PEI

New trade deal a 'game-changer' for ADL, says dairy processor

The new USMCA trade deal will be a blow for P.E.I.'s largest dairy processor, Amalgamated Dairies Limited (ADL), but is an obstacle it can work around.

'There's going to be a new level of uncertainty'

'It's just a new level of uncertainty,' for ADL, says CEO Chad Mann. (Pat Martel/CBC)

The new USMCA trade deal will be a blow for P.E.I.'s largest dairy processor, Amalgamated Dairies Limited (ADL), but is an obstacle it can work around, says the company.  

The successor to NAFTA was struck at the end of September, and ADL and its 165 dairy producer-owners have taken the last two weeks to look at what it means. 

"Utter disappointment when we got the announcement September 30 that this agreement had been reached," said Chad Mann, CEO of ADL.

More U.S. products will be allowed

"When you tally it all up it's about 15 to 18 per cent market access coming in sync with each other so it will be kind of a game-changer for producers and the dairy processors across Canada." Mann is adding up not only concessions made in the USMCA but also the TPP and CETA trade deals of the last few years. 

Canadian support for domestic products in the wake of the deal has been a 'silver lining for our sales' says Mann. (Nicole Williams/CBC)

Supply management has allowed dairy producers and processors predictability over the last several decades, Mann explained. 

"Now with the trade deals coming in there's going to be a new level of uncertainty," he said. 

Part of the uncertainty is over price — Canadian producers don't yet know what prices they'll be competing with from foreign dairy products. Mann noted that world prices fluctuate.  

Another part of the uncertainty is what products other countries will choose to import into Canada.

"Are cheese processors going to be impacted more than fluid processors, yogurt processors, someone making ice cream? It remains to be seen," said Mann. 

'Silver lining'

P.E.I. may be less affected than other dairy-producing regions, Mann said, because U.S. marketers and retailers may choose to target southern Ontario, Quebec or B.C instead. 

Mann hasn't seen the Canadian text of the agreement, so he said he can't fairly comment on exactly how the industry will be affected, but he said "it's my view the industry won't be completely handcuffed so it can't adapt to future market conditions." 

Should customers expect to pay more, or less, for ADL products because of the deal? Mann said there are many factors that influence prices, and the deal should not affect prices significantly. 

Customer support for ADL and other domestic Canadian products in the last few weeks has been high, Mann said, calling it a "silver lining for our sales."

ADL operates five processing plants in P.E.I. — its plant in Summerside is the largest specialty cheese processing plant in Canada, Mann said — and produces more milk per capita than any other province in Canada.

Compensation has been promised to Canadian dairy producers in the wake of the deal. 

Minister defends deal 

Federal Agriculture Minister Lawrence MacAulay's office is defending the deal. 

"The U.S. was calling for the complete elimination of the supply management system, and our government has defended and preserved our supply management system from these very strong U.S. attempts to see it dismantled," a spokesperson from MacAulay's office said via email on Monday. 

Foreign dairy suppliers will have access to about 10 per cent of Canadian milk production, the spokesperson added.

"We understand there will be impacts on our farmers and we are committed to fully and fairly compensating them."

The department plans to form a working group of industry representatives to make sure compensation is appropriate, the email said. 

More P.E.I news

With files from Laura Chapin

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