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Economy Canada should open dairy industry to free trade, Australian farmers say

Dairy cows are pictured at the Kooyman family dairy farm in Chilliwack, B.C., Tuesday, June, 10, 2014.

Jonathan Hayward/The Canadian Press

The head of Australia's dairy lobby has some advice for Canadian farmers: Embrace free trade, and thrive.

Canada is missing out on a vast and growing global market for dairy products because it shields its industry behind a protective tariff wall, argues Noel Campbell, chairman of the Australian Dairy Industry Council and president of Australian Dairy Farmers.

"My position is that opening up your market is positive for the industry," he said in an interview. "That's what it was for us. It's allowed our industry to grow."

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Canada is facing intense pressure from Australia, along with the United States and New Zealand, to open up more of its protected dairy and poultry sectors in the ongoing Trans-Pacific Partnership [TPP] trade negotiations.

Ottawa has said repeatedly that it's committed to protecting supply management – the system that tightly regulates prices and production of dairy and poultry in Canada.

Deregulation of Australia's dairy industry in 2001 helped the country to double milk production to nearly 10 billion litres a year, according to Mr. Campbell. Nearly half of that output is now shipped to countries such as China and Japan, making Australia a leading dairy exporter.

"I would think that people in Canada would see they have the potential to grow their industry, if they are able to be world-competitive," said Mr. Campbell, a third-generation dairy farmer from Yannathan, a rural community about an hour south of Melbourne.

But Canadian dairy officials vigorously disputed Mr. Campbell's contention that deregulation has been a boon for Australia's dairy farmers. Yves Leduc, director of internal trade for the Dairy Farmers of Canada, said Australia's industry peaked in the early 2000s, but production and exports have stagnated in the years since.

"The doubling of production occurred essentially during the regulated era," Mr. Leduc said about Australia's experience. "Post-regulation, [the Australians] haven't seen any significant growth."

A recent Conference Board of Canada study concluded that deregulating Canada's dairy industry could more than double milk production to 20 billion litres a year from eight billion over 10 years, making the sector vastly more efficient.

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Australian dairy farmers say they expect the 11 countries involved in the TPP talks to reach a deal in the next few months. But Mr. Campbell said he's resigned to an agreement that offers his industry little if any new access to foreign markets, in Canada or anywhere else. That's because Canada and Japan will likely negotiate significant "carve-outs," allowing countries to continue protecting their politically sensitive agricultural sectors.

"If we have free-trade agreements they need to be real," he said.

Facing fluctuating world prices for milk can sometimes be daunting, Mr. Campbell acknowledged. But he insisted that most Australian farmers "would say they're better off now."

Australian dairy farmers aren't alone in urging Ottawa to be more ambitious in the TPP talks.

Earlier this month, a coalition of Canadian agricultural exporters – including pork, beef and grain producers – warned that they will "lose access to the world's largest and fastest-growing economic regions in the world" if Ottawa exempts some sectors from the TPP deal.

"A meaningful agreement cannot be achieved without a substantive commitment to the comprehensive elimination of tariff and non-tariff barriers," said Lisa Skierka, president of the Canadian Agri-Food Trade Alliance.

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