The Canadian government has sacrificed yet another vital part of Canada’s domestic supply management system by signing a new trade agreement with the US and Mexico, says the National Farmers Union (Canada). The new agreement, signed last week, is called USMCA - US Mexico Canada Agreement – and replaces NAFTA, the North American Free Trade Agreement.

“Since 1969 Supply Management has awarded Canadian dairy and poultry farmers a fair return for producing sufficient quality and quantity without over-production,” says dairy farmer Jan Slomp, Vice-President Policy for the NFU. “Ever since Canada engaged in negotiating trade agreements the system has been weakened by allowing more production from elsewhere to enter the Canadian market at prices below the cost of production, an unfair trade practice known as ‘dumping’,” Slomp adds.

With USMCA, the Canadian government has agreed to end Class 6 and 7 milk pricing. These discount classes were created recently as a last resort to push back against milk being illegally imported from the US in the form of “diafiltered milk” (milk processed to contain extra protein). The measure was necessary because the federal government refused to step up with proper border control to stop the imports.

Explains Grey County farmer, Leo Manion, in a letter published by the NFU, supply management was created to regulate perishable commodities such as eggs, poultry and dairy products. The supply management Board also sets the price per unit based on the cost of production, and controls the quality and safety of products by regulating the use of medicines used with dairy cattle and prohibiting the use of genetically modified hormones allowed across the border. The Board also ensures that processing is local, meaning less travel, fresher products and local employment on which Canadians place high value.

But the real value of supply managed agriculture, Manion writes, can been clearly seen by comparing apples to apples right here in Ontario. Non-supply managed agriculture sectors include beef, pork, and cash crops such as corn, soybeans and wheat. These sectors are supported by subsidies, grants and insurance programs used to infuse cash into a system that leaves farmers with no options other than to sell their commodities below the cost of production, thanks to a global marketplace.

“Canada wide these transfers are commonly around $1.5 billion dollars per year with the majority going to large scale operations. The government delivers a disproportionate amount of cash to the largest producers, and encourages huge fields/feedlots instead of smaller traditional family farms.

In Canada you will only pay for your milk once, as supply managed sectors don’t need to draw from the subsidy pools,” Manion continues.

“Milk producers get paid for what they produce and only what they produce,” Manion says, adding, “This does not create inefficiencies [as US officials have charged] but the opposite. Programs that require taxpayers to pay twice for their food do a far better job of encouraging a non-profitable operation.”

“Dismantling supply management will do little to ease [overproduction issues in the US]…and will destroy one of the few successful farming models Canada has left,” Manion says. “If you like paying once for safe dairy products benefiting local small farmers instead of multinational corporations, you need supply management!” he adds.

"During Trans-Pacific Partnership (TPP) negotiations Canada gave away access to over 3.25% of its domestic market in the supply managed dairy, poultry and eggs sectors to the 11 countries involved, with the USA as one of those countries," Manion says. "After President Trump took the US out of the TPP, Canada concluded virtually the same deal with the remaining 10 countries. Now, in the USMCA Canada has given an additional over 3.25% of our market to the US alone. This is on top of stopping our farmers from competing with the American imports to provide high-protein ingredients to Canadian processors,” Manion adds.

“We take no comfort in promises of compensation,” continues Slomp, in response to the federal government’s pledge to compensate farmers adversely affected by the new trade deal. “In the Comprehensive Economic Trade Agreement (CETA) with Europe, the Canadian government granted additional access for 17,500 tonnes of European cheese in the Canadian market. In the wake of CETA the compensation packaged offered to Canadian dairy farmers is a boondoggle. CETA shrinks total revenue available to Canadian farmers, yet the subsidy is given to the farmer that expands,” Slomp adds.

“To expand when revenue is diminished is a rather reckless business decision. It is a recipe for pushing more farmers out of business, not compensating them for a wrong-headed trade decision,” Slomp says, adding, “To add insult to injury, it is Canadian dairy farmers who take the brunt of low prices resulting from the skim milk surplus, while miraculously, processors qualify for CETA compensation package money, which they use to capitalize on the lower-priced skim milk, as if that alleviates farmer’s losses.”

“Successive Conservative and Liberal governments in Canada have protected supply management while causing a death by a thousand cuts”, Slomp says. “If this is support from a supply management-friendly government, who needs an enemy?”

source: media release, NFU