CETA Bad News for Dairy in Canada

From Dairy Farmers of Ontario: a listing of the preliminary impact.  I wonder what the Bankers are thinking?  Could this have an equity impact?  For now here are the issues.

DFO Responds to Proposed CETA Deal

October 17, 2013

CETA Deal Doubles European Access to Canadian Market & Hurts Canadian Dairy

On Tuesday, October 15, 2013, the Dairy Farmers of Canada (DFC) executive was notified 
that the Comprehensive Economic and Trade Agreement (CETA) negotiations between Canada 
and the European Union (EU) have concluded.

We have been informed that the EU will get an additional 17,700 tonnes of tariff free 
access for its cheese into the Canadian market (TRQ).

There are different ways to quantify the impact this will have on Canadian farmers and 
the Canadian dairy industry. However, it is very significant and represents at least 4.5 %
 of the Canadian milk produced for the cheese market and is approximately 2.25% of all 
milk produced in Canada.

In addition, the impact of giving increased TRQ to the EU represents a significant risk that
 even more market access will be given for the on-going Trans Pacific Partnership negotiations. 
 There is little doubt that the US, Australia and New Zealand will see this as an opening 
and pursue their interests aggressively; certainly for cheese and likely other dairy products, 
as well.

While the Federal Conservatives have stated they continue to support the 
Canadian dairy system, known as Supply Management, this deal does not support dairy farmers.

Giving Up Canadian Dairy

The Canadian dairy system provides safe, high quality Canadian milk products and 
supports a strong local economy. This deal compromises our system.

The CETA deal will cost our Canadian local dairy economy millions of dollars. This potential 
deal is a loss for Canadian dairy farmers and industry. It will take income from Canadian 
dairy farmers and their communities and give it to the European industry.  With this loss of 
farm income and squeeze on cheese makers, it is also taking economic development and 
jobs from Canadian communities.

Our farmers are demanding that the government matches its actions with its words by 
standing up for Canada and the Canadian dairy industry by not giving up our safe high
 quality Canadian dairy.

What the Deal Means in Numbers

What the Proposed Deal Could Mean for Canadian Dairy

• The EU access will total 31,971 tonnes or 7.5% of the Canadian cheese market.
• Total imports will reach 38,171 tonnes or about 9% of the current Canadian consumption.
• The EU will have 63% of the fine cheese market in Canada. 
• The additional access is equivalent to a 2.25% cut in farm quota.
• That quota cut carries an estimated farm income loss of nearly $150 M
• Farmers will then have to rationalize their dairy herd

Fair Food Trade ? Not likely.

The Conference Board of Canada is at it again.  Another report and with more spurious claims.  Perhaps they think that if they acknowledge some truths their doggerel will be better accepted.

Dairy Farmers of Canada deserves some kudos from their farmers.  I hope the industry is sharing this material far and wide to their producers. Producers are increasingly finding their information and updates via Twitter and sharing it!! They in turn, can transform and impact what kind of information the media is getting by posting from Twitter.

I am amazed at how widespread items can be.  It just takes a tweet to the right place or forum. Go for guys!-CG

Richard Doyle

Executive Director, Dairy Farmers of Canada

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One Size Does Not Fit All in Food Trade

Posted: 08/01/2013 5:22 pm

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Another Conference Board of Canada report claims supply management drives up prices and discourages international trade. I found it interesting to see some trade truths being acknowledged, that one-size does not fit all. Here are some more facts:

Farmers are not against trade. Canadians want Canadian food, and coffee of course!

There is no evidence that deregulating Canada's dairy market would result in lower prices for consumers. In fact, international experience tells us otherwise.

The Australian milk industry deregulated in 2000. The experiment did not work out as people had hoped: Dairy Australia monitored farm price fluctuations increased, hurting farmers, and consumer prices just kept going up at the same pace as before, according to the Australian Bureau of Statistics, resulting in this situation: 

Neither consumers nor farmers are benefiting. In the post-deregulated Australian dairy market, price fluctuations faced by farmers are more severe, and consumers are continuing to face rising prices.

It does not seem to work in Columbia either, which I do not find surprising. I've blogged about this before.

Furthermore, supply management has not prevented Canada from negotiating significant international trade agreements. Since 1986, with supply management firmly in place, Canada has completed free trade deals with the U.S. and Mexico (NAFTA), Jordan, Columbia, Peru, Costa Rica, Chile, Israel and EFTA (Switzerland, Norway, Iceland and Liechtenstein).

It must be noted that in these negotiations, Canada was not alone in wanting to "protect" certain sectors. Beef, sugar, dairy and rice are often considered "sensitive" by several countries in trade talks, as are cars, procurement and other services. See the complete article at: One size does not fit all in Food Trade

Bruce Muirhead does it well, Again!!!

I would think that the Media would review articles like this and try to provide the public with some balance. True, it is summer and true, although farmers get upset about inaccurate press, the media does not always pay attention one way or the other.  The problem is that when they do pay attention material like that from Professor Muirhead is not at the forefront. Let's hope that by posting regular articles to the Huffington Post, they at least can find 'the other side of the story'!! -CG

Bruce Muirhead

Professor

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What the Media Has Wrong About Dairy Farmers

Posted: 08/01/2013 5:21 pm

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With reoccurring and recycled negative commentary about dairy supply management in the Canadian media, one would think that it, and not money, is the root of all evil. I believe that this country's media and punditry is either ill-informed on the merits of the system, or committed to a world view in which data and practical reality have no place.

The question often raised in Canada, and around the world, is this: does dairy supply management, represent a reasonable model through which to license Canadian milk production?

Neoliberal critics like Canada's Conference Board or the CD Howe Institute, and international critics like the Organization for Economic Cooperation and Development, say no, claiming the system gouges consumers, at least when compared with prices set by "the market," which in their world is rational, objective and infallible. And we have seen where that has gotten us, what with market meltdowns, imposed austerity, and sharply rising unemployment in many countries.

But more to the point, the claim is simply not true. The cost comparison between supply management and the market-determined price is like comparing apples and oranges. When the market sets the price, the direct expense to consumers does not generally reflect the outlays incurred by the farmer. As a result, government must provide billions of dollars worth of subsidies annually to farmers if they are to stay in business.

The critics of supply management do not factor these hidden taxpayer dollars into the cost of a litre of milk. In Canada that is not the case. There is no hidden subsidy provided by Canadian taxpayers to dairy farmers.

By comparison, U.S. subsidies to dairy producers represent about 40% of American dairy farmer incomes, when it reaches them. These subsidies come directly from taxpayers' pockets. Without that hidden support American dairy products would be much more costly for consumers, and much more expensive than the equivalent Canadian product.  See more at: What the Media Has Wrong about Dairy Farmers

The Conference Board of Canada goes after Farmers Again!

It consistently boggles my mind that after so much discussion about the gutting of rural Canada and the continual loss of jobs to imported products, that the Conference Board of Canada can even print this stuff.

 They certainly have not factored in what those imports would do to farmers or food safety. Increased access means lost jobs in whichever sectors.

 The brave new world of new, better jobs is is disappearing in a puff of smoke. 

You can find a complete summary of their views in the Press Release at: Canada's Barriers on Food Trade only Hurt  Ourselves. No one ever asks the industries on the losing end of this equation what the impact would be or what their opinions are.-CG



NEWS RELEASE 14-19

Canada’s Barriers on Food Trade Only Hurt Ourselves

Reducing tariffs likely to lead to more exports abroad and greater choice at home

Ottawa, July 31, 2013 –Canada should be a leader in reducing trade barriers on food products – instead of being one of the strongest holdouts in the developed world. A new Conference Board of Canada report, Liberalization’s Last Frontier: Canada’s Food Trade, argues that the food industry and Canadian consumers would benefit if import duties on food were significantly lowered.

“The benefits of freer trade in food are similar to those from trading any other product,” said Michael Burt, Director, Industrial Economic Trends. “The Canadian food industry can become more prosperous by serving fast-growing markets, which benefits all Canadians. And consumers benefit from a greater variety of food products at lower cost – including staples like year-round fruits and vegetables, coffee, sugar and tea. The only thing preventing Canada from gaining these benefits is ourselves.”

Highlights

• Trade barriers for food have fallen over the past 20 years, but Canada still maintains high tariffs, especially compared to similar countries.
• Canada is unlikely to gain the full benefits of its current trade negotiations without agreeing to reductions in tariffs on food products.
• Food imports provide Canadians with products they could not otherwise obtain at affordable prices.

Among the 34 countries in the Organisation for Economic Co-operation and Development, Canada is one of the very few that export considerably more food than they import, along with Australia, New Zealand and Chile. Unlike these countries, however, Canada still maintains very high tariff barriers on all dairy products, chicken, and eggs. And Canada has high barriers on wheat and barley.

Important New Dairy Industry Stats

The following article from the July Issue of the Milk Producer, is full of information that everyone who supports supply management need to have in their hands.  Certainly supply management's detractors would like everyone to ignore the facts. The figures provided below are important to farmers, governments and the public.  Use them well and spread them around.-CG

Dairy Industry Success Should Make Us Proud

DFO VICE-CHAIR’S MESSAGE By Ron Versteeg

Some people have criticized supply management as being a self-serving system that dairy farmers enjoy at the expense of others.

Nothing could be further from the truth. Canadian dairy farms produce nearly eight billion litres of milk a year, making the dairy industry Canada’s second largest agricultural sector. Our industry’s contribution to Canada’s gross domestic product has risen to $16.2 billion in 2011, up from $15.2 billion in 2009, according to ÉcoRessources Consultants, which provides economic analysis. It completed a study for Dairy Farmers of Canada on the economic impact of the Canadian dairy industry in April 2011, later updated in February 2013. The study showed the dairy industry contributes 218,330 jobs, up from 215,104 over the same time period. It is important to note this increase occurred during a difficult period in Ontario’s economy.

Our sector also pays more than $3 billion in taxes to all three government levels. This helps support several services, such as pensions, healthcare, road repair and other infrastructure projects.

All these benefits require the Canadian consumer to contribute little to maintaining our industry. Canadian consumers spend only 11.8 per cent of their disposable income on food, of which 1.07 per cent is our industry’s share of the grocery basket. Canadian per capita consumption of milk and milk products is about double the global average. By producing what the market requires, we avoid wasteful and costly surpluses. Dairy industry stakeholders enjoy reasonable costs, predictable revenues and a stable business environment. This lets producers earn a fair margin, reinvest in their farm businesses and make efficiency gains.

Our system has evolved considerably in the last four decades, yet it remains true to its guiding principles. No one has yet identified an alternative system that balances farmer, processor, government and consumer interests as well as supply management. That’s what the public interest is all about. Our long-term track record of shared success should make us all proud.

Wow- The Globe provides Balance !!

This article was a surprise, as the Globe and Mail has not been known for its balance  around the issue of Supply Management in the past.  True, it is not written by a regular Globe reporter but they did publish it and Mr.Clarke wrote a very good, pointed article about the issue of trade and reality.  It got the usual snarky, ideological comments but still the readers of this newspaper got some balance.  It is worth the read and more. -CG

PETER CLARKE

Canadians care about their dairy supply, not Economics 101

PETER CLARKE

The Globe and Mail

Published Thursday, Jul. 25 2013, 9:33 AM EDT

Last updated Thursday, Jul. 25 2013, 11:50 AM EDT

Canada’s system of supply management for its dairy, poultry and egg sectors has been getting a lot of attention in the business press over the past few months. Ongoing trade negotiations have prompted some pundits to argue that local poultry, egg and dairy farmers stand between us and final deals.

The point of disbelief arrived when two economists from the Fraser Institute, known for promoting the power and good judgment of unfettered free markets, argued against supply management, all in the name of low income households. The C.D. Howe Institute also offered similar positions, suggesting they know better than average Canadians about what is good for them. see complete article at: Canadians Care About Their Dairy Supply not Economics 1o1-The Globe and Mail

EU Trade Deal & Public Hearings?

This article was flashing around parts of the internet the other day. It sure is important to have our Premier's focus on this issue.  It is also important that dairy organizations ensure their premiers and their Ministers are kept in this particular information loop. 

It becomes even more important when they are reminded that Ottawa has continued its downloading to the Provinces, removal of supply management would directly impact the provinces and local economies, so provincial jurisdiction, control and input becomes enormously important in the lobbying battle to protect supply management. If you tweet and saw this article I hope you passed it on.-CG

OTTAWA

Critics urge provinces to hold public hearings on EU trade deals

Published Sunday, Jul. 21, 2013 06:52PM EDT

Last updated Monday, Jul. 22, 2013 04:48AM EDT

Critics of the free trade talks with Europe are urging provinces to ensure any negotiated deal gets a full public airing before it is formally signed.

The Trade Justice Network and Quebec-based Le Reseau quebecois sur l’integration continentale has sent premiers a letter in advance of their meeting in Niagara-on-the-Lake, Ont., next week, saying the federal review mechanism is not sufficient.

The umbrella groups, which represent unions and civil society organizations, say provinces must step in because “the current federal government has rejected virtually every amendment proposed by opposition parties to every trade agreement that has come before Parliament for review.”
The Harper government has made a successful Comprehensive Economic and Trade Agreement with 28 European Union nations a key economic and political goal – it would constitute the only major free trade deal since NAFTA two decades ago.

Unlike trade talks of the past, however, Canadian provinces have had to be directly involved in the process since some of the biggest issues – such as liberalized government procurement and public hydro-electricity tenders – fall under provincial jurisdiction.

As well, expected extensions in pharmaceutical patent protections will likely result in higher provincial health care costs. With so much involved, the groups say the provinces must hold public hearings, adding there is precedent for doing so.

“If there is a difference between the CETA and these other trade and investment agreements it is surely that the Canada–EU agreement will have far greater impacts on provincial sovereignty, as well as on policy flexibility at all levels, including municipally,” the letter notes.
“We therefore urge your government, and the Council of the Federation, to champion the idea of a democratic review of the CETA in between conclusion of the negotiations and a formal signing of the agreement.”

Most analysts believe a deal could be signed in principle this fall, despite several missed deadlines.
Officials on both sides of the Atlantic contend only a few difficult issues remain to be resolved, including expanded access for Canadian beef exports and European demands that Canada allow more imports of European dairy products.

But analysts also warn momentum could be stalled if the talks are not concluded quickly, particularly as the European Union is refocusing its attention on a deal with the more lucrative market in the United States.

Ottawa has maintained a deal could boost Canada’s economy by $12-billion and create about 80,000 jobs, although critics say the benefits are exaggerated.

Dairy Farmers of Canada & Huffington Post

It looks like DFC has a regular column or at least regular input into the Huffington Post.  Columns are being written by Richard Doyle -Executive Director of Dairy Farmers of Canada.  

This is  certainly one of the places to be because the Huffington Post is now often quoted as a source in the mainstream media. Who woulda thought that something that began as a fancy blog would develop into what we have today?

For those readers who do not know the Huffington Post, here is a Wikipedia account:

The Huffington Post (sometimes abbreviated Huff Post or HuffPo) is an online news aggregator and blog founded by Arianna Huffington, Kenneth Lerer, Andrew Breitbart,^[2][3] and Jonah Peretti, featuring columnists.^[4] The site offers news, blogs, and original content and covers politics, business, entertainment, environment, technology, popular media, lifestyle, culture, comedy, healthy living, women's interests, and local news.

In July 2012, The Huffington Post was ranked #1 on the 15 Most Popular Political Sites list by eBizMBA Rank, which bases its list on each site's Alexa Global Traffic Rank and U.S. Traffic Rank from both Compete and Quantcast.^[13]

Kudos to Dairy Farmers as their media talents and tactics come of age.  Well done.-CG

Richard Doyle

Executive Director, Dairy Farmers of Canada

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How Should Farm Performance Be Measured?

Posted: 06/06/2013 11:35 am

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Studies, like the recent one by the Organization for Economic Cooperation and Development, that attempt to undermine the value of supply management to Canadian agriculture must be examined carefully.

These studies compare Canada to other nations and often state that we are lagging behind. In the case of the OECD study, it claims Canadian dairy farmers have a "particularly low" economic performance. The methodology that is used for these comparators is flawed in many respects. It defines "economic performance" as a comparative to "global competitiveness," uses tools that the OECD itself has claimed to be inadequate (e.g. Producer Support Estimate calculation) and lacks consistency in the data utilized (e.g. all farms in Canada compared with only larger farms in EU).

Canadians would also find it puzzling that the OECD would not include investment by farms in modern technology as indicator of performance. Here again, dairy farms in Canada are leading the pack in investing in robotics and other technology that make farms more efficient.

In the end, it is interesting that Germany, Belgium and Australia are held up as areas where farmers are identified as performing better from an economic standpoint. But that makes one wonder why dairy farmers in Germany, Belgium and Australia have taken to the streets to protest a system based on world prices that has made it increasingly difficult for them to cover their costs?

We don't see that in Canada. Supply management not only ensures consumers can access high quality dairy products, but it also ensures efficient farmers -- not all of them! -- can receive a fair price for the milk they produce based on their costs. Read more at: the Huffington Post- How Should Farm Performance be Measured?