Dirt Cheap Dairy is Not in Our Best Interest

Owen RobertsCall me old fashioned, but I’m siding with dairy farmers in the latest attack against supply management. And I hope any farmer who feels the same way will take action and let their elected officials (particularly at the federal level) know how they feel.

Over the past couple of weeks, a fight has emerged between dairy farmers and a Conference Board of Canada think tank, funded primarily by the food industry. RealAgriculture has a great report on the scrappy situation.

The think tank says that when it comes to dairy, the future is in the free market. It claims there’s a big export market for milk, including China, and it’s growing at a rate of seven per cent a year.

Canadian farmers would do better by lowering their prices and exporting cheap milk than they would by trying to service a weak “slow growing” Canadian market with milk at the current price, says the think tank.

Right now, Canadian dairy producers can’t access those export markets. Internationally, they’re in the penalty box. Our support system for dairy farmers is considered unfair to other countries by the World Trade Organization. So, we’re not allowed to sell milk products globally.

And it’s true, we do keep cheap imported dairy products out.

But why wouldn’t we?

Cheap imports would undercut our own producers and undermine our very stable dairy industry. Maybe we’re guilty of protecting our own farmers and upholding the quality of our domestic dairy system, but so what? Other countries look after their own, including our closest neighbour to the south, with a king’s ransom worth of farm subsidies. Why can’t we?

Naysayers allege one reason we shouldn’t protect Canadian dairy farmers is that consumers, processors and manufacturers are paying more than they should for milk. If the current system was demolished, cheap exports would be allowed in, Americans and the WTO would be happy, the price to Canadian farmers would no longer be guaranteed and they’d have to compete with imports. Following this line of thinking through, the price farmers receive would come down, and then so would the price to consumers.

To me, that’s a foolish assumption. Who believes that if farmers get less for their crops and livestock, the retail price of food will fall significantly? With the long chain of services, processors, manufacturers and other middlemen between farmers and consumers, someone will be standing in line to take the difference.

In fact, that’s what’s happened in New Zealand and Australia. Those countries cut out subsidies to dairy farmers and others, and expected the price to fall. But in fact, milk is the same price there today as it is in Canada.

(Milk is cheaper in the US, but it’s heavily subsidized by the government.)

It’s worth noting that most Canadian dairy farmers aren’t clamouring for access to the open market. They make a decent enough living working with the current system.

And to me, Canadians are not suffering as a result of them being paid a fair price. Canadian dairy farmers have among the best livestock in the world. One dairy-related thing we do export is Canadian dairy genetics, and they’re A-1. The products we consume from Canadian dairy farms are exemplary.

Canada is opening up to the global dairy world in other ways. For example, the pending trade deal with the European Union will give Canadians access to more kinds of international cheese, and vice versa. This will augment the 800 domestic varieties already available here.

Still, there’s room to improve the sector. The quota system is expensive and makes it tough for young dairy producers to buy into the industry. Wisely, steps are being taken to change that, to make it easier for new dairy farmers to break in. This must continue.

But overall, the system doesn’t have to be demolished. We don’t need to be like everyone else.

And we aren’t. Let’s keep it that way.

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