Sask. dairy farmers uneasy as Americans push for concessions on supply management

Saskatchewan dairy farmers are leery of American trade negotiators' demands to allow more U.S. milk and cheese into Canada.

'There is no level playing field,' farmers warn, noting American milk gets heavy subsidies

Milk is displayed in the dairy aisle of Giant Tiger on 22nd Street West in Saskatoon. Saskatchewan dairy farms produce 24 million litres of milk every month. (CBC)

Mel Foth would like to get on with business as usual at his dairy farm near Hague, Sask., north of Saskatoon.

"We have cows calving every day," said Foth, who also chairs the board of directors of the dairy industry group SaskMilk.

"We're making investments, there's a lot of barns being built, upgrades being done so we can do a better job, a more efficient job," he said.

"But there is this uneasiness."

'There's a bit of uneasiness and yet we've been through concerns like this before,' said Mel Foth. He and his wife run dairies in the Hague area, just north of Saskatoon. (CBC)

Dairy farmers like Foth are in the crosshairs, as trade negotiators try to hammer out an updated North American Free Trade Agreement.

Canada is under pressure to sign on to an updated deal, after the U.S. and Mexico announced a new trade agreement Monday that U.S. President Donald Trump says will replace the North American Free Trade Agreement.

'He seems quite stuck on it'

Since he took office, Trump has complained repeatedly about Canada's reluctance to allow foreign dairy imports, and its quota system for dairy farmers.

Foth and other dairy advocates said Trump's bluster is misleading.

"He seems quite fixated on the dairy industry, where the U.S. actually has a trade surplus with Canada," said Joy Smith, who speaks for SaskMilk. "He seems quite stuck on it."

Currently, 10 per cent of the dairy products sold in Canada are allowed to come into the country tariff-free.

South of the border, Americans allow imports into just three per cent of the dairy market.

"The U.S. is considerably more protectionist than Canada," Smith said.

Dairy farmers in Canada are guaranteed a minimum price for their milk, while retailers set prices on grocery store shelves.

Phasing out the dairy quota system would not lower prices for consumers, said Smith.

"That hasn't been the case in other places where it's been deregulated," she said. "Why would we think that would be the case in Canada?"

A four-litre jug of milk sells for $4.65 at Giant Tiger in Saskatoon. Dairy advocates say scrapping supply management has not led to lower prices for consumers in other countries. (CBC)

Other analysts said countries which have scrapped dairy quotas initially see a drop in consumer prices, only to have prices revert to their previous levels after a few years.

'Very proud of the milk we produce in Canada'

Foth is concerned about the future, as he and his wife prepare to pass their dairy farm to their son and daughter-in-law.

"We're very proud of the milk we produce in Canada," said Foth. "The demand for dairy has grown as well, so we have to keep up with the times and modernize and invest into the future."

Along with dozens of workers employed on their farm, the Foths are among the 4,800 people in Saskatchewan whose jobs are tied to the dairy industry.

Those dairy workers see any additional trade concessions to the Americans on dairy as direct threats to their livelihoods.

Facing competition from highly subsidized dairies south of the border, they say virtually every Canadian dairy would dry up without supply management.

"You'd have to get rid of all the subsidies in the U.S. and other countries to actually make it a level playing field and nobody's talking about doing that," Smith said.

'We're not going to be able to compete with heavily subsidized American dairy farmers,' said Joy Smith of SaskMilk. 'There is no level playing field.' (CBC)

Still, SaskMilk is confident in Canada's trade negotiators, as they try to hammer out a new deal with the U.S. and Mexico this week.

"We're optimistic," said Foth.