Minnesota congressman critical of Canada’s supply management system

Colin Peterson suspects Canadians are using windfall profits from supply management to buy up American dairy processors

Canada’s supply management sector knows it’s on the American government’s hit list. Veteran Minnesota Congressman Colin Peterson reaffirmed that here April 26 while speaking to members of North American Agricultural Journalists.

“What sticks in my craw the most is the fact that we are letting Canada off the hook (with supply management),” Peterson said when asked about his opposition to the Trans-Pacific Partnership. “Canada took us to the cleaners in NAFTA (North American Free Trade Agreement). And the only chance that we have to fix that is in this (TPP) agreement, in my opinion. And this does not fix it.”

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Peterson, who has represented Minnesota’s 7th Congressional District since 1991, is the House of Representative’s agriculture committee’s most senior Democrat and chaired the committee from 2007 to 2011.

Supply management was created partly to give farmers stable incomes by matching production with consumption. But Peterson hinted Canada’s dairy sector is making windfall profits and using them to invest in the U.S.

“A 100-cow dairy is making a half-million dollars a year,” according to Peterson. “Our (dairy) guys are barely surviving and Saputo (a Montreal-based dairy processor and the 10th largest in the world) is the second-biggest owner of dairy processing in the United States. It just bought some more processing plants last week. Agropur (Canada’s largest dairy co-operative) is No. 6 now. So we now have Canadian dairy farmers owning more of the dairy industry in the United States than Land O’ Lakes. This is a screwed-up deal.”

Under supply management, exports are restricted. It’s considered a trade-off for protection from cheaper imports. But according to Peterson, Canada is exporting dairy products to the U.S. while high Canadian tariffs block U.S. dairy exports to Canada.

Trade statistics

However, trade statistics show that the trade balance in dairy products favours the U.S., an Agriculture and Agri-Food Canada official said in an email May 1.

“The dairy trade deficit with the United States in 2015 was at $371 million, almost double what it was in 2011,” the official wrote. “In 2015, Canada imported $475 million in dairy products from the United States, whereas the United States imported just $104 million in dairy products from Canada.”

The Canadian government fully supports supply management, the mail added.

“Supply management has served Canadian farmers and consumers well for over four decades providing producers with fair returns on their labour and investments. It also provides consumers with a steady supply of high-quality products at predictable prices.”

Considered to be one of the most conservative Democrats in Congress, according to Wikipedia, Peterson opposes TPP even though typically conservatives support trade agreements. Most American farm groups support TPP. Peterson is also offside on the issue with fellow Democrat and President Barrack Obama.

The Obama administration is pushing the deal hard, but according to Peterson right now the House of Representatives would defeat legislation endorsing TPP.

“He (Secretary of Agriculture Tom Vilsack) understands that it will not pass if it is brought up now,” Peterson said. “Why they are putting on this full court press now I don’t know, because I do not think it is a smart thing.”

TPP not needed

Peterson said he doesn’t believe the U.S. needs to sign TPP to be engaged in world trade or counter China’s growing economic power.

“This is not a free trade agreement, in terms of agriculture,” Peterson said. “This is a managed trade agreement and all we got out of agriculture was increased access in different commodity areas — so much for pork, so much for rice, so much for whatever.

“It could be that they may have to renegotiate this thing to get it passed. I think that’s unprecedented, but it could happen.

Leading U.S. presidential candidates Donald Trump and Hillary Clinton have expressed opposition to TPP. The deal was signed in February by Pacific Rim countries Brunei, Chile, New Zealand, Singapore, Australia, Canada, Japan, Malaysia, Mexico, Peru, the U.S. and Vietnam.

About the author

Reporter

Allan Dawson

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.

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