Trade ministers and negotiators are meeting this week in Atlanta in what might be the final round of negotiations for the Trans Pacific Partnership (TPP). Leaving aside the fact that they first announced a “final” round nearly two years ago, it does seem that they are down to a few sticking points. As in so many trade agreements, whether and how to include agriculture is one of those points of controversy. This time, much of the debate focuses on just how much the member countries must open their dairy markets to imports, and whether Canada will be compelled to weaken its dairy supply management program.
These demands come at a time when dairy producers in many countries are reeling from falling prices. After increases in global prices over the last few years, farmers in many countries increased production. Then conditions changed dramatically. Russia banned dairy imports from the U.S, EU and Australia. China substantially increased its own production. According to USDA reports, the price of non-fat dry milk (the main reference price) fell from $1.77 per pound in 2014 to about $0.89 as of September 2015.
Wild swings in supply and demand have pushed many dairy farmers over the edge. According to an article in Bloomberg Business, the U.S. has lost more than 76 percent of its dairy farms in the last 25 years. In the article, Andrew Novakovic, an economics professor at Cornell, said, “This is a problem of globalization. You are exposing yourself to a lot of risk without a lot of control.”
Sound familiar? One of the big lessons since the 2008–2009 food price crisis has been that volatile prices are bad for both farmers and consumers. And that too much dependence on fickle world markets is dangerous for food security. But the official answer to the dairy crisis that resulted from too much of a focus on global markets seems to be to open those markets wider and more permanently.
Canada’s dairy supply management program has helped to insulate it from these wild swings, but that sensible policy is under threat in TPP. In what sounds like a kind of shell game, several governments are demanding market opening under TPP, each with the idea of strengthening its access to the others’ markets. For several years now, New Zealand has made clear that one of its top priorities in TPP is to open U.S. and Japanese markets to imports of milk protein concentrate on behalf of Fonterra, which controls the vast majority of its production. The U.S. has said that it won’t increase access to its dairy market unless Canada opens its dairy markets to U.S. exports.
Canadian dairy farmers are pushing back, staging protests all over the country, including bringing cows and tractors to block traffic at the Parliament to protest the proposed TPP deal. They have made it a major issue in the electoral campaign, with current Prime Minister Stephen Harper claiming that he will safeguard the current system. Still, agriculture ministers for Ontario and Quebec, the two biggest dairy producing regions, decided to join the talks over concerns that the federal government would give up too much. Quebec Agriculture Minister Pierre Paradis said, "We want the minister, who left the federal campaign to go down there, to feel that this is a big deal."
The Dairy Division of the International Union of Food, Agriculture, Hotel, Restaurant, Catering, Tobacco and Allied Workers Associations (IUF) issued a statement saying that, “we believe that sovereign democratic nations have the right to protect jobs and livelihoods in the interests of their peoples. For example, the supply management system in Canada provides price stability for producers and income stability for workers and has widespread democratic support within Canada. Its retention or otherwise should solely be for the people of Canada to decide, free from any intimidation or blackmail by corporate interests or by other nations.”
If dairy markets are opened under TPP, the end result won’t be just more milk being shipped across borders. It will undoubtedly lead to further bankruptcies of family farmers who are unable to cope with falling prices and rising costs, and greater control by a few big businesses. The driving force for these proposals is not farmers, consumers or even governments. It is agribusiness groups including the U.S. Dairy Export Council and Fonterra, the world’s largest dairy producer, for whom a “balanced” approach means opening up markets as much as possible.
The lessons of the past are clear. Trade agreements have been used as weapons against supply management programs, going back to NAFTA and the 1996 U.S. Farm Bill. Opening agriculture to “market” forces dominated by a few big producers results in greater corporate concentration, reduced bargaining power for smaller producers, and new challenges for fair and sustainable local economies. TPP is supposed to be a 21st Century trade agreement, but it looks like more of the same failed policies. It’s time to learn the lessons of history instead of just repeating them.
