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Industry NewsCanada’s ‘white gold’: Sylvain Charlebois

Canada’s ‘white gold’: Sylvain Charlebois

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It goes without saying that milk and cream are important foodstuffs in our diet. Cheese, yogurt, and butter: these products are cherished by many people and will force average households to spend between 10 per cent and 15 per cent of their food budget on them. Our love for dairy products will be put to the test since most of them are going to cost much more.

Last fall, the Canadian Dairy Commission (CDC) recommended an increase of at least 8.4 per cent on the price of milk paid to producers. For butter, the increase will exceed 12 per cent. This is the largest increase announced by the CDC in more than 50 years, almost double the previous record. Under our supply management system, the Crown corporation must identify more than 200 dairy producers annually to determine the real costs of production on the farm. Once the data is collected, it is averaged and used to determine a fair and equitable income for our dairy producers. Simple process indeed, but it is also marred with anomalies and secrets.

Few people know exactly where the figures presented come from, let alone knowing what the CDC does. Even many dairy farmers have no idea how the CDC works. This Crown corporation owned by all Canadians is managed by two or three people affiliated with the dairy industry and employs more than 80 people. Its very public mandate gives it the power to influence food affordability in Canada, at least for dairy products. For this, the Commission obviously has a duty of transparency which it fails to fulfill every year since the commissioners make decisions without necessarily presenting its decisions and process clearly and in detail to the public. The CDC and the Dairy Farmers of Canada are simply one and the same and they shouldn’t be.

Last fall, other than an amazingly brief statement on rising production costs, the Commission did not share any details that would justify such an increase. It never does. Many suspect the sample design is skewed to favour farmers. For example, since the census is not mandatory, the sampling may include less efficient farms, thus pushing cost estimates higher. It’s just impossible to know. Moreover, the CDC did not share the news widely about the increase. The media had to get involved to make the hike known to the public. Without fanfare, the Commission simply posted a short 300-word text on its web page that no one consults. The phone number shown on its website is also out of service and has been for months.

The CDC’s commissioners hide behind contracts that ensure the anonymity of dairy producers. It’s a silly argument since in research, it is always possible to disclose figures by hiding the identity of the participants in a survey. This has always been done, but the CDC refuses to share its primary data, using the argument of having to protect the anonymity of participating farms.

Unlike other food products, due to the state-sanctioned public quota regime, milk is nothing less than a public good. So, for milk, unlike other commodities and food products, the level of accountability to the Canadian public must be upheld.

In processing, this increase will force some companies to raise their prices. Before the holiday season, the big firm in the dairy sector, Lactalis, announced that it was raising its prices by 15 per cent to its customers, namely the food retailers from whom we buy our dairy products. We’ve heard some retailers are refusing to pay more to remain competitive. Consequently, two things can happen. Some processors may simply stop selling some dairy products since they can make a profit by doing so. If this happens, expect more unreported milk dumping in rural communities the Dairy Farmers of Canada will never want the public to know about. Or, dairy processors will simply start unlawfully importing dairy proteins from the U.S., where industrial milk is three times cheaper right now. Both scenarios will lead to more dairy farms disappearing. What a disaster.

Meanwhile, a CUSMA tribunal recently ruled that Canada is unfairly blocking the entry of certain dairy products destined for the Canadian market. Apparently, import quotas offered by Ottawa were granted to companies that have a link with Canadian dairy. These organizations are obviously not motivated to import products from elsewhere. Prices and market shares for their own products could drop. In other words, Canada got caught cheating on the Americans. Meanwhile, Canadian taxpayers are currently giving almost $2 billion (almost $200,000 per farm) in compensation to dairy farmers for lost market share due to seeing more foreign products coming into Canada. But barely anything is coming in. What a racket.

In the meantime, Ottawa’s hypocrisy regarding dairy is costing all Canadians, both as consumers and taxpayers. The lack of transparency and openness to better serve the public is becoming more painfully obvious by the day. Canadians are just resolved to keep on paying more for our white gold at the store while subsidizing dairy farmers without really knowing why.

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