An angry federal agriculture minister Chuck Strahl last week accused the Dairy Farmers of Canada lobby group of threatening supply management by being uncompromising.
The minister thought he had agreement from the presidents of DFC and the Dairy Processors Association of Canada to set up a group to iron out issues between the two sides. The problems included the need to expand the domestic market and to convince processors to use more domestic milk and less imported milk protein concentrate.
Instead, the board of DFC potentially scuttled Strahl’s mediation by insisting it would take part in the group only after Ottawa and the processors agreed to limit imports of concentrates that displace domestic milk, probably through a World Trade Organization action.
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Strahl was furious.
The issue of imported milk protein concentrates was to be one of the items discussed and he is convinced the WTO action promoted by dairy farmers could backfire and end up allowing more product across the border.
Strahl met with DFC president Jacques Laforge April 25 expecting to receive acceptance from the group to take part in the process proposed to the minister by Laforge and DPAC Andy MacGillivray in early April.
Instead, Laforge presented him with a DFC counterproposal that set preconditions.
Strahl said he understood Laforge was acting on orders of his board of directors.
“I’m not blaming Jacques or casting aspersions but I did say to him last night that in my opinion, they run the risk of rolling the dice for supply management by taking this kind of hard line,” the minister said. “I think it’s a very bad move by Dairy Farmers. I was madder than that when I met them but today I can say it is very unfortunate.”
DPAC president Don Jarvis said the DFC hard line was a setback.
Laforge conceded that while he helped initiate the idea of a working group to look at industry issues, the DFC board had rapped his knuckles.
“Our board did not say no but they did say the government and the processors have to take this issue of concentrate imports more seriously,” he said from his farm in New Brunswick.
Milk protein concentrates have become a threat to the industry because the Canadian International Trade Tribunal said they are not covered by supply management tariff controls and the courts upheld the tribunal’s ruling.
The DFC demand is that Ottawa use Article 28 of the General Agreement on Tariffs and Trade to cap concentrate imports at current levels plus 10 percent. Canada would have to pay compensation to the European Union and New Zealand that now provide the imports.
However, Strahl said the danger is that companies in the United States and Mexico would become the source of imports and under the North American Free Trade Agreement, they would not be covered by a GATT article 28 action.
Then DFC would say Canada should renegotiate NAFTA to include protein concentrate controls.
“What do you think the Americans are going to want in exchange?” the minister asked. He suggested increased access for other dairy products and a weakening of supply management controls.
Instead, Strahl said he was offering producers the chance to strengthen the system within Canada while helping expand the domestic industry, which would help processors remain profitable and innovative.
“I don’t want to negotiate with the Americans on this,” he said. “We have a system we want to protect, so why would you roll the dice when you have a negotiating possibility between processors and farmers that I’m prepared to ramrod through within the next two months?”
Strahl said he wanted some solutions proposed by the group within weeks and he would make sure they got the regulatory changes they need to help the domestic industry.
