Negotiating tactics aside, those in charge of the dairy industry in Alberta are confident the support is there to continue with the current system of supply and distribution employed in Canada.
Tom Kootstra, board chair of Alberta Milk, explained the supply management system for the industry is essential in maintaining a sustainable, yet reliable business model.
“For our industry, it is very important as it is the basis of a system that allows for an equitable market for our perishable product and all aspects of the market share in it,” he stated, noting the system is fairly complex compared to the public’s perception.
“As far as supply management goes, there is 100 per cent buy in from dairy producers as to the value the system provides when it comes to stability in the marketplace. And, the system benefits all players — from government to the retailers and the consumers plus the farmers.”
The industry has come under fire in recent months due to U.S. assertions during NAFTA negotiations that supply management in Canada — which includes dairy and chicken industries — be part of the new deal and dismantled over a 10 year period. The topic has also seen a number of detractors pop up on social media to raise their issues with the system.
However, for Kootstra, any allegation that the system doesn’t work can be easily dismissed.
“There will always be personalities out there that think any change will be to the advantage of the consumer, but those thoughts are not based upon facts,” he said.
“Right now, the Canadian and American dairy basket are very comparable and the fact is that retailers have shown they will simply pocket the difference. As a producer, when the price goes up we will get a penny while the retailers up it a nickel and blame us. Producers simply have no flexibility with three or four major retailers taking up 80 per cent of the Canadian market on a product that is perishable and has to be shipped to processors every two days.
“Processors are also benefiting greatly from the system with the big three companies in Canada also being among the top 10 processors south of the border, so it’s obvious this model works for them.”
He added that while there have been a few challenges since the system was implemented in the 1960s, the market has provided a decent — though not exceptional — return to producers unlike other jurisdictions.
In fact, Kootstra believes the Trump administration’s contention that the system inhibits American dairy imports is tantamount to the pot calling the kettle black.
“U.S. dairy producers have struggled to meet their cost of production since the 1990s, in spite of the $22.2 billion (in 2015) the U.S. dairy industry received from their state and federal governments. That’s 31 cents per litre handed producers on top of what they earn,” he said, adding he shares the feeling of others that the move is just a ploy to dump dairy production into Canada.
“That makes me angry — when they say we are subsidizing our industry and the trade deficit is five to one in Americans favour.”
One other note is that the Canadian dairy market allows for 10 per cent foreign access, while the U.S allows just two per cent.
“On the positive side, all three major federal parties have expressed their continued support for the Canadian dairy structure and having that support is important in order to defend against the constant U.S. requests to abolish supply management,” Kootstra explained.
“And the system, as complex as it is, continues to evolve in order to maintain competitiveness.”