Simply by following Canadian government public documentation, plus questions and discussion documents from the World Trade Organization (WTO) Agriculture Committee, a clear picture is emerging of the actual results and ramifications in Canada’s attempts to expand its production with the new Class 7 milk designation.
Quite simply, despite all the publicity stating otherwise, the data shows that imports are continuing and rising over last year’s record high, and that Canadian exports — especially of skim milk powder — are going through the roof.
The rest of the dairy exporting world is not happy with that and says Canada is violating WTO regulations prohibiting them from “subsidized” exports. Yet no formal WTO challenge has been launched at this time.
Canadian government public data documenting dairy imports from January to April inclusive, as compared to the same time period last year (which was a record year for imports), shows volume increases for these seven items: Milk protein substances up 82.8 per cent, cream up 302 .8 per cent, natural milk constituents up 40.7 per cent, ice cream up 36.9 per cent, butter up 12.9 per cent, cheese up 6.2 per cent and milk up 0.3 per cent.
When U.S. Secretary of Agriculture Sonny Perdue recently visited Canada, and in a public written statement, stated that he had no problem with Canada keeping its supply management system, that was a well thought-out statement. Because the American dairy industry has lobbied hard for Canada to keep that right, since keeping Canada uncompetitive on price means an increase in U.S. exports to unprecedented heights.
The same four months of export data show that if the trend continues, Canada’s dairy exports, which stopped falling and rose for the first time last year, will be close to $100 million more than last year. Canada exported $235 million in dairy products last year, according to Statistics Canada.
In case producers are wondering why their milk price is the same as a decade ago, the WTO documents that were sent out prior to the June 8 and 9 international meetings, asked Canada, whether the international communities’ calculations of total Canadian milk production for March, was 24.7 per cent in the new Class 7 category.
Bear in mind it was the end of March when Saputo and Parmalat made the announcement that they were going to stop importing and buy Class 7 instead.
While that might have been the intention, sourcing enough Class 7 milk, simply by announcing it, has proven to be problematic, judging by April’s import and export data. A lot of other processors have now joined this new added-on export game — until there is a WTO challenge.
Recall, of course, that Class 7 was announced as a means to combat imports. The data says otherwise.