News Milk
Why Canada's dairy industry needs to be overhauled
A group of agri-food researchers at the universities of Dalhousie and Guelph are sounding the alarm. If a 20-year plan for the Canadian dairy industry doesn't come out now, the industry will lose out and lose at least half of its dairy farmers over the next decade.
According to the researchers, the Canadian dairy industry needs a major overhaul to remain future-proof. In recent decades, both dairy consumption and the number of dairy farmers have fallen sharply. In addition, more and more foreign dairy products are entering the Canadian market through various trade agreements. If no action is taken, the number of dairy farms is expected to fall from 10.371 in 2020 to roughly 5.500 in 10 years.
20-year plan
The researchers indicate that it is not yet too late to stop the decline in consumption and companies. Although dairy farmers have enjoyed a stable price in recent years, this has not prevented the sector from slowly losing strength, according to the research. The high milk prices also cause high trade prices, making cheaper dairy from the United States, for example, more interesting for imports due to the free trade agreements.
In order to strengthen and grow the sector, various adjustments have to be made. Import tariffs on foreign dairy must gradually be phased out and money must be made available to help dairy farmers who are struggling with voluntary sale of the company. Canada also needs to get a strong international brand name on dairy.
trade agreements
The research shows that due to free trade agreements such as CETA and CPTPP, about 8% of the Canadian dairy market consists of dairy from abroad. Canadian dairy farmers lose part of the sales market as a result. The government has therefore released $1,75 billion (CA dollar) in compensation to the affected dairy farmers. With the entry into force of the CUSMA treaty, more money will be released, Canadian President Trudeau announced last week.
In the report, the researchers state that more is needed than that, even if this is going to disadvantage a group of dairy farmers. There is no escaping the influx of international dairy, which is why we have to respond to this situation. It may be that some Canadian dairy farmers have to make room. The research therefore advises the government to use the money for a purchase scheme.
The Netherlands
Where the Canadian dairy industry is concerned about the entry into force of a new trade agreement (CUSMA), we have a similar situation in the Netherlands with the CETA trade agreement. This makes free trade between the Netherlands and Canada possible. Dutch agriculture is afraid that it will have to compete with Canadian products that do not meet the same strict quality requirements as Dutch products.
Jorine Cosse
© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.