By Tom Collins
BRINSTON — Dairy farmers shouldn’t be thinking that the end is near for supply management, says a Dairy Farmers of Ontario board member.
Some dairy farmers are worried about the future of the industry as NAFTA talks heated up regarding supply management following U.S. president Donald Trump’s repeated remarks that Canada’s supply management system is unfair to American farmers because of Canada’s 270 per cent tariff on imports.
Worry was compounded when Prime Minister Justin Trudeau told NBC’s talk show Meet the Press in early June that Canada is moving toward more “flexibility” in supply management.
Region 2 DFO board member Nick Thurler said while some farmers have been expressing concern, they are not panicking.
“I think if farmers were panicking, you’d see a lot more quota for sale, and we don’t see that,” he said.
Thurler noted that supply management is necessary to protect farmers from an avalanche of milk into Canada. Just three of 50 states, New York, Wisconsin and Michigan combined over-produce milk by six million litres a day, he said. By comparison, Ontario produces a total of 8.5 million litres per day.
“That’s milk they don’t need,” said Thurler. “If there were no farms in Ontario, (milk production) would be filled the next day and it wouldn’t make any difference to the American farmers.”
While Trudeau has stated on multiple occasions that he will support supply management, he stops short of confirming Canada won’t give any dairy concessions in trade talks.
“I hear you, I understand your concerns — but I don’t want to start detailing all that we are trying to do in terms of talking to the Americans,” the National Post quoted Trudeau as telling a group of Quebec protestors in early June after jumping on the back of a pickup truck. “There are many issues that we will discuss.” Farmers groaned.
U.S. Agriculture Secretary Sonny Perdue said on June 14 at a press conference in P.E.I that “it’s not our desire to do away with (supply management), just to regulate it in a way that does not depress world prices.”
On June 15, Perdue said he did not see how the countries could go forward in trade talks without an end to the new Class 7 milk, the National Post reported. Class 7 was created to supply Canadian processors with a cheaper milk ingredient that U.S. producers were exporting to Canada while sidestepping a tariff. One of Canada’s largest milk processors, Saputo, came out in favour of scrapping the Class 7.
Thurler said farmers have had enough of the government giving up concessions in trade deals. The CETA trade deal gave away four per cent of Canada’s cheese market, while the CPTPP gave away 3.25 per cent of the entire market. But as far back as trade deals go, you could always find farmers observing that “supply management is always on the table.”
Canadian dairy farmers are quick to point out that the U.S. enjoys a five-to-one ratio advantage of importing and exporting milk to Canada. Basically, 15 per cent of the Canadian dairy market is imported, while just three per cent of the U.S. dairy market is imported. However, the three per cent of the U.S. market is a significant chunk. In 2017, the U.S. milk production was 215 billion pounds, the eighth year in a row milk production has seen a record year. In 2015, Canada had 81.8 million hectolitres (1.79 billion pounds).
However, about 73 per cent of the U.S. milk cheque is subsidized by the government.
Despite all of the blustering by both the U.S. and Canadian governments, the NAFTA negotiations are now at a standstill. Mexico is holding its presidential election on July 1, and negotiations cannot continue until Dec. 1 when the new president is inaugurated. The U.S. is holding its mid-term elections in November, and Canada will be holding its federal election on Oct. 21, 2019 at the latest.
“I don’t see too much happening on this,” said Thurler.
Jacob Beehler and his brother Josh of Nine Mile Farms at Crysler plan to take over the family farm within the next five years. Jacob figures the family will build a new barn within five to seven years to milk the 300 cows. That barn would be an H-shape with a rotary parlour in the middle.
Jacob said the future of supply management is a concern for his family, and while it isn’t the reason behind a new barn, the building would help alleviate some of the pressures as the farmers would be able to expand rapidly if supply management was lost.
“If quota does go, you can just keep pushing more cows through it,” he said. “It just takes a longer time to milk.”