The leaders of Canada’s dairy industry are in Lethbridge this week trying to accomplish the impossible – figure out how to salvage even a sliver of advantage from a federal report on butteroil imports.
On almost every count, the July 3 report from the Canadian International Trade Tribunal undercut the dairy farmer position.
The defeat is made worse by the fact that the dairy farmer lobby chose to make this a centrepiece political issue.
The Dairy Farmers of Canada lobby has invested time, money and political capital to insist that the federal Liberals find a way to reverse an earlier decision not to apply protective tariffs to the imports. They have made it a litmus test of Liberal support.
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But with one exception, the CITT savaged farmer arguments. It did accept that butteroil/sugar blend imports for use in lower-grade ice creams undermine the domestic market for cream and cost dairy farmers potentially as much as $60 million annually.
But that was as good as it got for the dairy farmer lobby.
The CITT qualified that loss estimate by noting dairy farm revenues are $3.8 billion. “Putting these revenues (between $26.6 million and $64.2 million in potential losses) into perspective, they represent between 0.7 and 1.7 percent of dairy farmers’ total revenues.”
The tribunal explicitly rejected the DFC demand that Ottawa simply admit it made a mistake and reclassify the butteroil blend product as subject to tariff. That would break Canada’s trade obligations, said the CITT.
And while saying it did not favor one option over another, the language of the CITT report clearly shows support for two options dairy farmers have rejected – the status quo or creation of a low price “special class” of Canadian milk to supply ice-cream makers.
The CITT even entered the realm of political argument, disputing the farmer argument that a failure by the government to choke off butteroil imports would represent a betrayal of political promises to support supply management.
“In the tribunal’s view, a decision by the government to maintain current access conditions for imports of butteroil blends does not suggest any change in the government’s commitment to supply management,” says the 84-page report.
Ice cream makers and dairy processors had to be smiling as they read it.
And dairy farmer leaders must have been remembering with some nostalgia their initial decision last winter to boycott the CITT hearing.
Eventually, DFC decided to take part, adding legitimacy to the exercise.
Now, it has been told its preferred solution is unacceptable and all acceptable solutions involve either compromise, acceptance of lost income in the interest of trade competitiveness or delay in any final resolution through an appeal.
At least if the DFC had stood outside the process throwing rhetorical stones, it could now make the political claim that the CITT report is one-sided. Instead, the lobby faces the formidable task of lobbying for protection even after the quasi-judicial CITT rejected its arguments.
