Will TPP negotiations sour over supply management impasse?

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Published: May 21, 2015

It might seem impossible to be a relaxed Canadian dairy farmer these days, considering that the industry is caught in the crosshairs of the Trans Pacific Partnership negotiations.

However, farmers aren’t letting it get them down, say dairy farming leaders from Alberta and Saskatchewan.

“Are we concerned? You’d have to be a fool not to be aware of the potential of TPP, but we’re confident our government will reach a balanced trade deal and not sell us down the river,” said Tom Koogstra, chair of Alberta Milk.

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“As anyone involved in agriculture, you need to be eternally optimistic.”

Melvin Foth, a dairy farmer from Hague, Sask., who is on the board of Sask Milk, said farmers are hopeful and worried.

“It does create a feeling of uncertainty. It’s just an uneasy feeling,” said Foth. “Most dairy farmers are optimists. You don’t think of worst case scenarios.”

The TPP politics over Canadian supply management, particularly with dairy import controls, are heating up, with U.S. officials recently complaining loudly about the Canadian government’s refusal to negotiate a weakening of the supply management system.

The United States, New Zealand and Australia have all targeted supply management for dismantling or reduction as a condition of allowing Canada to sign a final TPP deal.

The Canadian government has not said when it will put forward a position, but most assume it will come only after U.S. president Barack Obama receives trade promotion authority, which allows him to make deals that can’t be altered by Congress.

Even then, some speculate Canada won’t put forward a position until later in the negotiations, as a last minute concession.

Agriculture policy analyst Bertrand Montel doubts Canada will allow itself to be kicked out of TPP because of supply management. However, he also doubts that the government will be forced to kill supply management to get a deal.

“I think they will open the dairy market more,” said Montel, noting the Canada-European Union deal gave EU exporters a bigger quota of cheese that they could sell into Canada.

Those kind of concessions are likely, rather than a scrapping of supply management.

“Nobody is really asking to (eliminate) supply management itself,” he said of TPP countries’ underlying positions.

However, Montel hopes that neither the present TPP debate nor its eventual resolution stops Canada from reassessing its supply management policies. The present policy, as it works now, isn’t necessarily achieving what Canada should want, nor what is in the best long-term interests of dairy farmers, he said.

“What I find disturbing is that there is no place in the public debate about the future of the dairy industry in Canada,” said Montel.

“It’s all a very static position. I think it’s a very damaging position.”

Montel said the present system is not stopping the consolidation of farms at a rate that may see only half as many in operation in 10 years.

It is also discouraging foreign investors from seeing Canada’s potential as a possible source to produce milk for export.

“It will not prevent the number of dairy farms decreasing,” he said.

“It will not prevent a deficit in dairy products. It will not respond to the lack of growth of consumption in dairy products.”

He said Canada, dairy farmers and critics of supply management need to get beyond simplistic either/or arguments and find a way for Canada’s dairy farmers to move forward with a system better designed for today’s potentials and needs, rather than an old system that isn’t necessarily working well any longer.

“They need to really think strategically about the long-term face of the industry,” said Montel.

Uncertainty about the future isn’t stopping farms from operating, but Foth acknowledged that it’s hard to think about expanding production or investing capital when the future is so unclear.

“There is an uneasiness to expand when you hear the concerns,” he said. “We’ve got some growing markets in Canada. We need to invest in infrastructure. And we want certainty in order to be able to invest.”

Foth said the government has repeatedly stated its intention to defend the underpinnings of the system and “we intend to hold them to that promise.… Supply management has always adapted and changed and will continue to change, but the basics of supply management have not changed and we will hold them to that.”

Koogstra said outsiders might assume dairy farmers are worried sick about all the TPP talk, but the situation has become the norm inside the business.

“Because we keep hearing about it (over the decades), and there is no conclusion, we’ve become immune to the rhetoric. It’s background noise,” said Koogstra.

“You sign a deal. You tell me what it is and how it will impact me, and we will find a way to cope with it. In the meantime, why stress ourselves out with what might be?”

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Ed White

Ed White

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