With the European free trade deal CETA set to launch next month, Ottawa is smoothing out a few wrinkles.
The federal government has backed down a bit in a dispute with the European Union over the allocation of new tariff-free cheese imports.
It also said it would start accepting applications Aug. 22 from dairy farmers and processors for funding under transitional programs for improvements made to or planned for their operations to increase productivity.
Under the four-year $250-million Dairy Farm Investment Program, licensed producers can apply before next March for projects which were started after Nov. 10 last year, when Agriculture Minister Lawrence MacAulay announced the program. The first-come, first-served program will cover up to 50 per cent of approved project costs, up to a maximum of $250,000.
Dairy processors are eligible for support under a $100-million program that covers new equipment and infrastructure, or provide access to specialized expertise to introduce new products or processes.
Dairy Farmers of Canada said the program will “mitigate some of the negative impact on Canada’s dairy farmers” coming from the trade deal.
The government had acknowledged that the tariff-free access for an additional 17,700 tonnes of European cheese “would negatively impact Canadian dairy farmers. We are looking forward to seeing the Dairy Farm Investment Program in action to ensure that it functions as intended, and that the program has the ability to be adjusted if required, to truly benefit farmers.”
Pierre Lampron, newly elected president of Dairy Farmers of Canada, said his organization wanted the new cheese imports to go to the processors, “who would have imported cheeses that are not already produced in Canada, providing greater variety of cheeses to Canadian consumers, while supporting the continued growth of the Canadian dairy sector. Importing cheeses not already made in Canada would offer a greater variety of cheeses to Canadian consumers.”
DFC and Dairy Processors Association of Canada (DPAC) said the decision to split the quotas among cheese makers and retailers “missed an opportunity to support the future growth of the Canadian dairy industry.”
In June, the government said it planned to allocate 60 per cent of the new import quota to domestic dairy processors to sell. This caused one of many tempests between Brussels and Ottawa, as the two sides ironed out the details of the trade deal. The government cut that back to 50 per cent with the benefit going to retailers.
The additional cheese being admitted duty free under the Europe trade deal will equal about two per cent of Canadian milk production — representing 17,700 tonnes of cheese that will no longer be produced in Canada. Dairy Farmers of Canada says this is equivalent to the entire yearly production of Nova Scotia, and will cost Canadian dairy farmers up to $116 million a year in perpetual lost revenues.
The former Harper government had committed to provide the dairy industry with up to $4.3 billion worth of compensation to offset the impact of the trade deal. MacAulay said last year the Liberal government would honour that commitment but then backtracked to the $350-million program. DFC has questioned how many farmers will actually benefit from the funding.
MacAulay said the government wants to align program funding with the relative size of the milk quota in each province.
The dairy farm program will cover upgrades to the barn technology and equipment to improve productivity. The program will support large investments such as the adoption of robotic milkers and feeding system and small investments such as herd management and barn operation equipment.
The dairy-processing fund will provide up to $10 million for each capital investment project, such as installing new equipment and infrastructure, or up to $250,000 for each project to access technical, managerial or business expertise that could lead to new varieties of cheese coming to the market.
Jacques Lefebvre, president and CEO of the Dairy Processors Association of Canada, said Ottawa ignored provincial requests to have all the additional cheese quota go to dairy processors.
“When it comes to competition from European imports, our dairy sector is at a disadvantage,” he said. “Unlike the European sector which is heavily subsidized, the Canadian industry is not. Furthermore, the new cheeses coming into the market from Europe will enter Canada tariff free. While we are still early days, this will result in less production by Canadian cheese makers. In turn, this will impact Canadian dairy farmers who will not be producing the milk for these domestic cheeses. It is incumbent on the government to explain its logic to the 80,000 Canadian families that depend on our sector for their livelihood.”