Canadian dairies line up for fourth DDPP payout as ‘full and fair’ compensation is issued

By Teodora Lyubomirova

- Last updated on GMT


Related tags Agriculture Funding Livestock Dairy Trade European union Eu CUSMA CETA

Minister of Agriculture and Agri-Food, Marie-Claude Bibeau said that the fourth payment completes ‘full and fair’ compensation to producers who have lost market share as a result of two international trade agreements.

Supply-managed Canadian dairy farmers will receive the fourth and final direct payment under the Dairy Direct Payment Program, designed to reimburse producers who have been impacted by the CETA and CPTPP trade deals inked by the government.

Under CETA - Canada's trade deal with the European Union - the EU's share of the Canadian cheese market increased by 18,500 tons, which according to Canada's National Farmers Union represents a 185,000-ton loss of fluid milk production for Canadian dairies. The Dairy Processors Association of Canada estimated that dairy producers faced around CAD670m (USD490m) in lost market share and diminished returns on investment. Under CPTPP, Canada's free-trade deal with 10 Asia-Pacific countries including major dairy exports Australia and New Zealand, Canadian dairies faced a loss of CAD160m per year, according to Dairy Farmers Canada.

To compensate producers, the government allocated up to CAD1.28bn (USD940m) to the country’s dairy producers for the first three years of the Dairy Direct Payment Program (DDPP), with the fourth and final round totalling CAD468m (USD343m).

Eligible farmers are reimbursed based on their milk quota; for example, an owner of an 80-head dairy farm will receive CAD38,000 (USD27,880). To get their payment, producers must register through the Canadian Dairy Commission before March 31, 2023.

Future compensation

In its 2020 pre-budget submission, DFC estimated that the combined market access granted under CETA, CPTPP and CUSMA is equivalent to an average annual loss of CAD450m (USD330m) in Canadian farmer revenues. The body also projected that by 2024, 18% of Canada's domestic dairy production will be outsourced to foreign producers. 

As a result, the Canadian government has faced calls to devise a plan to further reimburse impacted producers through a fresh compensation package, this time to address the impact of the Canada-United States-Mexico Agreement (CUSMA). 

In the 2022 Fall Economic Statement, the state committed up to CAD1.2bn (around USD879m) to dairy producers. The funds will be distributed from 2024 to 2029 under the DDPP. 
As of 2024, a farm owners with a herd of 80 milking cows may receive compensation through a direct payment of about CAD106,000 (USD77,700) in six yearly instalments on a declining scale, the ministry explained.

"We made a promise, and we kept it,”​ commented Bibeau. “Our government committed to fully and fairly compensate supply-managed sectors after the ratification of trade agreements.

“The payment at the beginning of 2023 completes the compensation of dairy producers for the CETA and CPTPP. As of next year, and until 2029, they will receive compensation for CUSMA. I also reiterate our government's commitment not to concede any further market shares under supply management during future trade negotiations.”

Consultations for Sustainable Agriculture Strategy launch

In other news, minister Bibeau has launched consultations to develop a sustainable agriculture strategy (SAS).

SAS will be aimed at supporting farmer livelihoods while contributing to reducing emissions. The strategy will be developed in collaboration with the agricultural sector, with provinces and territories set to be engaged throughout the consultation phase.

There will be public consultations as well as targeted workshops and an advisory committee, which will be comprised of producers and sector representatives. The aim is to finalize the strategy in the next year.

Consultations run until March 31, 2023, with a discussion document​ available for comment online.

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