While the U.S. dairy industry has welcomed the new trade deal with Canada and Mexico, Canadian farmers say it will further erode a support system that has kept markets strong and many dairy producers profitable.
Farmers made that point with a boisterous series of protests last week in Quebec.
Tractors with air horns blaring paraded down the streets of Granby, Quebec, many bearing signs criticizing President Donald Trump and Canadian Prime Minister Justin Trudeau. Farmers and their supporters said the trade concessions agreed to by Trudeau – which include more dairy imports from the U.S. – ultimately threaten their way of life.
“They put a bomb in our system,” said Phillipe Swennen, who farms in St. Armand, Quebec.
Swennen has seen farmers in the U.S. struggle for years as prices plummeted due to overproduction. He says farmers in Quebec are now facing some of the same uncertainty. Some have stopped expanding or are thinking of selling out, he said.
“So now they’re afraid that the price of milk’s going to drop, and their quota will be cut, so they stop everything,” he said.
Canada’s dairy economy is based on supply management, including quotas. It’s a system that’s meant to keep farm production in line with consumer demand. It’s built on three elements: strict production limits that can be bought and sold among farmers; fixed prices paid to producers; and tight controls on imports.
But that last point – the restrictions on imports – was especially galling for President Trump and his trade negotiators. Late last month, Canada agreed to increase US imports to about 3.6 percent of the overall Canadian market.
Marcel Heyligen is a former dairy farmer who now raises beef in Notre Dame de Stanbridge. He said the recent Canadian dairy concessions follow similar moves in earlier trade deals with the European Union and the trans-Pacific partnership.
“So if you add them all up, it’s almost 10 percent of our market we’re giving away to foreign producers, and that’s what the problem is,” he said.
But that problem is a potential opportunity for U.S. farmers, said Anson Tebbetts, Vermont’s agriculture secretary.
“The more we can export the likely it will drive the prices up to farmers in Vermont,” he said.
Tebbetts said any price improvements won’t happen overnight. “These markets will take time to develop which is normal under any trade agreement,” he said.
But Tebbetts is particularly encouraged by Canada’s agreement to lift import restrictions on what’s known as Class 7 milk. That’s ultra-filtered milk used to make cheese and yogurt, and also processed as a milk drink.
“So that could allow more U.S. dairy to be sent into Canada and allow it to be more in balance, particularly with skim milk, powder and infant formula,” he said.
But the farmers demonstrating in Quebec accuse Prime Minister Trudeau of caving to President Trump.
Quebec dairy farmer Gerard Vermeulen said the increase in exports won’t measurably help U.S. producers. Vermeulen pointed out that Wisconsin produces more milk than all of Canada.
“This trade deal is going to do nothing or very little to the American farmer, because our market is 10 times smaller than yours, and we’re giving you 3.59 percent?” he said. “For you, it’s a drop in the ocean, and for us it’s going to destroy our industry.”
Vermeulen travels a lot in the states. He said the irony is that many U.S. dairy farmers want a supply management system similar to Canada’s. That’s what he heard this summer when farmers discussed supply management plans at a major summit in Albany.
“I was in Albany, New York for the dairy proposals and if I didn’t hear at least 10 times in the day, we need a system like the Canadians… I didn’t hear it once,” he said. “And look at what’s happening. It makes no sense to me.”
For Canadian farmers, this dispute is less about free trade and open markets that it is about keeping food production local, and helping farms stay viable.
In Granby, this point was driven home when a local member of parliament displays a container of ultra-filtered milk imported from the U.S. – it’s a product called Fairlife, distributed by CocaCola. He bought it at a nearby big box store, and he said it’s more expensive than a liter of Quebec milk. Taking a swig from the container, he suddenly spat it out without swallowing.
“Doesn’t taste as good either,” he said.
Although the trade deal has been agreed to by the three countries, the deal must still be approved by legislative bodies including the U.S. Congress and the Canadian parliament. The protesters in Quebec hope their voices resonate in Ottawa when that debate begins.