Cornell University economist says the deal signals that Canadians should prepare for life after supply management
DRESDEN, Ont. — The proposed Trans-Pacific Partnership trade deal is receiving mixed reviews in the United States.
The National Milk Producers Federation, which represents more than 30 dairy producer co-operatives, sees opportunity in the deal.
The organization feels there may be opportunities to export more U.S. milk and milk products to Canada and Japan.
“New Zealand did not get the unfettered access to the U.S. market that it long sought, but Japan and Canada did not open their markets to the degree we sought,” said federation president Jim Mulhern.
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“On an A through F grading scale for TPP, it was long clear the agreement would not score an A. The preliminary information suggests that the result is not an F.”
Mulhern said a detailed assessment is impossible until the final wording of the agreement is made available.
Gene Paul, legislative co-ordinator with the National Farmers Organization, said its directors have not yet taken a position on the TPP, but he feels the deal is taking the dairy industry in the wrong direction.
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The NFO is a co-operative whose members are largely small to mid-sized dairy producers in New York state, Ohio, Wisconsin, Minnesota and part of Iowa.
“There’s a philosophy in our country: all trade is good, no matter how bad it is,” Paul said.
“We’re concerned on a broad basis about ruining the market for everyone. We are not in favour of dumping product that would endanger Canada’s supply management system.”
Paul said his organization has long supported a growth management approach to the U.S. dairy industry that would involve similar principles as Canada’s supply management system.
Some farmers favour the expansion of trade opportunities into Canada, but they tend to be larger dairy operators, he added.
“This deal is for large agri-business, for the people who actually do the trading,” he said.
“I don’t think down the road farmers are going to get any real benefit from it.”
Paul said American dairy farmers have been struggling, although the decline in feed prices has helped.
Cornell University economist Andrew Novakovic said expanded trade could eventually provide opportunities on both sides of the border.
However, he said the opportunity for U.S. producers is small at the moment because Canada is offering only 3.25 percent access to its market.
“There’s not a big hurt to Canada; therefore there’s not a big opportunity for us,” Novakovic said.
“What the TPP is signalling to Canadian dairy farmers is that a crack has opened for supply management. It’s small, but cracks only get bigger.”
He said Canadian dairy farmers looking to get out of the industry within the next few years have little to be concerned about, but it’s a different story for those looking to pass their operation on to the next generation.
“You need to start thinking about a world without supply management.”
An end to Canada’s supply management system would likely change the movement of milk and milk products within North America, Novakovic said.
Opportunities for dairy farmers in Ontario and Quebec would likely open up in the northeastern U.S., but movement from south to north would likely also occur.
Producers in the western U.S., where the industry is concentrated, would have an opportunity to ship milk and milk products north into Western Canada. Milk and milk products have tended to move from east to west under supply management, he added.
Novakovic said farmgate milk prices in Canada were 18 percent higher than in the U.S. from 1991 to 2000 and profitability is also higher, though not dramatically so.
As well, Canadian dairy farmers enjoy a larger share of retail prices, which tend to be higher in Canada — 23 percent in the case of cheese from 2005-13.
Novakovic said supply management appears to have afforded Canadian farmers with a higher quality of life, based on a study he was involved in some years ago that compared dairy farms in eastern Ontario with those in New York state.
New Zealand, Australia and Ireland are among the world’s lowest cost producers of milk with New Zealand being the larger player in milk exports, he added.
