By Connor Lynch
CALEDON — Ontario dairy farmers have words for the new NAFTA deal. It’s a gut punch, death by a thousand cuts and “they threw us under the bus.”
No surprises. The biggest losers in the deal are Canadian dairy farmers.
The United States-Mexico-Canada Agreement (USMCA) replaces the North American Free Trade Agreement (NAFTA) that the three countries have been feverishly negotiating for over 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.
Said Hamilton-area dairy farmer Ben Loewith on Twitter: “With the concessions given to (CPTPP), CETA, and now (USMCA), my family loses 10 % of our market. It is like having a store, and 1 out of every 10 customers is stopped at the door by the government, and escorted to your competitors.”
It’s actually worse than that, said DFO director Murray Sherk, who farms at Plattsville, just southwest of Kitchener. Between 10 per cent concessions to satisfy the World Trade Organization and with the last two trade deals Canada signed on to, the total loss of the dairy market is closer to 18 per cent.
Said Phillip Armstrong, who milks 355 cows with his brother at Caledon: “Right at the moment, we have knots in our stomachs and a lot of questions. They threw us under the bus and we suffer a slow death over 20 years. Or is there some hope there? We don’t know.”
“It’s a very serious hit,” but 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. Class 6 and 7 are done, to be eliminated within six months of the deal being ratified, but those milk ingredients don’t evaporate, he said. The agreement, of course, recognizes this. It 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.”
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 is if the surcharge is high enough to make Canadian exports uncompetitive, Mussell added.
Market concessions are a tough pill to swallow as well, but they’re slightly softened by the fact that they were introduced, at least in part, years ago. Market access in the dairy sector under CPTPP was an olive branch to the U.S., who left the agreement. Segments of that access are going unfilled by the other partners in the deal, said Mussell. New Zealand, for example, doesn’t have much interest in shipping bulk fluid milk into Canada.
Prime Minister Justin Trudeau, in the days following the announcement, has said that with the American pressure to end supply management entirely, his administration defended the industry.
Farmers didn’t agree. Tweeted Bruce County dairy farmer Merv Misch: “Once again, throw the dairy farmers under the bus. Then turn around and say we protected and supported supply management.”
Woodstock-area Jersey farmer Nathan Wade said that the “whole deal is kind of a joke really. It’s disappointing, that’s for sure. But you can’t sit back and cry. We have to build our brand, 100 per cent Canadian milk. It’s up to us to do that, since we’re not going to get any help from the government.”
Canada did get increased access to the American sugar market, good news for Ontario’s sugar beet growers.
DFO representative Ralph Dietrich told the CBC that concessions have been given in the last three trade deals, signalling 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.”