2 TRADE deal disappoints supply-managed sectors


“What’s the fuss?” seems to be the general reaction from non-supply-managed agriculture. “The USMCA didn’t change


things for us,” says BC Cattlemen’s Association general manager Kevin Boon. “We still have no-tariff access to the US market.” The same applies to


Canadian pork, says BC Pork Producers Association president Jack DeWit. Of more concern to him is the trade war between the US and China. That resulted in China refusing to take American pork, forcing down the price of both Canadian and American hogs. “We export 70% of what


we produce and the Americans export 30% of what they produce and that became a problem when China wasn’t taking their pork,” he says. Although North American


hog production remains at record levels, prices have started to rebound but “we’re not out of the woods yet,” DeWit says. “Our biggest concern was the trade dispute mechanism and we got that,” Boon adds. Another concern for beef, hogs and other export-reliant agriculture sectors is the USMCA’s veto provision. Any country must give the other two countries three months’ notice before entering into trade negotiations with a non-free trade nation. Once an agreement is reached, the country needs to give the other two countries 30 days’ notice before signing it. If the


two countries deem the agreement contrary to their interests, they can terminate USMCA with six months’ notice.


Boon notes any


negotiations initiated prior to signing USMCA are exempt from the veto and he hopes that includes China, which offers huge potential for not only beef but many other Canadian meats and fruit. New export opportunities do little to ease the sting from USMCA concessions for supply-managed groups, however. Chicken and egg imports could now make up 10.7% and 7%, respectively, of the domestic market. At least 3.5% of the turkey market could also be imported, as well as 21.1% of broiler hatching eggs (unchanged from previous agreements).


Dairy takes brunt Canada has also agreed to


give the US tariff-free access to an additional 3.9% of the Canadian domestic dairy market. It will eliminate Class 7 milk


(Class 6 in Ontario) and to cap exports of milk protein concentrates (MPC), skim milk powder (SMP) and infant formula.


“I was a little shocked,” says


BC Dairy Association president Dave Taylor. “To have 3.9% of our market given away plus losing classes 6 and 7 was too much.” Dairy Farmers of Canada


says the deal is a bad one that lets the US dictate Canada’s dairy policy.


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“The 220,000 Canadian families who depend on dairy for their livelihood feel they were used as a bargaining chip to conclude this agreement,” it said in a statement the morning after the deal was announced. “If our government fought for a good deal for Canadian industry, it wasn’t dairy.” DFC estimates the industry could lose as much as $194 million a year in revenue by year six of the agreement. What is most aggravating is that the US was set to be included in the 3.25% market access Canada granted in the CPTPP. When the US pulled out of that agreement, Canada did not reduce CPTPP market access accordingly. Now, it has granted the US more access than it granted all countries participating in the CPTPP. “It’s not 3.9%,” Taylor says.


“It’s 3.9% on top of 3.25% [CPTPP] on top of 1.5% [CETA, the Canada-EU Comprehensive Economic and Trade Agreement].”


When these agreements


are fully implemented in 2024, non-tariff imports of dairy products could amount to nearly 19% of Canada’s milk production. “This represents total farmgate sales of $1.3 billion,” DFC states. “When is dairy not going to


be part of [trade agreement concessions] anymore?” Taylor asks, noting Canada is already working on a trade agreement with the Mercosur group (Argentina, Brazil, Paraguay, Uruguay and Venezuala) and will likely work on a trade deal with the UK once it exits the European Union and, by default, CETA.


Huge impact


Losing Class 7 and facing an export cap on MPC, SMP


and infant food could have a huge impact on Vitalus. Vanderpol was one of the prime drivers behind the National Ingredient Strategy which resulted in the creation of Class 7 and recently built large new milk drying/ processing facilities in both Abbotsford and Winnipeg. Vitalus is a major player in a


sector that exports about 70,000 tonnes of SMP and MPCs. In the first year of USMCA, those exports will be capped at 55,000 tonnes. In year two, they will drop to just 35,000 tonnes. Those caps are set to come into force six months after the agreement is signed by all three countries, which likely gives it a timeline of late 2019. Vanderpol notes those numbers are based on what the US has published, pointing out that as of mid- October, Canada has yet to publish its version of the text of the agreement. “With the encouragement of our government, processors have invested over $1 billion in recent years only to have our growth capped,” he says.


While the government has


promised to compensate producers and processors, there is no indication of what that compensation entails. “I certainly don’t expect to


see any of that money,” one dairy farmer said ruefully. Besides, says Vanderpol,


“We don’t want compensation. We want the freedom to grow and expand our businesses.” While dairy has been hit


the hardest, other supply- managed commodities have also been hit. Chicken Farmers of Canada notes the new agreement provides increased market access “of over 12 million kilograms.” “When more access is


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COUNTRY LIFE IN BC • NOVEMBER 2018 nfrom page 1


given, production decreases in Canada. This results in lost jobs, lost production and decreased consumer access to Canadian-raised products,” says CFC chair Benoit Fontaine. Not everyone shares the


industry’s concerns. Dalhousie University food distribution and policy professor Sylvain Charlebois, a noted opponent of supply management, says USMCA “could become the watershed moment Canadian dairy farmers have been waiting for.”


“Dairy farmers desperately need to become more market-focused and in sync with an increasingly fragmented sector,” he says. This is similar to the message Vanderpol brought BC producers at the 2017 BC Dairy Conference. Unlike Charlebois, however, Vanderpol did more than just talk. He also invested millions of dollars developing new products such as VITAGOS™, a prebiotic made from lactose, and the facilities to produce it on a commercial scale. With the latest trade deal,


government put a cap on that opportunity.


WINEnfrom pg 1


response to consumer demand. “The wine institute never


advocated for wine in grocery stores,” he says, but noted that it’s been a huge success. “It’s been very successful


and well-received by consumers; it’s been very successful and well-received by the wine industry because the value of the sales through those licenses has experienced great growth.” But it’s not great enough


that Prodan feels the US and other countries – including wine producers in Europe, Australia, New Zealand and South America – should feel they’re missing out. BC Liquor Distribution Branch figures report net sales of BC wine in the latest fiscal year totalled $513 million; net sales of US wine were just $126 million. “They’re under the misconception, I think, that they’re missing out on some fabulous opportunity to get their wine into every grocery store in this province, which was never the intent, and never will be the case,” he says, noting that the province has placed a moratorium on new grocery store licences. BC attorney general Bruce


Ralston, whose has oversight of liquor licensing, has indicated that BC will comply with the new trade agreement, but the specifics will be worked out with industry input.


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