By the time this is published, there will either be a new NAFTA (or USMC if U.S. President Donald Trump yet again gets his way) or trade ties with the USA and Mexico will be finished and our government will make deals with other countries, including Mexico. Personally, I would prefer the latter, which would allow Canada, over time, to stand proud and not be under the thumb of our southern neighbour (the word used in a very loose sense).
If, by a combination of Trump’s bullying and Trudeau’s nibbling away at our quotas, the U.S. is given access to our dairy market, I fail to see how many supply-managed farms, and specifically dairies, could hope to compete with open market American mega farms flooding Canada with milk. Trump will only win if our federal government, yet again, gives away that which does not belong to it: our quota. It has already been offered to the European Union and the Pacific Rim countries, each of whom is promised access to 3.25 % of our milk market when signed. Will it be the same to the USA or more? Can your farm survive a minimum 10 % cut to its income in the next few years? And if prices drop due to foreign competition, could you afford to replace that quota? I doubt it.
Last year, the feds introduced a multi-million dollar program called the Dairy Farm Investment Program to compensate for the pending EU deal. Rolled out in two parts, the program’s intent was to make farms more efficient and competitive with grants of up to $250,000 per farm. It applied retroactively, so those who had already built or had plans already in process snapped up the available funds in a short time, leaving everyone else wondering what happened.
In reality, though, those of us who did not participate in expansion may be the lucky ones. The answer to competing with low debt American milk production is to carry a low-debt operation ourselves, not a high-debt one. Encouraging farms to go into additional debt with quota reductions and possibly lower prices is not the smart way to do business. But there again, Ottawa knows little about either business or farms, especially when supply managed.
Here’s an analogy I have used before. You build a house that suits your family, meets all requirements and keeps you dry. The neighbour on the other side of the property line builds a house 10 times the size of yours, far bigger than his needs but he never finishes the roof. The family constantly gets wet. The government steps in, removes 10 % of the roof you built and paid for plus reduces your income by 10 %. Even worse, the government gives the 10 % of your roof to the neighbour who continues building, adding on to his big house but never finishes the roof. You have a choice. Pay for another roof or get out.
This will be the situation in Canadian dairy.
Our prime minister is making a habit of stealing our quota to use as bargaining chips in trade deals, His government does not own our quota. Farmers paid for their quota and rely on it to pay loans, operating expenses and support their families.
It is time Ottawa realized that it cannot just give away that which does not belong to them, all the while permitting foreign dairies access to our markets but without the same standards and requirements that are imposed on us. For every kilogram of quota removed from our system, those that own it are owed restitution at the going rate. It is the right thing to do.
Angela Dorie is an agricultural writer and a Jersey farmer near Cornwall.
