Sask. dairy farmers watching NAFTA talks closely

By CKOM News Staff
August 30, 2018 - 10:10am

The Canadian dairy industry is once again being brought into the conversation as politicians continue talks to salvage the North American Free Trade Agreement (NAFTA).

Joy Smith, the manager of policy and communications at SaskMilk, spoke to 650 CKOM Tuesday after the Trudeau government returned to what could be the final round of renegotiations.

“We’re watching closely, but it’s just business as usual – the farmers are working hard and continuing to produce that milk,” Smith said

The supply and management system for the dairy industry is a politically-charged issue that many analysts have predicted would be among the final conflicts to be addressed in the NAFTA renegotiation.

Smith noted that U.S. President Donald Trump has become “fixated” on the industry, which isn’t as large as the media attention may imply.

“It’s a really small part of Canada-U.S. trade, and the U.S. has a considerable trade surplus with Canada in dairy,” she said.

Smith noted Canada allows 10 per cent of the market tariff-free, while America only allows three per cent of its market tariff-free.

She said the amount of the tariffs isn’t as relevant as the fact they exist, because the measure is prohibitive.

“Nobody is actually paying 300 per cent tariffs on any products – the U.S. is filling the market as much as they can on the tariff-free side of things,” Smith said.

“It’s interesting to be called the protectionist ones when (Canada) actually allows access to a lot more of our market without tariffs than the U.S. does.”

The Canadian Press reported much of the American ire appears to be focused on Canada’s decision to introduce a new classification of dairy product.

In 2016, Canada created the Class 7 pricing agreement that has essentially restricted U.S. exports of ultra-filtered milk used to make dairy products.

It allows Canadian dairy processors to buy domestic milk at cheaper world market prices than the higher prices under supply management. U.S. farmers argue that’s a violation of Canada’s trade commitments.

The head of Saputo Inc., Canada’s largest dairy processor, told The Canadian Press in June that the NAFTA dairy impasse with Trump can be resolved if Canada ends Class 7.

Dairy Farmers of Canada has said that ending Class 7 is out of the question.

Smith said, ultimately, the political back-and-forth is taking its toll on local dairy producers.

“The farmers themselves are getting a little bit lost in all of this. They’re really doing a hard job,” she said.

According to the last available data, in 2015, Saskatchewan dairy producers brought in $430 million to the GDP and employed over 4,800 full-time workers.

In Canada, the dairy industry as a whole is a near-$20-billion industry that employs more than 220,000 people.

Trump imposed a Friday deadline for Canada to join the U.S. and Mexico, which is when the administration plans to give Congress its mandatory 90-day notification of the new trade deal.

—With files from 650 CKOM’s Chris Carr and The Canadian Press.

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