The Liberal government enters the election campaign with one major and potentially damaging piece of unfinished business hanging over the heads of rural candidates in dairy producing areas.
Agriculture minister Ralph Goodale has not been able to convince the government to delay by six months the scheduled beginning of the dairy subsidy phase-out. It would cost Ottawa $12 million to delay the cut to Feb. 1, 1998.
Finance minister Paul Martin wants the first cut in the dairy subsidy to take effect Aug. 1. Dairy farmers and processors have asked that it be postponed until Feb. l and that consumer prices then be increased to compensate farmers.
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Last January, Goodale told the Dairy Farmers of Canada annual convention in Saint John he agreed with their proposal and would try to convince Martin.
Last week, Goodale conceded he has not succeeded.
“The recommendation of both the processors and producers is under active consideration,” he told Reform questioner Dale Johnston, of Wetaskiwin, Alta., in the Commons. “As soon as we are in a position to confirm the appropriate arrangements, we will make them public.”
The dairy lobby made it clear that if Goodale is not successful, there will be a price to pay, at least for consumers. If the subsidy is cut Aug. 1, consumer prices will rise. DFC will demand higher milk prices to cover both the impact of lower subsidy and higher costs they are incurring this year.
Consumer pays more
John Core, of the Ontario Milk Producers’ Marketing Board and DFC vice-president, said it would be a sharp jolt in the consumer cost of dairy products.
The impact of covering higher producer costs-of-production would be $40 million for consumers this year. Covering the impact of the subsidy reduction would add another $20 million or $30 million to consumer dairy product costs.
“If we don’t come to a satisfactory conclusion to that discussion (with government), we will be seeking a price increase Aug. 1, as is called for under the law,” said Core.
“The window for the government to act is still there. August is still a ways away but we are getting more and more concerned. We want to live up to the agreement we have with processors to delay price increases until Feb. 1.”
He said if producers are forced to apply for an Aug. 1 price increase, it will strain relations with processors.
Liberal electoral opponents will be able to carry this issue into the election campaign, particularly in rural Quebec and Ontario where dairy is a mainstay of many areas of the rural economy.
Reform MP Johnston said given Goodale’s promises last January, the government has an obligation.
“A lot of dairy producers would like to see him keep up his end of the deal,” said the Alberta MP.
