Much talk, no action on supply management border issues

A Commons trade committee meeting heard lots of words but little new information at a recent hearing

Many words were spoken, but little new was said.

At a recent two-hour session of the Commons trade committee, representatives of the dairy and poultry sector and Lawrence MacAulay, the federal agriculture minister, all spoke at length about border issues — but largely reiterated previous statements.

Following a Parliament Hill protest by dairy farmers this spring over diafiltered milk imports, MacAulay said the government wants a “long-term sustainable solution in place,” a statement reiterated at the hearing — but he wouldn’t commit to when that might happen and what it may involve.

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The committee isn’t planning on any further sessions or filing a report to Parliament on what it learned from the session on whether the Duty Deferral for Food Ingredients program is being used to circumvent border controls on dairy and poultry products. The program exempts processors from paying duties on imported ingredients if the product is exported within four years.

The committee didn’t look at the situation of processors who want access to competitively priced Canadian ingredients so their products can sell in international markets.

As the group Food Processors of Canada has told Trade Minister Chrystia Freeland, “We would prefer to buy Canadian dairy and poultry but producers are uninterested in providing predictable access to competitively priced ingredients so that we can compete in export markets.”

MacAulay said the government is studying ways to make border controls on diafiltered milk and spent fowl effective, without interfering with legitimate imports. “What the government wants to do is to make sure we resolve these issues in a meaningful way, and to make sure we have a strong supply management system, and a strong dairy industry.”

Robin Horel, president and CEO of the Canadian Poultry and Egg Processors Council, said his organization has called for intensified “anti-circumvention measures that will enhance our border controls.”

He explained the organization isn’t concerned about the legitimate use of this legal option to import spent fowl, but rather with its use as a loophole to import what in reality is broiler meat.

“We are concerned with fraudulent import activity, and we support intensifying anti-circumvention measures that will enhance border controls,” Horel said.

Yves Ruel, director of commerce and policy with Chicken Farmers of Canada, said imports of American spent fowl have exceeded the amount of meat actually available in that category.

In 2012, Canada imported 101 per cent of the entire U.S. supply of spent fowl, when calculated on a whole bird equivalent basis.

“Obviously, this is impossible and far from feasible especially considering that U.S. fowl meat is both consumed domestically, as well as exported to other destinations,” he said.

From the beginning of 2016 to the end of July, Canada has imported 68.7 million kilograms of spent fowl from the United States, which is equivalent to 114 per cent of the U.S.’s entire spent fowl production. The imports were 32 per cent greater than the imports over the same period in 2015. If this trend continues, 2016 could see a record-high annual volume of 118 million kilograms in imports.

It’s estimated that at least 37 million kilograms of chicken were illegally imported as spent fowl in 2015, which is equivalent to 9.4 per cent of domestic chicken production, he said. This equates to a loss of 2,771 jobs to the Canadian workforce, $208.5 million in contributions to the national economy, and $69.6 million in taxes.

Caroline Emond, executive director of Dairy Farmers of Canada, said the organization had had numerous meetings with the previous and the current government explaining why “diafiltered milk cannot be an ingredient when it crosses the border, and milk when it comes to making cheese.”

This lack of enforcement of Canada’s domestic regulations is causing revenue losses estimated at $231 million per year for Canadian dairy farmers, Emond said.

DFC wants Ottawa to enforce the existing compositional standards for cheese, she said. “This could still be done easily and simply by allowing the Canadian Food Inspection Agency to delegate the enforcement of the cheese standard to the Canadian Dairy Commission.”

She said the agreement DFC has reached with Dairy Processors of Canada may solve some of the problems diafiltered milk has caused. But “it is not, and should not in any way, be considered as a complete solution. It also should not be taken as an excuse for the government to not play its role when it comes to enforcing Canada’s border measures and domestic regulations.”

Emond said the ingredients strategy may help, but it is only one part of the solution – the other half is the enforcement of the cheese standard.

“It is time for all parties to stop playing political games with this issue, and to solve the problem,” she said. “It is the government’s responsibility to solve this problem, the dairy sector cannot say, or do, anything that we haven’t already many times before.”

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