International Agriculture News

Canadian Dairy Industry Doesn’t Need NAFTA

It really seems that NAFTA is on thin ice, and this proverbial frozen trade pond seems to be full of cracks. North American agriculture is holding its breath before it’s plunged into the cold water under that ice, except, there is one agriculture group that has nothing to lose. They’re standing on land, by themselves: the Canadian dairy industry.

No NAFTA? No problem for the Canadian dairy farmer. The same could be said for the Trans-Pacific Partnership.

This is definitely not the case for the rest of agriculture in Canada.

Tom Vilsack and the U.S. dairy industry want increased access to the Canadian market, but they also want NAFTA to continue. You won’t hear the Canadian dairy lobby talk this way.

To be fair, we don’t hear other commodity groups in Canada looking outside of their industry’s interests. Is it really fair that dairy should take one for the team so NAFTA can possibly be held together? Probably not, but from an agriculture perspective, there are winners and losers in trade talks. If NAFTA falls apart, the overwhelming majority of Canadian farmers will be classified as losers.

It’s the strong resolve of the Canadian dairy lobby that should concern you as a beef, pork, cereal or oilseed producer.

In question period in Ottawa, it’s almost comical how we continually hear the opposition parties challenge the government’s resolve to stand up for Canadian famers in the NAFTA talks. Sometimes supply management is referenced and sometimes it’s not, but we all know it’s what the questions are actually referring to.

Politicians’ support of the dairy industry (and thus for supply management) defines how they are rated in their support of agriculture overall.

It would be refreshing if the question to politicians was, ”are you going to protect Canadian agriculture by negotiating the best deal for the agricultural industry that we all might be able to live with?” It would be refreshing if the question posed to the Liberals in question period was, “will this government stick up for Canadian cattle ranchers and feed yard owners to ensure that access to the U.S. market remains unfettered and the NAFTA agreement is successfully negotiated?”

Wishful thinking on my part.

The dairy industry’s inability to have any flexibility to allow imports could prove to be very damaging for the remaining majority of farmers that do not hold quota. The stranglehold that the Canadian dairy industry has on the government’s negotiation strategy is damaging to the beef, pork, cereal and oilseed sector. Many farmers should be asking ‘what about the rest of us?’

There is immense risk that while Canada is attempting to save the dairy quota system at any cost, ranchers and farmers that rely on trade are being thrown into a risky vortex.

A withdrawn NAFTA and potentially, a ripped up Canada/U.S. bilateral, would leave us with a WTO tariff rate on commodities like beef. With the Trump administration’s quest for nationalization, the WTO means nothing to them. We would see a thickening border on many agricultural commodities as the Trump administration follows the lead of R-Calf and not NCBA.

To the Canadian dairy industry there is no compromise, nothing to negotiate. This whole issue of increased U.S. dairy access into Canada is a mountain that Trudeau must die on with Trump, according to the Canadian dairy industry.

The Conservatives, when in power, also had to walk this fence. With CETA and TPP negotiations, the Conservatives worked hard to protect supply management, but they realized they had to compromise, which gained them intense criticism from the dairy lobby. Former Ag minister Gerry Ritz was labeled a closet hater of supply management by the dairy industry, even though he publicly supported it continually even after people suspected he had to as agriculture or trade minister or MP.

I have said repeatedly that if Canada was to negotiate away increased dairy access to U.S., this government is very well-positioned to do it for a number of reasons, but I have little doubt that they will not budge much, if at all, on market access into Canada. Due to the population of Ontario and Quebec and the location of the majority of dairy famers, it has been established as political suicide to speak out against the Canadian dairy lobby.

These negotiations will test Liberals’ willingness to face blowback from Canadian dairy famers if they have to negotiate away some access to hold NAFTA together. Currently, from the dairy famers and dairy industry insiders I talk to, they feel strongly that Prime Minister Trudeau has given them their word. Whatever that is worth.

So far, the NAFTA talks have been riddled with battles over government procurement contracts, U.S. steel imports, U.S. content in cars and other things I will not bore you with. Just like beef and pork, the Canadian steel and auto industry have much to lose in these talks.

I fully understand the entrenched position of the Canadian dairy lobby. If I held dairy quota, I would battle to keep it with everything I had due to the price stability and assurances it offers dairy farmers.  You cannot blame dairy farmers for trying to keep a system that serves them very well.

People are most dangerous when they have nothing to lose. The trouble for the rest of us is that if NAFTA is scrapped, the government will say they supported farmers, even if it’s a small portion. The Canadian dairy industry won’t skip a beat. They may even celebrate the end of the threat posed by the negotiations. The rest of Canadian agriculture will be shedding tears.

The following post was written by Shaun Haney, founder of RealAgriculture.com.

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