“Canada is very disappointed that New Zealand has decided to continue to challenge Canada’s dairy TRQ system,” said federal Trade Minister Mary Ng and Agriculture Minister Lawrence MacAulay in a statement on Saturday.

“We have been through this before and have consistently and successfully defended our dairy sector and supply management from trade challenges under CUSMA and the CPTPP.”

New Zealand Trade Minister Todd McClay said on Friday that his government had notified the Canadian government and other members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade agreement that it had triggered mandatory negotiations in the dairy dispute with Canada. These now must begin within 15 days.

New Zealand launched a claim against Canada in May 2022, arguing that Ottawa’s implementation of dairy tariff rate quotas under the trade pact were against the agreement’s rules.

In particular, New Zealand claims that although Canada agreed to allow some dairy market access to foreign firms through a system of tariff-rate quotas, it was in fact improperly allocating some of them to domestic firms.

“As a matter of principle, the New Zealand Government expects our trade partners to treat our exporters fairly and within the rules of our agreements,” McClay said in a statement. “Canada is not doing that in respect to the dairy quotas that were negotiated and agreed with New Zealand.”

Ng and MacAulay said Canada will always defend the supply-managed system, but will engage with New Zealand “in good faith.”

“We are confident that Canada’s new policies fulfill Canada’s obligation to eliminate the non-conformity identified by the panel.”

Five other CPTPP members including Australia, Japan, Mexico, Peru and Singapore have joined New Zealand in the dispute, and in September 2023 both New Zealand and Canada claimed a panel of arbitrators found in their favour.

New Zealand said on Friday that Canada had not complied with the findings within a reasonable amount of time.

This is the first dispute New Zealand has taken under a free trade agreement, and the first dispute that has been taken by any party under CPTPP, the New Zealand government said.

— With files from Reuters

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The P5 dairy farm boards, representing Quebec, Ontario, New Brunswick, Prince Edward Island and Nova Scotia, announced the quota increase Friday.

The one per cent increase in producer saleable quota is effective Nov. 1.

One incentive day per month — the ability to sell one additional day worth of milk, based on a dairy farm’s current quota — was issued for each month from November until March.

The quota is not cumulative, meaning that there is only one day for each month.

The industry has set a goal of 35,000 tonnes of butter in stock, which has not yet been met.

Organic farmers also got a significant boost in milk-producing potential, but they will have to wait for a while for it to kick in.

Organic dairy farmers will have three incentive days per month from April 2018 to March 2019. The incentive days will not be cumulative.

— John Greig is a field editor for Glacier FarmMedia based at Ailsa Craig, Ont. Follow him at @jgreig on Twitter.

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It will also be implemented quickly, on July 1.

The five provinces — Prince Edward Island, New Brunswick, Nova Scotia, Quebec and Ontario — create quota policy collectively, referred to as P5.

According to Kristin Benke, economist with Dairy Farmers of Ontario, between August 2016 and July 2017, there has been an increase of 12 per cent in quota issued by the P5, including one per cent in August, one per cent in September, three per cent in November, two per cent in December and now five per cent in July.

According to a statement from Dairy Farmers of Ontario and the P5, the increase is needed as there still isn’t enough milk produced to fill the market for butter.

“This decision is intended to ensure P5 milk production continues to fill all current demand, as butter stocks have not surpassed their updated target level of 35,000 tonnes.

“Demand for dairy products continues to be strong while P5 processing capacity has increased since the beginning of April but continues to be closely monitored.”

As butter demand has increased, there’s been an increasing amount of skim milk left, after the butter fat has been removed to make butter and other products.

Without adequate processing for that skim milk, it has become a waste product, sold to feed markets or disposed of.

Increasing investment in processing should take care of some of that excess skim milk powder with the creation of protein isolates.

A new class of milk in Ontario was implemented last spring, called Class 6. It lowered the price of milk to be used to make milk protein isolates in order to compete with imported American milk protein isolate products.

The rest of the country has since followed suit in creating similar pricing, called Class 7, but it is still under discussion.

— John Greig is a field editor for Glacier FarmMedia based at Ailsa Craig, Ont. Follow him at @jgreig on Twitter.

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It comes on the heels of a 2.2 per cent price hike in February.

“The industrial price index has gone up twice this year, which is an anomaly,” said Albert Kamps, a Lacombe dairy farmer and chair of Alberta Milk. “It usually goes up once a year, but farmers were able to demonstrate that their returns were actually shrinking due to an increase of cheap, subsidized production. The goal of supply management is for half of our milk to be produced above the cost of production.”

The increase comes as dairy markets in Europe, which ended its quota system 16 months ago, are crashing — down more than 14 per cent in a year. That prompted the European Union to up dairy subsidies last month by 150 million euros (C$218 million).

While many of Canada’s milk class prices are based on the world milk price, which does put downward pressure on farmers’ returns, industrial milk prices are determined separately from fluid milk prices, said Kamps.

“On all milk, it’s less than a two per cent price increase. We shouldn’t see huge swings in milk prices,” he said.

But Pierre Cadieux, the vice-president of Restaurants Canada, calls the increase a “short-term gain for long-term pain.”

“It does not help to expand the market,” said Cadieux, whose organization has 30,000 members. “We’re in the business of expanding the customer base. We have the same goals; the dairy farmers and us. But for us, supply management is an economic straitjacket. We have no negotiating power.”

Passing a price increase on to the consumer is not a good idea, he said.

“There’s a tipping point there, where the consumer will shift from certain menu items at the retail level and decide not to buy or reduce their consumption of cheese or yogurt,” said Cadieux. “That’s the bottom line. No one likes price increases and we’re all price sensitive. If we had access to a freer market based on more international prices, that would be mitigated. The irony is that these prices come in the context of low international prices, so we’re against the international trend here.”

The latest price hike will hurt his organization’s members, he said.

“Our operators work on thin margins. A franchisee operator of a pizza place — he or she works hard for their money. You have to sell a lot of pizza to make a living, and a two per cent increase when your margins are small just adds to that.”

But Kamps argues the increase is not going to have a huge effect.

“I know the restaurant association is arguing that the price of pizza is going to go up, but if you do the math, a farmer’s share of a medium pizza is 70 cents,” he said. “If we get a two per cent increase, it might be another penny. That’s the farmer’s share.

“If it becomes more than that, that’s on retailers and the middleman. If the price of pizza is going to go up, I don’t see them changing menus for one cent. The farmer’s share has very little to do with what happens at the retail level.”

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Federal officials on Monday confirmed negotiations have concluded on the multilateral Trans-Pacific Partnership, now billed as “the largest, most ambitious free trade initiative in history.”

The agreement commits Canada to pull back or remove tariffs for products from Japan, Australia, Malaysia, New Zealand, Singapore, Vietnam and Brunei Darussalam — as well as for Canada’s existing free-trade partners, the U.S., Mexico, Chile and Peru — while granting new access for Canadian wares in all 11 markets (see below).

For Canadian beef, pork, wheat, barley, canola, wine and whisky producers, a TPP deal means either tariff elimination or more market access to Japan, Malaysia and Vietnam, whose agricultural tariffs on Canadian product now average 17.3, 10.9 and 17 per cent respectively.

Canadian dairy, poultry and egg producers and processors can also expect more duty-free access to the U.S. and other TPP countries, the government said, noting “complete tariff elimination” on artisanal cheese and certain other specialty cheeses bound for the U.S.

Canada, meanwhile, has pledged “limited new access” in goods now covered by supply management, to be granted via quotas phased in over five years.

The new access, the government said, represents “a small fraction of Canada’s current annual production” — 3.25 per cent for dairy, mainly in milk and butter for value-added processing; 2.3 per cent for eggs; 2.1 per cent for chicken; two per cent for turkey; and 1.5 per cent for broiler hatching eggs.

Canada’s supply-managed producers in return will get a new Income Guarantee Program, which the government said Monday will protect those farms’ incomes against increased access for imports granted through both the TPP and the Canada/European Union free trade agreement (CETA).

The program is expected to provide “100 per cent income protection” to affected farms 10 years from the day the TPP comes into force, then more support on a “tapered basis” for another five years afterward.

The Income Guarantee Program, budgeted for $2.4 billion over those 15 years, would grant a typical dairy producer about $2,087 per cow in total; a chicken farmer, about 35 cents per chicken; a turkey farmer, about 24 cents per kilogram (live weight); an egg farmer, about $3.15 per layer hen; and a hatching egg producer, about seven cents per egg.

The government also announced a “demand-driven” Quota Value Guarantee Program, which is to protect producers against reduced values in quota is sold after the TPP is implemented.

The government said the program, worth $1.5 billion over 10 years, will ensure farmers’ banks and other lenders are secure in continuing to use quota as collateral for loans.

Those programs remain to be finalized with the Canadian Dairy Commission and the Farm Products Council of Canada, the government said.

Related programs announced Monday include a Processor Modernization Program, worth $450 million, to “further advance… competitiveness and growth” of processors in supply-managed sectors.

Supply-managed groups will also get a new Market Development Initiative, worth $15 million added to the AgriMarketing program, to assist them in “promoting and marketing their top-quality products.”

The government also pledged to plug other holes in Canada’s tariff wall through stronger “anti-circumvention measures” such as certification for spent fowl; preventing importers from circumventing import quotas by adding sauce packets to chicken products; and excluding supply-managed products from the federal Duties Relief Program.

Cheese compositional standards Ottawa introduced in 2008 have also been maintained, the government said.

Market access

The TPP deal as agreed upon Monday commits Japan to eliminate almost 32 per cent of its duties on farmed and agri-food products when the deal comes into force; another nine per cent of tariff lines will be get preferential treatment through permanent and “country-specific” quotas for Canada.

Japan’s remaining tariff lines will see tariff elimination or reductions over up to 20 years.

Vietnam will end tariffs on close to 31 per cent of its farmed and agri-food product tariffs when the TPP comes into force, and another 67 per cent of its tariff lines will become duty-free within 15 years, with preferential treatment for others.

Malaysia will end tariffs on nearly 92 per cent of its tariff lines for farmed goods and agri-foods when the TPP comes into force and end another seven per cent of duties within 15 years.

Australia and New Zealand, meanwhile, have pledged eliminate nearly all their tariffs on agriculture and agri-food products when the TPP comes into force, and remaining duties will end in five years or less.

Pork: Canadian pork bound for Japan will see that country’s “over-gate” price tariff of 4.3 per cent on fresh/chilled/frozen pork cuts and pork offal end within 10 years, and Japan’s “under-gate” tariff of up to 482 yen per kilogram cut to 50 yen/kg within 10 years. Over-gate price and below-gate price tariffs will also end within 10 years for preserved and processed pork.

Japan’s tariffs of up to 20 per cent on pork products, including sausages, not subject to the gate price system will also end within 10 years.

Fresh, chilled and frozen pork going to Vietnam from Canada will see tariffs of up to 27 per cent, and tariffs of up to 31 per cent on all other pork products, including sausages, eliminated within nine years.

Beef: Japan’s tariffs of 38.5 per cent on fresh/chilled and frozen beef, and 50 per cent on certain offal, will be cut to nine per cent within 15 years. Its tariffs of up to 50 per cent on processed beef and most offals will end within 15 years.

Vietnam’s tariffs of up to 31 per cent on fresh/chilled and frozen beef will end within two years, and its tariffs of up to 34 per cent on all other beef products end within seven years.

Wheat and barley: Feed wheat bound for Japan will be duty-free and quota-free when the TPP comes into force. Canada will also get a “Canada-specific” quota for food wheat, starting at 40,000 tonnes and rising to 53,000 tonnes within six years. Markups within that country-specific quota will be cut by 45 or 50 per cent.

Vietnam’s tariffs of up to five per cent on all wheat will be eliminated upon entry into force.

Food and feed-grade barley bound for Japan fall under a quota system with markups. Feed barley in Japan will be duty-free and quota-free when the TPP comes into force; Japan’s mark-ups on the price of food barley will be cut by 45 per cent within eight years.

Canada also gets a TPP-wide quota for food barley, starting at 25,000 tonnes and growing to 65,000 tonnes within eight years.

Canola oil: Japanese tariffs on canola oil, now up to 13.20 yen/kg, will be eliminated within five years, as will Vietnam’s tariffs of five per cent.

Wine and spirits: Canadian wine, icewine and sparkling wine will see Japanese duties of up to 182 yen/litre end within seven years. Vietnam’s duties of up to 59 per cent would end within 11 years and Malaysia’s duties of 23 ringgit/litre within 15 years.

Australia and New Zealand have both agreed to end their duties of up to five per cent on Canadian wines immediately when the TPP comes into force; Australia’s five per cent duty on Canadian whisky would also end at that time.

Malaysia’s duties of 58 ringgit/litre on Canadian whisky are to end within 15 years, as are Vietnam’s duties of 55 per cent will be eliminated within 12 years.
In Australia, duties of five per cent will be eliminated upon entry into force.

Canada said the TPP deal will also end or cut many of the TPP nations’ existing tariffs, or create tariff rate quotas, on Canada’s exports of processed foods and non-alcoholic beverages including maple syrup, baked goods, processed grain and pulse products, and sugar and chocolate confectionery. — AGCanada.com Network

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