Since threatening to tear up the North American Free Trade Agreement, the U.S. has seldom minced words when it comes to its views on Canada’s supply managed industries.
“It’s very unfair,” griped U.S. President Donald Trump multiple times throughout the NAFTA renegotiations, targeting Canada’s dairy industry in particular with accusations of trade profiting at the expense of U.S. farmers.
With all the rhetoric, Canada’s dairy sector may expected to draw the shortest straw when a new trade agreement was finally penned last month. Ultimately, however, Canada did not dismantle its entire supply management system, nor did it entirely stand firm to U.S. pressure. Rather, it compromised.
Under the new terms of the United States-Mexico-Canada Agreement (USMCA), Canada is offering U.S. dairy a moderate 3.6 per cent expanded share of its domestic dairy market. That means more American milk products entering local grocery markets, competing with Canadian brands on the same shelves.
While a comparatively small amount of Canada’s dairy market, which in 2016 produced approximately 8,470-million liters of milk, the 3.6 per cent needs to looked at in the context of the last several years, says a professor and researcher at the University of Waterloo.
“I don’t subscribe to the cohort that says it’s a relatively benign agreement and at least we still have supply management – and I guess that is true,” said Bruce Muirhead, the associate vice-president for research, oversight and analysis at the university.
“USMCA gave 3.6 per cent of the dairy market to American producers, but that’s on top of … a number of other agreements that we’ve signed like the Comprehensive Economic and Trade Agreement (CETA), and now the comprehensive and progressive, so-called, Trans-Pacific Partnership (TPP),” he said.
The concern was mirrored by local dairy farmer Adam Van Bergeijk of Mountainoak Cheese. Located in New Hamburg, the local operation produces chesses from their own cows on the farmstead.
The concerns extend beyond just the supply managed industries, suggest Muirhead. Because Canada relies on a quota system for milk production, and because quota are expensive an in limited supply, supply management tends to encourage smaller operations in Canada than it does in the U.S.
The smaller Canadian farms are typically more connected to local economies than the massive concentrated animal feeding operations (CAFO)’s prevalent in the U.S.
The large CAFO’s and farmsteads of the U.S., by contrast, can’t be supported by local economies, and typically must import their feeds and supplies from further afield.