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____ Monday February 22, 2016 ____


Supply Management

The TPP attacks democracy and supply management
by Jan Slomp

Courtenay, BC - The Trans Pacific Partnership (TPP) is designed to entrench the interests of foreign corporations at the expense of our sovereignty and democratic processes. Its Investor State Dispute Settlement (ISDS) mechanism gives foreign corporations the right to sue our government if they believe future profits will be reduced as a result of democratically enacted measures. ISDS puts a chill on public interest regulation, easing foreign corporations’ access to resources and commodities. 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 subsidies are not needed to keep farmers in business and ensure the 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 enough, but not too much, is always produced.

If the TPP is ratified, the border will be opened wider, increasing imports, primarily from the USA. The implications for the dairy sector are severe.

The TPP would immediately allow imports equal to 3.25% of Canada’s current fresh milk supply, with increases of 1% (compounding) per year for the next 18 years. 80% of these milk imports must be processed in Canada, and would likely be mixed with Canadian supplies.

Imported US milk may contain synthetic Bovine Growth Hormone (rBGH). This drug was banned for Canadian dairy herds in the late 1990s, the outcome of a democratic process involving citizens, scientists, dairy farmers, and the Senate. The ban is based on clear evidence that the drug increases disease and suffering of cows. It is more difficult to assess human health effects of consuming milk from rBGH-induced cows, however many consumers remain wary and avoid it. The TPP includes a commitment for Canada and the US to discuss their food safety rules for dairy with a view to harmonization. If the TPP is adopted, the difference between Canadian and US milk will be diluted, and potentially disappear.

NAFTA opened Canada’s doors to high protein milk components produced in the USA. The TPP would remove all tariffs on US whey after 10 years. It would also allow New Zealand to increase dairy exports to the USA. In turn, even more of the US’s excess milk protein would be dumped into Canada. This 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. Today, dairy faces a structural milk protein surplus. 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). MPIs are added to certain dairy products to increase yields. Separating milk components, then processing, storing and transporting them to reintroduce them in other foods is a drastic departure from fairly simple fermenting or cultivating whole milk into butter, cheese, yogurts and quark – and a practice that may ultimately undermine consumers’ confidence. Processors can import MPIs tariff-free, and due to the world-wide structural surplus, they are very cheap. This leaves dairy farmers in Canada with even more surplus skim milk powder and higher costs to get rid of it, putting pressure on the farm gate price. Thus the TPP reduces dairy farmer incomes by exacerbating the butter-protein imbalance in addition to taking away a portion of our domestic fluid milk market.

Our system ensures milk is produced and processed in every province, within a reasonable distance from both 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, namely the Maritimes, northern Ontario, interior BC and Vancouver Island. A vicious circle would ensue, eroding supply management and concentrating production and processing. Centralization would also impair climate change mitigation. Supply management minimizes GHG emissions by keeping production and processing close to where products are consumed.

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 is a direct assault that cannot be cheered because it might have been even worse.

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