Federal agriculture minister Chuck Strahl had dairy farmers cheering when he announced Feb. 7 that his government will take the unprecedented step of creating a new protective tariff under World Trade Organization rules to control imports of milk protein concentrates.
Ottawa is also directing the Canadian Food Inspection Agency to draw up rules over the next year on how much dairy product content must be included in Canadian-manufactured cheese.
It was action long sought by Canadian dairy farmers who have watched imports of high concentrate milk protein products almost double during the past year. Canadian dairy manufacturers have been bringing the cheaper imported products into the country to displace higher-priced domestic dairy ingredients.
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Producers at the Dairy Farmers of Canada convention sat on their hands while Strahl tried to assure them the Conservatives support a supply managed dairy sector but they were on their feet applauding when the he made the announcement on milk protein concentrate imports.
“I’ve never seen a minister of agriculture get a standing ovation from dairy farmers and I’ve been watching these guys for more than 25 years,” Ottawa trade consultant Peter Clark said.
“There should be no doubt in producers’ minds about this government’s support for supply management,” added DFC president Jacques Laforge.
Strahl also said that since the government was acting to stabilize demand for dairy products, farmers would now have to do their part by agreeing to lower prices for milk going to processors.
Dairy Processors’ Association of Canada chair Andy MacGillivray said processors were initially disappointed by the announcement but encouraged that the pricing issue also will be addressed.
“Now, after a few hours, I wouldn’t say we are disappointed but we are a bit confused about how all this will play out,” he said.
DFC estimates that the flood of imports was costing the industry more than $100 million a year and there was every sign imports would continue to increase.
Months of negotiations between producers and processors, mediated by a government-appointed chair, did not result in processor agreement to limit imports.
Under WTO rules, Canada can use Article 28 of the General Agreement on Tariffs and Trade to negotiate a new tariff line, although it likely will have to pay compensation to the major exporters of milk protein concentrates to Canada who will lose sales opportunities, including New Zealand. A new tariff line will control imports at a percentage of recent levels.
New Zealand has protested the announcement as anti-trade liberalization but Strahl said that is expected.
