Glacier FarmMedia assembled a team of reporters from its network of publications, which includes the Manitoba Co-operator, to examine the implications of Canada’s new trade deal with the European Union on Canadian agriculture and food processing. In coming weeks, watch for a series of articles that zero in on the challenge Canadian agriculture faces turning this new market potential to market share.
Bracing herself against a swirling snow squall as she heads to the milking parlour on Sweetridge Farm near Winkler, Miriam Sweetnam says sardonically it wasn’t Manitoba’s fine weather that brought her family to Canada 15 years ago.
“The draw to Manitoba was the quota system here,” she said. “Yes, it’s expensive to get into, but you can buy quota in increments. We are from Ireland, where the quota that you had on your farm was the milk produced on that land in 1983. So you couldn’t access any more quota to put up a barn, to pay for that barn, so you were tied.”
Sweetnam and her husband wanted their children to have choices as they got older.
“Our push has always been to be big enough to allow that second generation in — if that was the choice they made,” she said. “We saw what happened in Ireland with the quotas being dissolved and we didn’t want to be in that position again. We knew we had to be big enough to be strong enough to take any blips in the market, whether they be CETA or the Trans-Pacific Partnership.”
With that in mind, the Sweetnams expanded their current operation. Today they farm 600 acres and milk 250 cows.
“You don’t have control over trade deals, you only have control over the products you produce. So you have to produce your best product, in your most efficient manner,” she said, adding she believes that despite losing market access to the EU, Canada’s supply-managed system remains — if not entirely intact — at least secure.
Secure for now
Anton Borst agrees the Canadian government isn’t looking to dismantle supply management, but that doesn’t mean he’s pleased with the additional market access granted to imports under the deal.
“Any time the government gives market share it makes you concerned about how much the government is behind supply management, and in that regard, it might make you a little more careful about when you expand and how you invest in your operation,” said the fifth-generation dairy producer, who farms near Elm Creek. But he added recent trade negotiations have shown a commitment to a supply-managed dairy industry by the federal government.
“They’ve demonstrated that they are behind it, but also that it’s not totally, necessarily untouchable,” he said. “In one way it’s reassuring, and in the other regard it is a bit of a concern.”
For Sylvain Charlebois, it’s a given that Canada’s next generation of dairy farmers will be operating in a very different marketplace.
“As soon as you start allowing more products from abroad, it really creates an imbalance, and then you’re forced to revisit how you manage the entire regime. I mean quota values will be affected, processing will be affected and how assets are evaluated will be affected,” he said. “It’s a start of a new transition period. I think the dairy sector… understands that the current model is no longer sustainable.”
That doesn’t mean the end of supply management, it means producers and governments need to start planning for “supply management 2.0,” Charlebois said. The stumbling block is that government has not been entirely forthcoming with a long-term strategy for Canadian dairy as it moves towards ratifying new trade deals.
“We are signing these trade deals all over the world, but I think that someone has to start explaining to dairy farmers that we not only need to think about the future for them, but we need to figure out how a new system could coexist along with a strategy very heavily focused on trade,” he said.
Agri-Food Economic Systems Inc. founder Al Mussell said trade deals must be viewed in the larger context. Not only are Canadian dairy producers losing market share, they also face issues at home.
“The reason that I think this is really an important issue for the dairy industry is that there are plenty of other issues going on in dairy supply management and you can’t take the EU cheese deal as distinct from those issues,” said Mussell. “Basically, the issue is that we’re awash in non-fat milk solids and cheese is an interesting product from the standpoint that it’s a mix of butterfat and non-fat solids. And anything that brings more non-fat solids in here, creates problems for us on that basis alone.”
Combine that with cheese export caps and a World Trade Organization ruling labelling Canadian cheese as subsidized if sold below domestic prices abroad — and Canada’s hurdles multiply.
“So the cheese that comes in here, we cannot offset by exporting,” Mussell said.
Not that demand for Canadian cheeses is high in Europe — if it exists at all.
Sweetnam said she hasn’t seen a big interest in Canadian cheese when she visits family in Europe.
“They are also very good at what they do and they have a lot of artisan cheese makers,” Sweetnam said, adding she has a first cousin in Ireland who is a cheese maker. “Other Canadian products, yes, but not much interest in cheese.”
Canadian consumers also tend to view European cheeses as superior to Canadian products.
“The other factor is the quality, the quality of cheeses in Europe is world renowned, and that’s why I suspect Canadians won’t mind eating more European cheeses,” said Charlebois. “Cheese in Europe is insanely inexpensive compared to Canadian cheese, and I’m afraid to say, much, much better in terms of quality.”
Dairy Farmers of Canada president Wally Smith said the organization has worked to promote Canadian cheese abroad, but it primarily focuses on the domestic market. Efforts to establish Canadian dairy products as the safest and most sustainable through the ProAction initiative and the Blue Cow logo will continue, he said.
He emphasized the importance of compensation when it comes to market loss resulting from trade deals like CETA. The $4.3 billion promised by the previous federal government in late 2015 is crucial to keeping farmers intact in the wake of both CETA and the TPP, said Smith.
“(Quota is) my important asset that generates cash flow on my farm, it’s something that most of us have invested heavily in… now I’m left with less than 97 per cent; I’ve given that up forever,” he said. “As far as the revenue stream is concerned, in that package of dollars for the dairy farmers so there is no negative impact, there is also a portion of that money that’s applied to the CETA negotiation.”
Of course, no dollars will flow unless the current federal government ratifies CETA and commits to honour its predecessor’s promise. In the meantime, Smith said Dairy Farmers of Canada is working to keep producers informed so they can make the right choices for their operation.
For his part, David Wiens, chair of Dairy Farmers of Manitoba said that what the future holds is always on the minds of dairy farmers.
“We will continue to be strong, we will continue to make adaptations in our sector,” he said. “We will do as we have done ever since the beginning of supply management — adapt.”