit from lower retail prices as well as a wider range of products,” he wrote.
While American dairy prices have fallen as much as 25 percent during the past year, Statistics Canada reported Feb. 20 that the dairy product price index in Canada rose five percent in the same period.
Laforge said critics such as the Fraser Institute should get out more and broaden their focus of research and analysis.
“I would challenge them to go around the world to see how much subsidy dairy farmers in other jurisdictions get,” he said. “If they did that, they might conclude that while they don’t like supply management in principle, it works.”
