By Connor Lynch
WINCHESTER — Hundreds of dairy farmers turned out to meetings across the province last month, pressing Dairy Farmers of Ontario’s general manager Graham Lloyd for answers on what’s going to happen to their industry.
In many cases, there were no answers to be had.
The United States-Mexico-Canada Agreement (USMCA) replaces the North American Free Trade Agreement (NAFTA), a deal the three countries have been feverishly negotiating for more than a year. Deadline after deadline had passed with scarcely a murmur. Then a tentative agreement was reached on Sept. 30. While grain farmers and beef farmers welcomed the news, dairy farmers counted what they had lost: 3.9 per cent market access to the Americans and an agreement to end Class 6 and 7 milk, a significant blow to the domestic dairy industry.
The Canadian government has promised dairy farmers compensation, but has yet to explain how that compensation will work.
Parts of the deal are still up in the air. By mid-October, the Canadian government hadn’t released its own text of the deal because “they can’t agree to some of what’s written,” Lloyd said.
At Winchester, on Oct. 18, more than 100 farmers pressed into a room overlooking an evening hockey game at the local arena.
Farmers alternately expressed disappointment and frustration, concern, anxiety and anger. Compensation was an especially sore subject. Said Greely-area dairy farmer Leonard Quinn: “How do you compensate a country for giving up part of its economy?”
Some farmers said that promised compensation meant that the rest of the world could finally say that Canada’s dairy system was subsidized. One farmer went even further. “Call it a welfare cheque,” he said. “We don’t want a welfare cheque.”
What exactly is going to happen to Canada’s milk classes isn’t entirely clear, said Al Mussell, founder and lead researcher at the Guelph-based Agri-Food Economic Systems, but “it’s a very serious hit.” Class 6 and 7 are to be eliminated within six months of the deal being ratified, expected to be sometime next year, but those milk ingredients don’t evaporate, he said. The agreement recognizes this and allows for pricing of milk ingredients domestically based on the U.S. price. Said DFO director Murray Sherk: “We should be able to use a Class 7 price for domestic uses.”
How that will work exactly is not clear. The DFO told farmers it’s working hard on the issue. Ashton-area dairy farmer Melinda Foster-Marshall said the DFO isn’t sharing with farmers how it plans to salvage Class 7, even behind closed doors. The deal still needs to be ratified and could well end up getting changed before any legislators sign off on it.
One farmer asked, with so much given up already and the USMCA open for renegotiation every six years, when will the government stop giving up market access?
“We all thought we’d be done (giving up market share) with the TPP,” replied DFO’s Graham Lloyd. “I don’t know. You need to make your own personal decisions on risk.” He added that the DFO is projecting market growth at between three and four per cent annually. “I’m really quite confident we’ll be able to respond to this.”
Lloyd told producers that saving the milk class wasn’t an option. “(American negotiators) said Class 7 was a hill they would die on.”
More than 200 farmers turned out for a meeting the night before at St. Isidore where one farmer thundered about the elimination of Class 7. “We have a skim milk crisis on our hands,” he said. Compensation talk scratched fresh wounds from earlier trade deals. After signing the Comprehensive Economic Trade Agreement (CETA) trade deal two years ago, the government launched the Dairy Farm Investment Program. The program matched investments on dairy farms, up to $250,000, as a way to compensate dairy farmers for market access given to European cheese. Said one farmer: “One guy got $150,000. The rest of us got zip.”
Including previous market concessions under World Trade Organization rules, the CETA deal between Canada and Europe, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade deal and the new NAFTA deal, the DFO figures Canadian dairy farmers have given up about 18 per cent of their market.
Exports will suffer but by how much is impossible to say, Mussell said. Canada exported 70,000 tonnes of skim milk powder last year. A mere 228 metric tons went to the U.S. Under the deal, surcharges kick in at 55,000 tonnes for the first year. The question remains if the surcharge is high enough to make Canadian exports uncompetitive, Mussell added.
“I thought this meeting would be about us fighting a bully,” said North Glengarry dairy farmer Wendy McPherson. “When is the deal going to be good for us? When will you stop using our quota as a bargaining tool?”
Another farmer asked: Do we have to go ahead with the deal?
Replied MP Francis Drouin (Liberal — Stormont-Dundas-Glengarry): “What if it were worse?” An audible groan filled the room.
In an interview with CBC news, DFO representative Ralph Dietrich said concessions given in the last three trade deals, signal a “death by a thousand cuts.”
Trudeau promised that dairy farmers will be compensated again for the loss of market share, but Dietrich countered. “We had a system where we didn’t need compensation.”
The deal faces one major hurdle. U.S. midterm elections for members of Congress are largely on Nov. 6. If the Republican Party does not win majority seats in Congress, it could possibly kill the deal.
For many farmers, the concessions made are simply proof that the Americans dominated the Canadian negotiators, with farmers paying the price. Grumbled one farmer at St. Isidore: “Trump owns us now.”
