Dairy farmers, processors strike deal for future

Deal on pricing, other issues still needs ratification

Skim milk powder. (PelchGroup.com)

Ottawa — Dairy Farmers of Canada and dairy processor associations have reached an agreement in principle on how to evolve the Canadian dairy system for the future.

The agreement was reached during meetings in Charlottetown following a year of talks, which followed previous attempts to open a dialogue over pricing and other issues.

Details of the agreement won’t be released until dairy farmers and companies have had time to review and ratify it, the two sides said in a statement. The anticipated implementation date is Sept. 1.

“As our dairy industry operates under supply management, it is important that farmers and processors work together to be responsive to the evolution of the market, and this is exactly what this agreement in principle is all about,” Jacques Lefebvre, CEO of the Dairy Processors Association of Canada, said in a release.

The agreement includes an understanding on ingredient pricing, which has been the subject of protests on Parliament Hill and at Quebec dairy plants.

An agreement would be a major break for Agriculture Minister Lawrence MacAulay, whose assurance the government was working on a long-term strategy for the dairy sector — and a solution to the contentious imports of U.S. diafiltered milk — was wearing thin after he didn’t meet a June 3 deadline.

MacAulay has said he’ll meet with the industry to discuss that issue, as well as challenges following the possible ratification of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).

The deal would allow a 17,700-tonne increase in European cheese imports, about four per cent of the Canadian cheese market. The cheese is made from milk which is heavily subsidized by European governments.

Compensation for increased tariff-free European cheese imports was promised by the Harper government but never worked out. When no plan was included in the March 22 federal budget, dairy farmers said they were worried the new government was backing away from compensation.

When asked about that concern after the budget’s release, MacAulay said the government remained committed to compensation as part of the goal of getting the trade deal ratified this year so it can be implemented in 2017.

DFC says the increased European imports amount to an annual loss of between $110 million and $150 million a year in revenues and market share for Canadian dairy farmers.

— Alex Binkley is a freelance journalist and parliamentary press gallery reporter in Ottawa.

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