A dairy cow chews a mouthful of cattle feed with seaweed at the UC Davis Dairy Teaching and Research Facility in Davis, Calif., on Thursday. (Randall Benton/Sacramento Bee)

Canada’s dairy processors to lose $100M if USMCA takes effect in July: Plett

‘We’re not talking small adjustments,” says Mathieu Frigon, CEO of the Dairy Processors Association of Canada

The federal government has betrayed Canada’s dairy processors by allowing the United States to activate the new North American trade deal on July 1 — a month earlier than the industry was expecting, the Opposition leader in the Senate said Tuesday.

Sen. Don Plett warned the country’s 470 processing facilities, an industry that employs more than 24,000 people and contributes $18 billion annually to the Canadian economy, stand to lose upwards of $100 million if the U.S.-Mexico-Canada Agreement takes effect as scheduled.

That’s because the dairy industry’s “quota year” for a number of key products begins in August, and many of the terms of the agreement are tied directly to the production calendar. Enacting the deal in July would mean that Year 1 — a 12-month period the industry was counting on to adjust to the new landscape — only lasts 31 days.

“We’re not talking small adjustments,” said Mathieu Frigon, president and CEO of the Dairy Processors Association of Canada.

“We’re talking adjustment to products, portfolios — the product mix of my members, so that means that requires often plants retooling, new products, you have to find a new market. Now we’re left to do all of this basically within 30 days.”

The new USMCA opens up to U.S. producers some 3.6 per cent of a Canadian dairy market that had previously been exclusively available to domestic producers — a change that some producers have predicted will carve a $240-million chunk off the industry’s bottom line.

It also requires the elimination of a pricing system that restricted American imports of certain products, including skim milk powder, milk protein isolates and infant formula, while at the same time restricting Canada’s ability to export those same products into the U.S. market.

Adding insult to injury, Frigon added, is that all of this comes at a time when both processors and dairy producers are already feeling the brunt of the impact from the COVID-19 pandemic.

“It has a multiplier effect, you know, in the current business environment.”

In exchange for agreeing to fast-track the government’s implementation bill last month, with COVID-19 bearing down on North America, Plett said Conservatives in the Senate received a “guarantee” from the governing Liberals that the USMCA, which is also known as CUSMA north of the border, would not go into effect before August.

But late last week, U.S. Trade Representative Robert Lighthizer served notice to Canada, Mexico and Congress that all three parties to the deal had finished their necessary domestic housekeeping, starting a clock that makes the deal the law of the land on the first day of the third month after the final country provides notice that its internal processes are complete.

By giving its own notice on April 2, Canada gave the U.S. the power to decide when the agreement would take effect, Plett said.

“The government’s latest decision to move ahead with CUSMA on the backs of our dairy processors in the middle of a global pandemic is completely inexcusable,” he said in a statement.

“How can Canadians trust that the government is doing everything it can to protect and defend the Canadian economy when they are willing to give up on one of the founding industries in our country?”

Plett called the change in timing, particularly in the throes of the pandemic, a betrayal of the Canadian dairy industry. And he suggested that tensions between Ottawa and Donald Trump’s White House forced the government to make concessions.

“One has to wonder if the government was forced into this weakened position with our biggest trading partner as a result of the prime minister’s overall mismanagement of this crisis, and his strained relationship with the Trump administration.”

In a statement late Tuesday, the office of Deputy Prime Minister Chrystia Freeland defended the government’s handling of the agreement, reiterated a promise to compensate the dairy sector and denied Plett’s claim that the government ever promised a specific timeline for the deal taking effect.

“Amid the COVID-19 pandemic, it is essential that we preserve and position our economy for the recovery — including our essential and privileged access to the U.S. market. We preserved and protected supply management in the face of U.S. demands to fully dismantle it,” said Katherine Cuplinskas, Freeland’s press secretary.

“Any assertion that there was a guaranteed entry-into-force date is incorrect; the agreement states it will enter into force on the first day of the third month after all three countries ratify it.”

Dan Ujczo, a lawyer who specializes in Canada-U.S. trade issues at the firm Dickinson Wright in Columbus, Ohio, pointed out that the federal government bought Canada an extra month of time by waiting until early April to serve notice to the U.S. and Mexico, making it impossible to meet Lighthizer’s own preferred timetable of June 1.

“I thought Canada actually played it masterfully by issuing its certification on April 2, because that addressed the issue of making sure it was July 1, not June 1 … and combated USTR concerns that Canada was dragging its feet,” Ujczo said.

“I think Canada had always kind of indicated that it was going to push this as far as it could, but I don’t think there was ever a direct commitment that Aug. 1 will be the date. I think it was more, ‘We’ll give it the old college try.’”

While dairy producers are obviously a vital component of the industry, the processing side of the equation is often overlooked — and continues to be, Frigon said.

“As I always say, a viable, sustainable supply management system needs both a viable farming sector, and a processing sector. And we often forget about the latter part, and that’s really unfortunate.”

James McCarten , The Canadian Press

Like us on Facebook and follow us on Twitter.

CoronavirusDairy Farmers

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Business notes: Downtown Duncan open-air food court opens

What’s happening in Cowichan’s business community

Documentary on legendary Chief Tzouhalem to be filmed in Cowichan

Film is the latest project by Drama Camp Productions

West Shore RCMP arrests five suspects in multi-jurisdictional drug trafficking investigation

Cocaine, prohibited loaded handgun, weapons, stolen vehicles seized

Bottle drive Saturday to assist sick Cowichan teenager and family

Sammy Dubois, 14, disgnosed with rare neurological disorder

Editorial: Alternative approval process is not the enemy

Not everything should go to a referendum.

Horgan says B.C. restart making gains as more people come out of their homes

B.C. announced the easing of more restrictions on businesses, recreation and travel last month

B.C.’s COVID-19 job recovery led by tourism, finance minister says

Okanagan a bright spot for in-province visitor economy

National Kitten Day aka the ‘purrfect’ day to foster a new friend

July 10 marks National Kitten Day, a special day to celebrate all things kittens

Lower Mainland YouTubers claim to be Kelowna display toilet ‘poopers’

RCMP can not speak to legitimacy of video, will be investigating

Haida matriarchs occupy ancient villages as fishing lodges reopen to visitors

‘Daughters of the rivers’ say occupation follows two fishing lodges reopening without Haida consent

Conservatives say police should be called into investigate WE charity scandal

Trudeau is already under investigation by the ethics commissioner for potential conflict of interest

Amber Alert continues for missing Quebec girls, 6 and 11, and their father

Police issued the alert for Norah Carpentier, 11, and Romy Carpentier, 6, from Levis, Que.

Limit police access to lethal weapons in Indigenous communities: Justice Summit

Grassroots-organized National Indigenous Justice Summit was a free-to-attend two-day videoconference

Campaign aims to raise $50K for young family of deceased Vancouver Island skydiver

James Smith, 34, died July 5 following incident in Nanoose Bay

Most Read