Canada's food sector counting on NAFTA negotiators to keep them in the game

A group of young farmers stageda protest outside Prime Minister Justin Trudeau's riding office in Montreal today, sending a message to Canadian negotiators to keep fighting for them at theNAFTAtable.

JulieBissonnette, one of the organizers, toldCBCNews they want to remind those negotiatorsthatas Canada decides which concessionsit must make to reach a new North American trade agreement, their future is on the line.

Hundreds of younger farmers were expected to join the protest from as far away as Alberta, Manitoba and New Brunswick. While manyrepresent Quebec's politically-active dairy sector, farmers in other sectors are worried as well.

In 2017, Statistics Canada reported that the average age of a Canadian farmer was 55. More farmers are over 70 than under 35.

If negotiators feel forced to settle for compromises that harmCanada'srural economy, those older farmers could push for taxpayer compensation simplysell out and retire.

Farmers protest outside Trudeau's riding office

6 years ago

Duration 0:27

Hundreds of young farmers held a protest outside Prime Minister Justin Trudeau's riding office in Montreal to remind negotiators to keep fighting for them at the NAFTA table.

The more difficult question is how to craft an agreement that makes it possible for younger farmers to stay in the game. The agriculture and food sector remains a top employer overall in Canada, with many competitive advantages internationally.

Trade negotiators have to make sure it stays that way. The leader of Canada's negotiating team, Steve Verheul, comes from an agriculture trade background, so there's no question he understands what's at stake.

Farm sectorgathered in Washington

The current NAFTAround isn't the first trade negotiation which saw agriculture matters put off until the end. It's actually standard operating procedure for Canadian negotiators to get the other chapters done first.

Agrifood sectors in other countries European cheesemakersduring the EU talks, New Zealand butter exporters in the Trans-Pacific Partnership and its successor, the CPTPP have long had designs on Canada's markets.

The 25-year old NAFTAagreement treats agriculture as a series of bilateral agreements.A small crowd of players inCanada's food and agriculture sectors has formed in Washington this week, trying to influence the final, difficult choices Canada needs to make.

During trade talks, these players tend to be divided into two camps one playing offence, the other defence. Because they all work together on common issues back home, their relationships arecordial, even asone camp pushes for a deal while the other camp pulls away. (As one longtime agrifood advocate puts it, infighting'sunproductive.)

While chronic oversupply issues depress globalprices for dairy, Canada's system ofquotas to control how much its dairy, poultry and eggfarmers are allowed to produce is is unique in the world. But outside of supply management,there's big money to be made in the export-oriented farm sectors.

Canada has always been ahuge player ininternational grain markets. And after some rough years of disease-related border closures and depressed prices, Canadian livestock farming (beef and pork) is once again in expansion mode, trying to take advantage of new market opportunities in Asiaand (to a limited extent, now) Europe.

Lighthizer and Freeland arrive for NAFTA talks

6 years ago

Duration 1:01

USTR Robert Lighthizer and Foreign Affairs Minister Chrystia Freeland arrive for talks on Thursday in Washington. Lighthizer spoke to the CBC's Katie SImpson

But the closely-integrated north-south movement of grains and livestock still defines Canada's farm trade which is why the exporters are in Washington, making sure new non-tariff barriers don't sneak their way into the fine print.

It wouldn't be the first time. Canada and the U.S. battled for years over American country-of-origin labelling (COOL) requirements, before the Canadian side ultimately prevailed and was awarded remedies. No one's ever sure what the U.S. will try next.

Compensation unclear

The players on defence are familiar by now: dairy, egg and poultry producersbracing for diminished markets, quietly convening briefings and relaying updates back home.

They're still waiting for the call that matters, though the one where the lead negotiator pulls them into a room and walks them through what's about to hit them, explainswhy it was necessary and (hopefully) lays outa plan to mitigate the damage.

When Canada's supply-managed agriculture sector took a hit in the Trans-Pacific Partnership negotiation, the previous Conservative government had a $4 billion-plus compensation package already sketched out.

This time, however, it's not clearwhether the current government knows what it's prepared to do for the sector this time how much Finance Minister Bill Morneaumight be setting aside for compensation in his final pre-election budget, or what form that compensation might take.

Dairy farmers fear they'll be sacrificed to appease Trump

6 years ago

Duration 1:53

Canadian dairy farmers are on edge, fearing that they'll be sacrificed to appease U.S. President Donald Trump in order to make a trade deal.

The more modest sums earmarked to help the industry modernizewhenthe CanadaEurope deal kicked in were depletedin no time.

The Liberals are still consulting on potential compensation for the now-11 country (minus the U.S.) CPTPP, now at the ratification stage.

No one expects Canada to make a NAFTAconcession smaller than what the U.S. secured in the original TPP deal. The Trump administration is on a mission to deliver more, more, more politically,itcan hardly afford to settle for less, especially given the hits the vote-richAmerican farm belthasbeen asked to absorb in recent months.

So what would "more" look like, especially for the dairy industry? That's the question on a lot of minds in Washington this week.

What concession makes sense?

According to industry estimates, the hits Canada absorbed to land its European and Pacific Rim trade deals (roughly valued at two per cent and 3.25 per cent of Canada's total milkmarket, respectively) will cost the dairy sector about $250 million a year. Even if consumer demand keeps growing, consistent slices of that growth if not all of itwill goto foreign farmers from now on.

It's possible that another slice a significantly larger one is being measured right now. That's depressing and demotivating for those working to improve the industry's competitiveness, spokespeople say.

Anyone remember that old gameKerplunk?Think of the marbles as commodities, the sticks as the supply management system that supports them. Tradedeals keep pulling out stick after stick. With each stick withdrawn, Canada'ssystem becomes less stable closer to losingall its marbles.

But at least it's possible to calculateand prepare for that kind of concession, as the Department of Finance reportedly is doing.

The bigger worry right now is about the future of the Class 7 policy the understanding reached between farmers and dairy processors to agree on a lower, internationally-comparable price for dairy ingredients to remove the incentive for Canadian processors to use cheaper diafiltered milk importsentering Canada through trade loopholes.

Many argue that the government can't just negotiate Class 7 away, because it was a private industry agreement, not a government creation. But if provinces put enough pressure on their marketing boards to comply,hands couldbe forced.

There's bitterness in Canada's dairy sector over the way theU.S. has approachedthe Class 7 question how the Trump administration, especially U.S. Secretary of Agriculture Sonny Perdue, embraced it as a cause.

Americans could have responded to Class 7 by cutting their own diafilteredmilk prices to compete with Canada's lower ingredient price. They didn't.

Meanwhile, U.S. dairy farmers are taking part in a new $12 billion trade compensation scheme, along with the subsidies they already get. Were the U.S. losses from Canada's policy changes more hypothetical than fact?

The Americans changed the way they enforcecheesemakingstandards, making it easier for them to use diafilteredmilk. The U.S. still has an overproduction problem, but its industry is showing signs of contraction. One Canadian processorwho still buys American ingredients reports being able to get an order filled within 48 hours in the past. It takes two to three weeks now.

Wild card Congress

For Canada, the worst-case scenariowould include both anend to Class 7 and another slice of market access tradedaway.

There are a few seats in Congress that can be won or lost based on how angry dairy farmers get, and those farmers have had a loud voice in the NAFTA debate so far. But Congress hasn't debatedNAFTA's final package of tradeoffs yet. In fact, the Congress that ends up debating that package won't be this one, but the one elected later in the fall.

That House will no longer be led by a dairy-consciousRepublican from Wisconsin, for example, because Paul Ryan isn't running.

Add this to the general climate of chaos surrounding the Trump administration, and it must be hard for the Canadian negotiatorsto feel confident that anything they agree to this weekwill actuallycome to pass.

When negotiators giveup too much, too soon, the other side comesback for more. A card laid is a card played in trade talks once offered, Canada's dairy industry will never get it back.