Canadian dairy organizations claim government misled them on CUSMA implementation

By Jim Cornall contact

- Last updated on GMT

Dairy organizations in Canada say the Canadian Government has misled them.  Pic: Getty Images/Rowena Kong
Dairy organizations in Canada say the Canadian Government has misled them. Pic: Getty Images/Rowena Kong

Related tags: Canada, Dairy, CUSMA

The Dairy Farmers of Canada (DFC) and the Dairy Processors Association of Canada said that not only were parliamentarians misled by the Government, but they were also misled on the date of implementation of Canada-United States-Mexico Agreement (CUSMA).

The dairy sector said it had secured the support of parliamentarians to have CUSMA come into force in conjunction with the beginning of the dairy year, August 1, 2020, to allow the sector a full 12-months of exports per the negotiated concession for year-one threshold limit on key dairy products, before being constrained by the significant reduction conceded in year two of the agreement.

The DFC said as part of CUSMA, Canada transferred to the US part of its domestic dairy production, and also agreed to self-imposed limits on exports of some dairy products.

"Our government was first out of the gate to give notice to the other parties that it was ready to implement CUSMA. The dairy sector was informed at the last minute and judging by the reaction from the opposition parties, we weren't alone in this being a complete surprise,"​ said Jacques Lefebvre, CEO of Dairy Farmers of Canada.

Mathieu Frigon, president of Dairy Processors Association of Canada, said, "[The Government] told us not to worry, Canada had to send a signal to the US administration that it was committed to CUSMA, but that both the US and Mexico were nowhere close to being able to give notice, thus we shouldn't be concerned about an early implementation date."

The organizations said by coming into force before the start of the dairy year on August 1, 2020, the first-year export cap and access volume will apply immediately and for just a few weeks before a significantly lower second-year export cap is triggered, and significantly more volume is imported into Canada.

That means an almost 40% reduction in exports being imposed on the Canadian dairy sector, the groups argued. 

They also said that for dairy producers and processors, the early implementation by one month of CUSMA is estimated to represent up to C$100m (US$72m) in losses,  and that the sector will need to contend with an additional $330m (US$237.7m) in annual perpetual losses as a result of the lost market share.

Related topics: Markets, Fresh Milk, Pricing Pressures

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