VANCOUVER – The chair of the Canadian Dairy Commission last week told dairy industry leaders the days of their protective supply management system are numbered.
In his first address to a Dairy Farmers of Canada meeting since being appointed to head the federal dairy agency last year, Guy Jacob offered a blunt assessment of sector problems.
Dairy farmers are too adversarial with processors, he said. Provinces are too provincial in their outlook, setting policies which undermine national marketing goals. And in his most explosive assessment, Jacob said too many farmers believe the system they have now, of controlled prices, production and imports, will remain indefinitely.
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“Whether we like it or not, that is not the reality,” he said. “At some point in time – 10, 15 or 20 years, no one can tell for sure – the dairy industry, producers and processors alike, will have to operate on a competitive basis, at least in the North American market context.”
Unless farmers prepare themselves, “the consequences could be quite dramatic.”
It was the most damning assessment in a convention filled with gloomy worries and uncertainty about the future of the business, which provides $3 billion in farm receipts.
Supply management in jeopardy
There were fears the federal government is not strongly committed to defending supply management when it goes to the World Trade Organization negotiating table next year. There will be a concerted American effort to tear down some of the barriers that exist against imports into Canada.
There were predictions from National Dairy Council of Canada president Kempton Matte that unless farmers begin co-operating with dairies to help them compete against lower prices and new products, the dairy industry will be left behind.
Imitation and dairy substitute products are the threat, he said as he lambasted dairy farmers for continuing to see processors as the enemy.
“The enemy is calcium-fortified water,” he said. “It is not inside the dairy industry.”
And there were worries about an expected American challenge to Canada’s export pricing policy which provides milk to exporters at lower-than-domestic prices.
DFC set aside $374,000 to help pay for the fight against the charges that this is a disguised export subsidy.
But outside critics were not the only ones talking tough.
Even DFC president Barron Blois conceded the industry is facing “a number of important crises” and a failure of leadership may be one of them.
Despite an uncertain future, dairy farmers are bidding up the price of quota and accumulating debt, he said.
“I must question … the extent to which the leadership has adequately indicated to all producers the degree of risk that exists in the current environment,” he told the convention.
“We must not be afraid to discuss whether we can manage those risks and we must not be afraid to let producers know the reality.”
