Canada’s dairy processors and producers say the federal government has “failed to adequately support its dairy sector” after announcing plans for the allocation of cheese import licenses through the Canada-European Union trade deal (CETA).
Canada agreed to tariff rate quotas for nearly 18 million kilograms of annual cheese imports in CETA under two categories: 16 million kilograms for cheeses of all types, and 1.7 million kilograms of cheeses to be used in food processing.
50 percent of the 16 million kilograms of cheeses of all types will be allocated to Canadian cheesemakers, with the other 50 percent going to distributors and retailers, announced Trade Minister François-Philippe Champagne on Tuesday.
Canadian negotiators compromised on an earlier plan to give 60 percent of the quota to domestic cheese producers, reported the CBC.
“We are on track for the provisional application of CETA on September 21. I am confident that we have set the stage for exciting opportunities for Canadians in the cheese sector, particularly for our small and medium-sized enterprises,” said Champagne in a statement. “We held extensive consultations with a wide range of stakeholders about the best way to allocate the EU cheese quotas under CETA. These allocations will ensure benefits are achieved throughout the value chain.”
The Dairy Processors Association of Canada and Dairy Farmers of Canada argued the licenses should be allocated “only to those negatively impacted” by the tariff-free European access.
When it comes to competition from European imports, our dairy sector is at a disadvantage. Unlike the European sector which is heavily subsidized, the Canadian industry is not. Furthermore, the new cheeses coming into the market from Europe will enter Canada tariff-free. While we are still early days, this will result in less production by Canadian cheesemakers. In turn, this will impact Canadian dairy farmers who will not be producing the milk for these domestic cheeses. — Dairy Processors Association of Canada and Dairy Farmers of Canada
“It is clear that only the dairy sector is impacted negatively by this, yet the government has chosen to offer a significant portion of these licenses to retailers. It is incumbent on the government to explain its logic to the 80,000 Canadian families that depend on our sector for their livelihood,” said Jacques Lefebvre, president and CEO of the DPAC in a news release. “Any import license going to retailers equates to handing over the whole supply chain, from import, through distribution and retailing to the retailers. How is it in the best interest of Canadian consumers?”
“We had hoped the government would prioritize the allocation of the new (tariff rate quotas) to cheesemakers, who would have imported cheeses that are not already produced in Canada, providing greater variety of cheeses to Canadian consumers, while supporting the continued growth of the Canadian dairy sector,” added Pierre Lampron, the new president of Dairy Farmers of Canada.
The import licenses will be phased in over the next five years, reaching maximum market access in January 2022. Applications for 2017 quota will be accepted until September 8, 2017, with imports to begin on October 2, 2017.
Coinciding with the cheese allocation announcement, the federal government confirmed its plans to offer $350 million in compensation to dairy producers and processors, as originally announced last fall.
The five-year $250 million Dairy Farmer Investment Program will provide up to $250,000 per farm to make upgrades to barn technology and equipment to improve productivity. This will range from robotic milkers and feeding systems to smaller investments in herd management and equipment.
The four-year $100 million Dairy Processing Investment Fund will provide “up to $10 million for each capital investment project, such as installing new equipment and infrastructure, or up to $250,000 for each project to access technical, managerial or business expertise.” (Find out more on both programs here.)
Dairy Farmers of Canada has previously said the increased European market access will “cost Canadian dairy farmers up to $116 million a year in perpetual lost revenues.”