Dairy farmers in Canada might be a little sour after a new trade deal.
The United States, Mexico, Canada (USMCA) trade deal is set to replace NAFTA. It sees give and take on each side, but the dairy market saw a few more drops given to the U.S. than hoped.
If the deal gets approved, 3.6 per cent of the Canadian dairy market will be open to U.S. dairy imports.
At least one Durham dairy farmer says it’s unfortunate that market is now gone, because he doesn’t think Canadian producers will be able to get it back.
“I can see there being months in the future where everybody else gets paid and I don’t, because the bank account won’t allow for me to have a take home salary,” says Robert Larmer, a farmer in Nestleton, who has 250 dairy cattle. He says as a young farmer, he carries a large debt for the farm and the deal is a significant hit to revenue.
Larmer has been a dairy farmer in Nestleton since 2014. He has known dairy farming his whole life, since his father and grandfather worked as dairy farmers as well.
Canada historically operates its dairy industry on a supply management system. Dairy processors set quotas for farms, which are based on market demand.
This system helps farmers stay in business, and maintains prices in stores for shoppers.
In Canada, the dairy industry is a $20-billion business. However, under the new deal, the per cent open to U.S. producers could mean $720-million will be lost annually. Larmer says the loss of the market will be felt not only in the next month, but in years to come.
Ontario is the second-largest milk producing province behind Quebec, with 3,613 dairy farms in Ontario in 2016.
Local dairy farmers are concerned about the effects of the USMCA, including Larmer.
The 3.6 per cent of the USMCA deal is is not the only damage to the dairy industry. Two other trade deals, the Transpacific Partnership (TPP), and the Comprehensive and Economic Trade Agreement (CETA), coupled with the USMCA mean that 10 per cent of Canada’s dairy market will be open internationally.
Larmer says these deals won’t change how he operates his farm. He says animal welfare, human welfare and economics are the three factors he makes decisions on.
“We want to do what’s best for the animals, we want to do what’s best for us as a family, from a health perspective and of course our employees as well, and then obviously it needs to be economically feasible for us to make those decisions,” Larmer says.
He hopes to stay in the dairy market.
Many say this dairy deal had to happen to save the bigger trade deal between Canada and the U.S.
Bin Chang, program director of finance at UOIT, says the USMCA is not as good as NAFTA for the Canadian dairy industry.
However, she says the USMCA is better than no deal at all, and it is good it got done by the Oct. 1 deadline.
“We give up something, but other countries give us more market access to their own market,” Chang says, adding free trade deals like TPP and CETA are good for the economy.
She says that in the USMCA negotiations, the dairy market was a priority on both the U.S. and Canada sides of the deal.
“From the U.S. side they wanted a more open market, but from Canada’s side we want to protect our dairy farmers,” she says.
Supply management will remain the way Canada operates its dairy market, and perhaps help it maintain profits.
“Our system is the envy of the world,” Larmer says.
The USMCA still has to be passed through the House of Commons and the Senate. The deal could come into effect as early as June, 2019.