Local farmers in supply management industries are keeping a wary eye on negotiations for the North American Free Trade Agreement, but are putting their faith in the federal government to protect their livelihoods.
“They’ve been saying all the right things, so we have to be confident that they say what they mean and that they will genuinely support the system. I mean, we’re counting on them. We can’t do it as farmers, they have to do it for us,” said Wally Smith, a Cowichan Valley dairy farmer who just finished a stint as the president of the Dairy Farmers of Canada in July.
Supply management industries include dairy, eggs, poultry, and sugar. Under the old NAFTA agreement, which has come under renegotiation at the insistence of new U.S. President Donald Trump, these industries were exempt from tariff elimination. As the negotiations on a new agreement start, dairy, in particular has come under fire from the new president.
Supply management limits the amount of a particular product being produced through the use of a quota system, so that the market doesn’t get flooded with excess, driving prices down sharply for producers.
Smith is a staunch believer in the effectiveness of this system to both supply the market, and provide a fair return for farmers.
Countries that have deregulated their markets have seen farmers face severe negative impacts, he said, citing Australia as an example, with many farmers unable to afford to even stay in business.
“There’s a real volatility in the price once you deregulate. There’s wild cycles of highs and lows and usually the periods of low prices, that cycle lasts a lot longer than high prices. Consumers do not benefit, contrary to what the right-wing think tanks would lead you to believe,” Smith explained. “We have plenty of evidence that jurisdictions that have deregulated do not pass those kinds of negative impacts on farmers’ earnings to [benefit] the consumers. It’s the middle man and the retailers that seem to be gaining the margins at the expense of the farmer and at no benefit to the consumer.”
This hurts not only farmers, but the communities such as Cowichan where they remain strong economic drivers.
He does not think the U.S. has a leg to stand on in arguments that Canada maintaining it’s supply management system is hurting the U.S. Canada is already the second largest importer of U.S. dairy products, he explained, next to Mexico.
“That happened in spite of being exempted from NAFTA and yet the Americans don’t allow any access into their market,” he said.
Canada offers more than four per cent access to imports, according to the B.C. Dairy Association. The U.S. offers only 2.75 per cent.
It comes down to a simple question, Smith said.
“Are we going to support Canadian farmers that produce a very, very high quality product because we can, or do we want to import our product from the United States?” he questioned. “The United States could flood our market in a heartbeat. There are more cows in the State of Wisconsin than there are in all of Canada.”
That kind of difference in scale is similar to what local farmer Jen Woike, owner of Farmer Ben’s Eggs and member of the B.C. Egg Marketing Board, cites in her industry, where the average size of an egg producer in B.C. is 22,000 laying hens, while in the U.S. the average is 1.2 million.
“So when you lose supply management, what is happened in the past is you lose that family farm,” she said, leading to two or three major players controlling the entire market.
As in the dairy industry, she says supply management ensures “the farmer makes a fair living.”
As a grader as well as an egg producer, Farmer Ben’s is a bit more insulated than many who simply produce eggs, Woike said, then must send them to a grader, who takes a cut. The grader then sends the eggs on to market, where a grocer will also take a mark-up. This last step is where the margins are highest, especially on specialty products.
For egg producers who are not graders, supply management is even more important.
“If supply management falls apart, their safety net as to how they get rid of their eggs, including their surplus, which means their undersized eggs — smalls and mediums don’t go into the grocery market anymore so supply management supplies an outlet for where those eggs go — and the farmer still gets paid a fair market price for that,” Woike said.
She said the egg industry isn’t as directly in the crosshairs as dairy, but egg farmers are keeping an eye on the situation.
“Dairy is the one that Trump has been quite vocal about and wanting to kind of get his teeth into. Obviously though, anything that happens to any supply managed commodity will affect us,” Woike said. “Things work here the way they are in our country and we’re hopeful that we can continue to operate that way.”
“It’s always helpful if consumers who believe in supporting local farmers would write your to their MPs and write to the Minister of Agriculture to indicate how strongly they support local agriculture,” urged Smith.
One of those MPs who is already on-side is Cowichan-Malahat-Langford representative Alistair MacGregor.
“There are some very grave concerns about how the United States has specifically mentioned — particularly the dairy industry — specifically mentioned that they want to see our system of supply management undone and overturned,” he said.
Like the Conservative government before them, the Liberals have stated they will stand by the system, said MacGregor, which is heartening, but it’s unclear what kinds of things Canada may have to give up to keep NAFTA alive.
However, all of the parties have found common ground on supply management.
“There’s violent agreement among the different parties on this issue,” he said.
“You don’t find many issues where all of the major federal political parties come to agreement on,” he said, so the agreement when it comes to the importance of preserving supply management is “pretty notable.”
He doesn’t envy the NAFTA negotiators, however, as they try to keep up with Trump, who announces major policy positions everywhere from on Twitter to campaign-style rallies, making staying abreast of the latest a big challenge.
“It must be daunting to try to keep up with the different policy lurches that the United States in going through and I wish them the best because it can’t be easy,” he concluded.