"It looks like they had to tighten the screw one last time."
That is how the chair of Dairy Farmers of PEI reacted when he heard the news the federal government had agreed to a July 1 implementation date for the Canada/United States/Mexico agreement. Gordon MacBeath said the dairy sector has paid a high price at the negotiating table under the Justin Trudeau government and the latest move adds insult to injury.
The move comes after assuring the four opposition parties in the House of Commons, the Senate, Dairy Farmers of Canada and Dairy Processors of Canada the implementation date would be delayed until at least August 1. Based on those assurances, both the Commons and the Senate agreed to speedy passage of the implementation bill in March before adjourning due to the COVID-19 pandemic.
The deal comes into effect three months after all countries signal their intention to implement it. Canada was the first country to make that indication. While a month might not seem to make much difference at first glance, MacBeath said it will mean over $100 million in losses to producers and processors across the country. That is because the Canadian dairy year runs from August 1 of one year to July 31 of the following year.
The agreement provides for an excess cap and access volume that increases over the first five years of the deal. The early implementation date means the second year export cap comes into effect after only 31 days at the first year level and the third year cap will be trigger after only 13 months.
MacBeath said the big winner will obviously be the U.S. dairy industry. However, he said if Ottawa had held off implementation for a month, there would be nothing the U.S. government or dairy producers could have done.
"This is pain that has been inflicted on us by our own government," the chair said. "It looks like we don't have many friends in the federal government."
The Chief Executive Officer of ADL Limited was also disappointed in the government action. Chad Mann described the early implementation as "rubbing salt in the wound" saying it is pressure both processors and producers don't need as they deal with the impacts of COVID-19.
Mann said the pandemic has resulted in lost markets for the producer-owned cooperative, largely due to the fact restaurants have either been closed or reduced to take-out only as part of the physical distancing restrictions imposed in PEI and throughout the country.
He said the only winner in the move will be the American dairy industry, which is more export driven than its Canadian counterpart. Mann said U.S. dairy producers have received strong support from Washington and have mounted a lobby for improved access to the Canadian market under the CUSMA deal. Mann described the ratification timetable as the "worst possible" scenario for the Canadian dairy industry.