Critics see TPP as edge of wedge for U.S. milk

(Peggy Greb photo courtesy ARS/USDA)

A U.S. dairy sector economist is the latest observer to suggest Canada’s concessions in the Trans-Pacific Partnership may eventually lead to more imports of U.S. milk than Ottawa bargained for.

Ag economist Andrew Novakovic of New York’s Cornell University said in a release that the TPP, for U.S. producers, marks a major opportunity in Canada’s supply-managed dairy market.

“The breakthrough for the dairy chapter was a Canadian agreement, under heavy U.S. lobbying, to expose their closed system to slightly greater imports, which (Canada) cleverly will do within their production quota system,” he said Wednesday.

Canada said Monday that despite “significant and broad demands from several of our TPP negotiating partners,” it offered “only limited” new access for supply-managed products such as dairy.

Access to the Canadian dairy market, granted through quotas to be phased in over five years, amounts to 3.25 per cent of Canada’s current annual dairy production, with a “significant majority” of that additional milk and butter to be directed to value-added processing, the federal government said Monday.

Dairy farm profitability in Canada is “more stable than the U.S., but not dramatically higher,” Novakovic said. “The implication is that (Canada’s) supply-managed system has, over time, allowed increased costs to be rewarded with increased prices.”

From 1991 through 2000, he said, Canadian farm milk prices averaged 18 per cent higher than those in the U.S., but since 2000, they have averaged 62 per cent higher.

“Eliminating the protection of the Canadian cocoon is a frightful prospect for Canadian farmers and an alluring opportunity for world exporters, including New Zealand and the U.S.”

Provincial dairy associations this week estimated 3.25 per cent of Canada’s 2016 dairy production will amount to about 250 million litres of milk. The British Columbia and Alberta boards estimated the deal would displace about 23 million and 22 million litres of milk respectively from their provinces’ producers.

Canada’s concession, Novakovic said, “represents a brand new opportunity for the U.S. to develop marketing relationships with Canadian processing and marketing companies and the confidence of Canadian consumers.”

That opportunity, he said, “will be available to any dairy firm in the U.S., but it will be especially enticing to border states, like New York. As a beginning, it is assuredly modest, but what is terribly important is that it is a beginning.”

Denis Richard, president of Quebec agrifood co-operative La Coop federee, said the “breach” to Canada’s tariff barriers for dairy is “of great concern” and it adds to the “laxity of border protection that has arisen in recent years through the uncontrolled importation of milk proteins and poultry.”

Ottawa, he said in a separate release Monday, “needs to put a lock on all new dairy and poultry imports. The future of supply management itself, and that of thousands of dairy farms across Canada, depends on it.”

Measures announced Monday to strengthen border controls against unauthorized dairy imports “will not stop the flow of milk protein entering the country,” he added. “It is urgent that a solution to this issue be found.”

Ottawa’s further plans for a $1.5 billion compensation package for loss of quota value over 10 years, and $2.4 billion for lost income over 15 years, seem “unnecessarily high, if we are only talking about a 3.25 per cent dairy quota cut,” Jan Slomp, president of Canada’s National Farmers Union, said in a separate release.

Those dollar amounts, he said, suggest “the intent is to completely dismantle dairy supply management over the next 10 years.”

Canada’s supply-managed sectors, he said, instead “should have been kept right out of TPP negotiations.” — Network


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