Compensation kept for supply management

Federal budget promises $3.9 billion to dairy, egg and poultry farmers, down from $4.3 billion previous government offered

The federal Liberals appear to have picked up where the previous Conservative government left off when it comes to compensating supply managed farmers for trade agreements.

The March 19 federal budget promised $3.9 billion to dairy, egg and poultry farmers, four years after the Stephen Harper government offered $4.3 billion.

Details on how the money will be paid won’t be available for months, but the package includes $2.15 billion for farm income loss due to the Comprehensive Economic and Trade Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and $1.5 billion to safeguard quota values. The dairy sector has already received $250 million for innovation funding.

Agriculture Minister Marie-Claude Bibeau agreed the compensation is “more or less the same amount as was promised in 2015.”

She said the working groups established by former minister Lawrence MacAulay to look at compensation packages will continue.

“They will be working with my officials but I also want to have personal conversations, kind of a roundtable,” she said. “I want to attend some of the meetings to really understand issues around the matter and make sure the mechanisms we put in place are as appropriate as could be.”

Bibeau noted she would also have to go back to cabinet with the final proposals.

The budget does not take into account any impacts of the U.S.-Canada-Mexico Agreement, which still hasn’t been ratified.

Dairy Farmers of Canada vice-president David Weins from Manitoba said while the sector welcomes a compensation announcement, it worries about further access and limited protein exports through USMCA.

“Our preference is to receive all of our revenue from the marketplace, which is what supply management in dairy has allowed us to do,” he said. “We made our case to government leading up to the last number of agreements.

“Yet in all of these agreements it was dairy that took a hit. Our concern becomes one of why is it always dairy?”

Negotiations are underway with Mercosur in South America and Weins said once Brexit is complete, he expects the United Kingdom will be looking for a trade deal, too.

Dairy Farmers of Canada have pegged CETA losses at $100 million annually and CPTPP losses at $160 million per year. Adding the concessions granted in USMCA represents yearly losses of 8.4 percent of Canada’s milk production, according to the organization.

Al Mussell, lead researcher at Agri-Food Economic Systems in Guelph, Ont., said the lack of detail in the budget, as well as the fact that the compensation doesn’t appear in the budget tables for this year, indicates there is still plenty of discussion to be had.

“I wonder if in the long-term this is good for the dairy industry,” he said. “This could have the effect of in some ways alienating supply-managed industries from more market-based industries and provinces in which supply-managed industries are concentrated from other provinces in which they’re not so much.”

He also said Canada has to think about how income payments are reported.

“We have a $4.3 billion cap on aggregate measure of support, so if you’ve got potentially $2 billion and what period of time it’s paid over, we simply don’t know, but if significant portions of that fall in a given year that starts to loom pretty large.”

This is a concern given what’s happening in canola markets, potential droughts and other disasters that could result in significant claims, he said.

Mussell added that while earnings in the supply-managed sectors are strong relative to sales levels, farmers need exceptionally high asset levels to generate those earnings.

“The farms are sitting on a large amount of capital and generating very healthy operating earnings but the operating earnings relative to the value of the assets is low,” he said. “I would worry that something like (compensation) could make that worse.”

Food policy expert Sylvain Charlebois from Dalhousie University said throwing money at supply management isn’t a plan.

“Supply management is broken,” he said. “It needs to be fixed or it needs to be enhanced or it needs to be improved. Where’s the plan?”

Meanwhile Weins said there has been a silver lining to the trade discussions in that it has galvanized support for Canadian products.

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