For Canadian dairy farmers such as Jayne MacDonald of Newtown Cross, PEI, the far-reaching Pacific Rim trade talks entering the final stretch in Hawaii this week are a giant question mark hanging over their future.
Milk producers in Canada say they’re hesitant to make major decisions about their farms – from taking out loans to buying new machinery to selling their enterprises to their children – while their industry is under pressure at the negotiating table.
Led by the United States, a group of 12 countries including Japan, Canada, Chile and Malaysia are trying to create a Pacific Rim trading bloc with North American-calibre commercial rules – a counterweight to Chinese influence in the region. The price of entry for Canada to a Trans-Pacific Partnership deal is expected to include opening up this country’s heavily sheltered dairy and poultry sectors to further foreign competition.
Dairy farmers have sent five envoys to these Trans-Pacific Partnership talks taking place on the Hawaiian island of Maui, seeking to preserve a sector that is protected from foreign competition by tariffs that can run as high as 246 per cent. They won’t let Canadian Trade Minister Ed Fast, who arrived in Maui on Monday, forget the 12,000 milk producers anxiously monitoring these talks from home.
They’re worried because it was only last year that Ottawa signed a deal with the European Union to allow another 18,500 tonnes of cheese to enter Canada tariff-free. That represents the annual milk output of 20,000 cows, according to the Canadian Dairy Farmers, who note the average farm has 77 cows.
The dairy farmers are in Maui to protect the interest of producers such as Ms. MacDonald and her husband Wayne who have spent three decades building up their dairy farm 25 miles west of Charlottetown.
The MacDonalds milk about 140 cows and have acquired the right under Canada’s tightly regulated dairy industry to produce 4,000 litres of milk daily. They have assurances there will be a market for their milk in part due to the hefty tariff wall that insulates their industry from much of the world trade in dairy.
Their eldest son, Jeremy, would like to take control of the family business, but Jayne has concerns about where the dairy industry is headed when it’s unclear “what part of your market could be traded away” in Maui.
”Our oldest boy is 29 and he’s been pressuring his father and myself to sign over the reins,” Ms. MacDonald said. “I have some uncertainty because we’ve grown rapidly and the farm holds debt. I don’t want to sign over the debt if I don’t have confidence that the system we invested in is still there.”
The Trans-Pacific Partnership talks have the potential to be the biggest leap forward in international trade for Canada since the North American Free Trade Agreement. There’s lots of opportunity for Canadian exporters, particularly in Japan, the world’s third largest economy, where Prime Minister Shinzo Abe is fighting homegrown protectionism by seeking a deal.
Not all dairy farmers whose governments are negotiating at the Trans-Pacific talks feel like Canada’s. New Zealand’s export-oriented dairy farmers – the country has been dubbed the “Saudi Arabia of milk” – are pressing Wellington to bargain hard for more free trade in dairy.
Critics of Canada’s sheltered dairy industry dismiss its concerns as the whining of a cosseted industry that’s fighting change and the discipline of the free-market. Dairy farmers, however, say there’s value in Canada’s “stable” supply-managed system where prices and production are regulated.
“It’s sort of the equivalent of the union: You know you’re getting hired. You know about what you’re getting paid. You know about how long you are working. It gives you something to work with when you go to the bank,” Ms. MacDonald said. “As good as trade is, the effort has to be made to ensure that the [Trans-Pacific] deal doesn’t wreck something really good to gain the possibility of something else.”
Most of Canada’s dairy farms are family-owned and operated. Farmers warn a major trade-away of market share will force a consolidation of dairy production and squeeze out small operators who reinvest their proceeds into local businesses.
“Our farms will bring in between $1.1-million and $1.3-million per year,” Ms. MacDonald said. “Personally, my husband and I, we live on, and take out, about $45,000 to $50,000 per year. The remainder of all that money goes back into the community.”
The PEI farmer believes the Canadian government appreciates Canada’s dairy system. But she says she knows Ottawa is “under tremendous pressure,” which gives her pause as she contemplates selling the farm to her son.
“I just wouldn’t want to see a young couple take over our debt and have the system disappear,” Ms. MacDonald said, “because it leaves a lot of uncertainty for young farmers, for future farmers, if we don’t know what’s going happen.”
Editor's note: an earlier version of this story published online and in Tuesday's newspaper incorrectly said the MacDonalds farm in PEI milks about 140 cows and have acquired the right under Canada’s tightly regulated dairy industry to produce 170 kilograms of milk daily. In fact, the farm produces about 4,000 litres of milk a day. This version has been corrected.Report Typo/Error