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Dairy farmers must patch up differences with processors

An informal discussion might enable us to open our minds a little bit.”

Jacques Laforge, DFC

Jacques Laforge, president of Dairy Farmers of Canada, says he wants to try again to develop a better working relationship with the country’s dairy processors.

In his fourth term as association president, Laforge told the DFC annual meeting Jan. 5 the dairy industry must become highly innovative and forward looking. “Producers, processors and retailers have to work cohesively. We have to resolve our differences.”

The two sides have tried formal discussions but they didn’t settle differences over pricing, use of dairy substitutes, cheese standards and a host of other differences. “I want to invite the processors to a brainstorming session because in the past we haven’t been able to reach a consensus. An informal discussion might enable us to open our minds a little bit.”

Doug Jarvis, president of the Dairy Processors of Canada, said in an interview he would discuss Laforge’s proposal with his board. But the last time the two sides talked, the processors were stuck with cheese regulations they opposed and are now challenging in the Federal Court of Canada. “We were not very pleased by that and that has made us reluctant to enter into further discussions.”

Laforge said the idea for a more informal approach to the processors came while he was thinking about where the dairy industry should be in 10 years. He said co-operation is a must. “We need a flexible pricing system to deal with swings in world markets. We want to grow our markets, protect our income and take advantage of our products which are recognized internationally as being environmentally friendly.”

He said dairy policy has to be built on three pillars – efficient import controls, fair returns for producers and production discipline. It would also help to have the Doha round resolved so supply-managed farmers know what they faced in the coming years. “Canada has to remain focused on achieving no negative impact on dairy producers from the negotiations.”

Agriculture Minister Gerry Ritz told the delegates the government would continue to defend supply management

in the trade talks. He said the government was ready to bring in special safeguards if there is a sudden influx of cheap dairy products or substitutes.

However, the government isn’t going to endorse a DFC call for composition standards for yogurt as were developed for cheese in 2007 and now face the legal challenge, he said. “We will move on yogurt standards when the time is right.”

Delegates told the minister that the current proposals before the WTO on sensitive products weren’t good for supply management. “They would be devastating and would cost dairy farmers $1 billion in lost income,” one delegate said.

Steve Verheul, the chief Canadian agriculture negotiator at the WTO and a regular fixture at DFC meetings during the last few years, said that while there is no deal, a lot was accomplished during the past year of negotiations. “The gaps are not closed because there’s no political will to close them.” It’s possible the global economic slowdown might pressure countries to approve the proposals on the table “because that would send a positive signal to the world economy.

“Many countries are pushing hard for an agreement while many others are not opposed to one,” he said. “So it comes down to whether India and China will endorse the current proposals and what President Obama will do. Verheul said the American position should be clear by late spring or early summer.

Four draft texts for a new WTO agreement were prepared during 2008 and each one narrowed down the differences. “The technical issues are mostly resolved; it’s the political decisions that have to be made.”

The proposals advanced in December don’t provide Canada and Japan with sufficient protection for their sensitive products and also require greater tariff cuts than the two countries want to make, he said. He said countries understand why Canada is seeking more protection but they still want extra concessions.

The Canadian side is also considering whether there are other ways to achieve the country’s goals in the negotiations or whether changes could be made in the supply management sectors. “We know we can’t protect them by standing still.”

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