published in the Western Producer, February 4, 2016
The Trans-Pacific Partnership’s Investor State Dispute Settlement mechanism gives foreign corporations the right to sue our government if they believe their future profits will be reduced as a result of democratically enacted measures.
While ISDS puts a chill on public interest regulation, the TPP also has more insidious ways of overturning democratic decision-making and imposing a corporate-friendly agenda. One is its attack on our supply management system.
Supply management is a Canadian innovation that ensures farmers do not need subsidies to stay in business and our population has enough dairy, eggs and poultry. It is built upon three pillars: import controls, cost-of-production pricing to farmers and producer discipline to ensure that enough, but not too much, is produced.
If the TPP is ratified, the border will be opened wider, increasing imports, primarily from the United States. The implications for the dairy sector are severe.
The TPP would immediately allow imports equal to 3.25 percent of Canada’s current fresh milk supply, with increases of one percent (compounding) per year for the next 18 years.
Eighty percent of these milk imports must be processed in Canada and would likely be mixed with Canadian milk.
Imported U.S. milk may contain synthetic bovine growth hormone (rBGH). This drug was banned for use in Canadian dairy herds in the late 1990s through the efforts of citizens, scientists, dairy farmers and the Senate. The ban is based on clear evidence that the drug in-creases disease and suffering of cows.
It is more difficult to assess human health effects from drinking milk from cows given rBGH, but many consumers remain wary.
The TPP includes a commitment for Canada and the U.S. to discuss their dairy food safety rules with a view to harmonization.
If the TPP is adopted, the difference between Canadian and U.S. milk will be diluted and potentially disappear.
The North American Free Trade Agreement opened Canada’s doors to high protein milk components produced in the U.S., and the TPP would now remove all tariffs on U.S. whey after 10 years.
This would also allow New Zealand to increase dairy exports to the U.S. and result in more dumping of excess U.S. milk protein into Canada, which causes a number of problems.
Butter is popular again after decades of being blamed for high cholesterol. In the 1970s, the dairy sector had to adjust production to avoid creating butterfat surpluses.
Margarine with trans fats is now seen as the unhealthy choice, and consumers are switching back to butter and whole milk.
Dairy now faces a structural milk protein surplus, and the cost of removing surplus protein components eats into farmers’ returns for milk.
Processors have new ways to separate proteins from fluid milk, which they market as milk protein isolates.
MPIs are added to certain dairy products to increase yields. Separating milk components and then processing, storing and transporting them to reintroduce them in other food is a drastic departure from fairly simple fermenting or cultivating whole milk into butter, cheese, yogurt and quark.
The practice may ultimately undermine consumers’ confidence.
Processors can import MPIs tariff-free, and because of the worldwide structural surplus, they are cheap.
This leaves dairy farmers in Canada with even more surplus skim milk powder and higher costs to get rid of it, which puts pressure on the farmgate price.
As a result, the TPP reduces dairy farmer incomes by exacerbating the butter-protein imbalance and taking away a portion of our do-mestic fluid milk market.
Our system ensures milk is produced and processed in every province, within a reasonable distance from farmers and consumers.
More intense, capital intensive processing to make protein components with longer shelf life would promote larger, centralized plants and eliminate dairy farming in less populated regions, such as the Maritimes and Vancouver Island.
A vicious circle would ensue, eroding supply management and concentrating production and processing.
Supply management is a treasure of Canada’s agriculture policy and the envy of dairy farmers around the world who suffer with price volatility, debt, uncertain markets and unfair contracts. The TPP should not be cheered just because it might have been even worse.