DFC President Reacts to TPP

There were many differing reactions to the announcement of the Trans-Pacific Partnership (TPP) deal yesterday. Some export sectors rejoiced, some sectors breathed a sigh of relief, and others, including the National Farmers Union, interpreted the deal to mean that the end of supply management is near.

Let me be clear. The way I see it, those who were watching and expecting the end of supply management, are now being forced to admit that supply management is here to stay. I fully expect, as I’m sure you do too, that these critics, inside or outside Canada, will come back in force with all of their arguments as to why supply management is not a good agricultural policy. However, while these critics will try to instill fear in farmers, what I see in this deal is a strong signal that supply management is not going anywhere. This is underlined by the fact that New Zealand’s demand for a renegotiation clause, in the TPP, was rejected by Canada.

Compensation package

DFC is still analyzing what the package will mean for dairy and poultry farmers. Included in the $2.4 billion over 15 years that was announced, there is compensation – not subsidies - for both CETA (dairy) and TPP (all supply managed sectors). The government made the choice to pay this price in order to be part of the TPP.

The access granted in this deal, according to government estimates, will amount to roughly 3.25% of the projected 2016 milk production. We estimate the resulting losses of market opportunity – given away to TPP imports - for dairy alone, to be over $200 million a year. You will recall that our estimate for lost market opportunity in CETA was in the range of $110 to 150 million.

The amount of the package should in no way be interpreted as a funding of a phasing out of supply management, as implied by some in Canada, and other countries who might want to portray it this way. Although we are quite disappointed that access was granted, announcing the compensation package at the same time as the deal does remove much of the uncertainty we’ve been living with. There are no other major trade deals on the immediate horizon. As I’ve been saying publicly, I believe supply management will be strong and sustainable for the next generation.

Moreover, in regards to questions about the quota program, it is not designed to buy quota; it is a guarantee for the value when the quota will be traded on the market during the next 15 years.

DFC will continue to work with the government to make sure that compensation measures are implemented quickly. I’m sure you appreciate the efforts that were required to avoid a disaster: the end of supply management was at stake. What we accomplished, with the support of farmers and their provincial organizations across the country, is outstanding.

The supply management system has been safeguarded. The three pillars are maintained, with a commitment to strengthen border measures. The level of access granted will be mitigated by the fact that a good portion of the imports are to be redirected to the further processing market. Cheese standards were maintained. Farmers will automatically be compensated for the drop in revenue, not requiring a proof of loss, as was the case with CETA. The value of quotas is guaranteed for 15 years. Investments of $450 million in processing capacity were also announced.

Our industry is constantly changing and adapting. All these pieces fit together as we work together to shape the future of our industry, to ensure that it remains strong and sustainable. We will provide more information to our members as our understanding of this complex deal continues.

Source: DFO