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Report on Business Poultry farmers warn increased U.S. competition in proposed trade deal will hit bottom line

Canada’s chicken, turkey and egg farmers are warning that more market access granted under the proposed free-trade agreement with the United States and Mexico would erode the foundations of their supply-managed industries and lead to losses in farm income.

The United States-Mexico-Canada-Agreement (USMCA), set to replace the North American free-trade agreement (NAFTA) after ratification, would assure tariff-free access to goods worth about $1.1-trillion. After 14 months of negotiations, Canada made significant concessions on dairy imports, and opened more of the country’s protected markets for poultry and eggs.

Arpad Kovacs weighs a chicken at Vince Gasparro's Meat Market on Bloor St. W near Ossington Avenue.

Carlos Osorio/Globe and Mail

Benoît Fontaine, chairman of Chicken Farmers of Canada, said the U.S. competition would drive down domestic poultry sales. "This results in lost jobs, lost production and decreased consumer access to Canadian-raised products, not to mention the reduction in the contribution to Canada’s economy,” Mr. Fontaine said.

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Canada’s chicken, turkey and egg farmers are protected from competition in the same way as the dairy farmers: fixed farm-gate prices, agreed-upon production and high tariffs on imports. There are about 4,600 poultry and egg producers in Canada, mostly in Ontario and Quebec. In 2017, Canada imported $260-million more in eggs and poultry than it exported. The farm groups say they are still assessing the impact of the proposed deal, and note many details have yet to be settled.

In a departure from NAFTA, the new trade pact would set fixed amounts of imports of poultry and eggs, rather than a percentage of domestic production. For Canada’s egg farmers, whose hens lay 732 million dozen a year, this means 10 million dozen eggs will be shipped into Canada from the United States on top of the 21 million dozen allowed in under World Trade Organization (WTO) commitments.

Chicken Farmers of Canada says the trade deal would bring in an additional 12,000 tonnes of U.S. chickens, representing almost 11 per cent of Canadian production, including volumes allowed through other trade agreements. The United States would be able to export to Canada 57,000 tonnes of chicken by year six of the agreement, in addition to the 40,000 tonnes permitted under the WTO quotas and 27 tonnes under the coming Trans-Pacific Partnership (TPP) trade pact.

Much of the U.S. chicken is frozen, boneless white meat, a value-added product that replaces Canadian birds and processing work at plants, said Michael Laliberté, executive director of the chicken farmers’ group. He said he is “disappointed” with the prospect of more U.S. competition.

“It reduces the ability for farmers to invest in their farms, equipment and so forth,” Mr. Laliberté said by phone from Vancouver on Tuesday. “It creates doubt in their minds, and it’s hitting them on the bottom line directly.”

Ethan Chapman arranges the chicken counter.

Carlos Osorio/Globe and Mail

The Turkey Farmers of Canada said the new trade agreement would be “harmful” to the country’s 500 producers. “Supply management is being eroded by concessions in [the Trans-Pacific Partnership] and USMCA,” said Darren Ference, the group’s chairman.

After meeting in his Queen’s Park office with industry stakeholder groups, including dairy and chicken farmers, Ontario Premier Doug Ford repeated his demand that the Trudeau government compensate farmers who are affected by the new trade deal.

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He accused the Trudeau government of not reaching out to affected groups since the agreement was struck.

“I would have handled it differently… I would have been in constant communication with the agriculture industry right across this country. I would have been in constant communication with the steel and aluminum industry, and from what I understand there was no communication and there still isn’t any communication,” Mr. Ford said.

But a spokeswoman for the Prime Minister’s Office denied Mr. Ford’s claims.

“The statement is false. We have been in regular contact with dairy and supply management representatives,” spokeswoman Chantal Gagnon said.

“The same is true for the steel and aluminum sector. We have been in constant contact.” She said the government is committed to compensation.

The dairy, poultry and egg producers, unlike ranchers and growers of crops, face strict limits on exports because the WTO has ruled the supply-managed systems amount to unfair trading practices.

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Trade expert Lawrence Herman, counsel at Herman and Associates and a senior fellow at C.D. Howe Institute, said this leaves farmers defending a relatively small – and sometimes shrinking – domestic market, rather than exporting to the world.

“Those industries have been under attack by Canadian trading partners, both at the WTO in Geneva and bilaterally, for years,” he said, calling supply management a “Soviet-style system” that ensures consumers pay more at grocery stores.

Roger Pelissero, chairman of the Egg Farmers of Canada, said consumer prices are set by retailers, not farmers. He said more U.S. eggs on the shelves is not what consumers want, pointing to the group’s research that shows 90 per cent of Canadians prefer domestically grown eggs.

With reports from Laura Stone

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