The Canada-European Union trade agreement concession to give European cheese more access to Canada has negated the 2005 parliamentary pledge to never budge on supply management protection.
With that blunt assessment, Dairy Farmers of Canada president Wally Smith went before the House of Commons agriculture committee to argue that the trade deal granting European cheese makers double their previous access to the Canadian market is far more damaging to the Canadian industry than the Conservatives are letting on.
He promised that dairy producers will work “in constructive dialogue” with the government to try to minimize the damage the dairy industry is facing.
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When announcing the deal in October, prime minister Stephen Harper promised that Ottawa will provide compensation if the deal damages the dairy industry.
However, the government argues that cheese demand is increasing by seven thousand tonnes or more a year and the deal doesn’t take effect for at least two years.
As a result, higher consumption levels will take care of most of the increased European imports before the deal takes effect.
Smith challenged the government calculations, but he went to the core of the compliant: a 2005 House of Commons resolution on protecting supply management.
The unanimous House of Commons resolution of Nov. 22, 2005, which was supported by Conservative MPs facing an imminent election, said that Canada should agree to no tariff reductions in trade talks and no increased market access.
Smith said that promise clearly is off the table.
“Zero new market access and zero tariff reduction,” said Smith, a Vancouver Island producer.
“Back in British Columbia where I’m from, zero and zero equal zero.… I was told very clearly that the House motion is not binding on the negotiators. It’s not binding on the government and so we obviously can no longer use that.”
Smith told MPs that the Canada-EU trade agreement, which offers the EU an additional 18,000 tonnes of access for its cheese, would reduce farm dairy production quotas and cost the domestic cheese market $300 million in annual sales.
“That’s about $60,000 per farm on the income side,” he said.
Eastern Ontario Conservative MP Pierre Lemieux, parliamentary secretary to agriculture minister Gerry Ritz, argued that increased demand will quickly overwhelm the new import quota and Canadian producers will be no worse off.
DFC executive director Richard Doyle said the increasing cheese sales are retail calculations and not sales from farms.
He said 16,000 tonnes of fine cheeses to be allowed into Canada from Europe will be taking space in a 50,000 tonne market.
The government also argues that the EU has granted Canadian dairy products unfettered access so this is a net gain.
Doyle said it is a false argument and a government dream.
Canadian milk prices would have to fall below production costs to compete in the European market filled with cheese from subsidized milk, he added.
There is already a 4,000 tonne aged cheddar market into the United Kingdom that goes unfilled.
“This is a fine cheese as far as we’re concerned because the processors, to fill it, require milk at $28 a hectolitre,” he told MPs.
“Quite frankly, not a single producer in this country based on our cost of production could actually recover their cash costs. No return on investment and no return on labour. Not a single one of them would recover their cash costs.”
