Canada’s dairy processors said the federal government has to develop a long-term plan for the sector after chipping away at its profitability through trade agreements.
Officials appeared at the Senate’s agriculture committee last week as part of the committee’s study of how the value-added sector can be more competitive.
Dairy Processors Association of Canada president Mathieu Frigon said government actions have undermined the investments and competitiveness of the sector.
Dairy processing is the second largest food manufacturing business behind meat processing, he said, and $7.5 billion worth of investments have been made in the last decade.
“However, a number of recent government actions have the potential to unravel the progress the dairy processing industry has made in recent years and make us question whether or not the government shares our belief that a strong dairy sector is good for Canada,” he said.
DPAC board member Dominique Benoit said trade agreements with Europe, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and now the new North American deal are leading to losses.
He said the losses from the first two agreements will be more than $2 billion over implementation.
The Canadian text of the United States-Mexico-Canada Agreement hasn’t yet been released but Benoit expects more losses.
“There’s a contradiction between what Canada has said, the constant use of the dairy sector as some kind of trading coin,” he said through an interpreter at committee. “This will put an end to innovation, slow down growth of the market and create new losses for dairy producers that have made greater investments in the last few years.”
Both said they still don’t know how the USMCA will affect the sector. Other than the fact that Class 7, which handled pricing for milk protein solids, will disappear, the industry knows little else, they said.
Benoit said the government has to clearly determine Canada’s objectives for the industry and develop a long-term plan.
Processors want tariff rate quota allocation under trade agreements to be given to them, not other companies. For example, under the European agreement, Canadian dairy processors got only 45 percent of the TRQs to import cheese.
“To our minds these are companies that will benefit without having been subject to the negative effects of the agreement.” Benoit said. “As processors we will be hit full front with the problems with this agreement so we think this allocation should be given to Canadian processors to reduce the impact.”
The TRQs should be part of compensation to those who will be impacted, DPAC said.
Processors also want proposed front-of-package labelling regulations postponed, saying milk products should not be labelled when unhealthy foods won’t be.