Source: Dairy Farmers of Canada
As the COVID-19 pandemic stretches on, DFC continues to work with government and provincial milk boards to ensure that dairy farmers can continue to feed the nation with high-quality and nutritious milk and dairy products.
On May 27th, DFC President Pierre Lampron and VicePresident David Wiens appeared before the House of Commons Standing Committee on Agriculture and Agri-Food as part of their Study of the Canadian Response to the COVID-19 Pandemic. This was the first opportunity for representatives from DFC to appear on the record before MPs since the crisis began.
In their presentation, Wiens and Lampron highlighted the key challenges dairy farmers have had to face since the onset of the pandemic in early March, from fluctuations in consumption to workforce challenges at the retail, distribution and processing levels. The presentation highlighted the extraordinary efforts and leadership of dairy farmers, who have worked with partners throughout the supply chain to lessen the impacts of COVID-19 on the sector. They also touched on the additional challenge and significance of the Canada-United States-Mexico Agreement (CUSMA) coming into force on July 1, 2020.
DFC highlighted how, thanks to supply management, the dairy sector was able to move quickly to mitigate the impacts of the COVID-19 crisis by adjusting production. Furthermore, our advocacy efforts paid off when Parliament approved an extension to the Canadian Dairy Commission (CDC) line of credit for the additional storage programs. Finally, dairy farmers showed their community spirit by offering food donations valued at more than $10 million across Canada.
Compared to other industries and other countries that do not have supply management such as the U.S. and the E.U., Canadian farmers were better positioned to act quickly or collectively to respond to the crisis.
Positive first steps
The recent increase to the CDC’s borrowing capacity from $300 million to $500 million, was welcomed, as the existing level of borrowing would not have provided the level of flexibility needed to respond to any surplus milk situation should there be additional market shocks. DFC’s presenters also noted the government’s moves to facilitate the entry of new temporary foreign workers into Canada during the pandemic while safeguarding public health, given that some of them work on dairy farms.
Although we have welcomed these announcements which will benefit the broader agricultural sector, some industries have been more severely affected than others and will require additional government support, such as dairy processing.
DFC seeking full and fair compensation
DFC did not seek financial support from government to address the impacts of COVID-19. Rather, it highlighted the more significant issue of market access concessions, and called upon MPs to formalize the government’s previous commitments to compensate dairy farmers for the domestic dairy production that was given up in CETA, CPTPP, and most recently with the early adoption of CUSMA. These agreements have eroded the supply management system – by 2026, 18% of our Canadian dairy production will have been transferred to imports coming from abroad. Unlike COVID-19 which created a market disruption, trade concessions mean Canadian product on the shelf will be replaced by dairy from other countries.
While the government committed to a compensation package for CETA and CPTPP, with a balance of $1.75 billion to be delivered over eight years, only $345 million has been made available under the Dairy Direct Payment Program, which ended on March 31, 2020. DFC continues to request that the remaining seven years of full and fair compensation for CETA and CPTPP be delivered in the form of direct payments, but the government has yet to make a commitment in this regard.
“A big part of our market was ceded to foreign production, and that’s why we need this compensation, and like the first round of compensation, we are seeking it in direct payments,” said Lampron.
‘Every time there’s more access given, it weakens us’
“The losses that we will incur have been well documented, and they will be felt even sooner than we had anticipated,” said Lampron. “We were really hoping that CUSMA would take effect in August because that would align with the start of the dairy year, but these lower limits will be imposed on our exports and our industry will have to adjust.”
“Part of what we’re really trying to emphasize here is that with supply management, we can handle things like downturns, although this was extreme – we have never experienced something like this so that tested us to our limits,” said Wiens when asked about the impact of CUSMA on dairy farmers. “But what supply management cannot do is to have the foundation continuously being undermined, and whenever we allow further access to the Canadian dairy market, that is in fact what is happening. So every time there’s more access given, it weakens us and then it makes it more difficult for us to withstand the kind of challenges that we’ve seen with the pandemic, that concerns us, the in the future it does make us a little bit weaker.”