If the federal government signed an international trade deal that undermined supply management and reduced quota values, would Ottawa be obligated to provide compensation to affected producers?
During his controversial reign as deputy agriculture minister half a decade ago, Samy Watson once circulated a memo to senior government officials warning that the government might have to provide compensation for the more than $20 billion worth of quota value outstanding once a World Trade Organization deal was signed.
But the recent federal refusal to compensate southwestern Ontario tobacco farmers for loss of quota value and market returns has led dairy producers and industry watchers to conclude that compensation for quota value loss is not likely.
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“I would say value loss from political decisions is the risk of operating in a regulated market and you enter it with your eyes open,” said Al Mussell, an analyst with the George Morris Centre in Guelph, Ont.
Bruce Saunders, president of Dairy Farmers of Ontario, said the industry would ask for compensation if a political decision undermines profitability or asset value.
“I think they have an obligation, but do I think they would fulfill it? No,” he said.
“There would be an ask for compensation if a government action created loss, but for producers to start to develop a farm plan based on it happening is a different story.”
Federal agriculture minister Gerry Ritz was blunt in his assessment of the issue when asked in February if the government would compensate for tobacco quota losses.
“I am not interested in buying out quota,” he said. “Never will be.”
Still, dairy farmers and politicians continue to believe the government would be obligated to compensate if a trade deal hurt dairy values.
“If they trade off my livelihood, I certainly would expect some compensation if there isn’t a guarantee that conditions will exist to make sure I can continue to make a profit,” said Stan Van Keulen, a dairy producer from Surrey, B.C.
Wayne Easter, Liberal agriculture critic and a former dairy farmer, said there would be a government obligation because farmers invested in quota and farms based on a government promise of support.
“If the government of Canada betrays its promise to defend and preserve, I do believe it has an obligation to compensate for losses,” he said.
But few industry leaders appear to believe that is likely.
“I think buying out quota would be like buying out your job,” said Dairy Farmers of Canada president Jacques Laforge.
“Government might try to find you another job but it would be dead end to buy your job and let you exit.”
