Agriculture Committee on Nov. 7th, 2013

[Richard Doyle]

On the little milk containers, check next time, because I'm sure none of you have noticed. They don't call them “milk” or “cream” anymore; they're called “milker” or “creamer”. This is not milk or cream. It's milk and cream that has permeate added, which is lactose, and it no longer qualifies to the standard of identity for milk. This is a common practice everywhere.

So now here comes CETA and these five GIs that you will guarantee, that will have to have a word style, no geographical indication, pictures of any sort. You're going to have to make it clear that the product is from Canada. You're going to have a whole series of requirements to protect them. We don't even do it for our domestic products. So we're asking the government to enforce those regulations so we can actually compete on a level playing field.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Preston.

We'll go to Mr. Davies for five minutes please.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chairman. Thanks to all the witnesses for being here.

Mr. Smith, is it possible for you to quantify the financial cost to the dairy producers of their loss of market in terms of transferring milk to processors? Do you have a percentage you could give us?

[Wally Smith]

The number we've been floating is $150 million. Are you asking for direct farm impact?

[Don Davies, NDP, Vancouver Kingsway, BC]

Yes. I've seen the figure of about a 2.2% reduction in milk to processors. Is that what you have calculated as the detrimental effect of this deal?

[Wally Smith]

Exactly, yes. That's about $60,000 per farm on the income side.

[Don Davies, NDP, Vancouver Kingsway, BC]

Okay.

We in the NDP have been saying consistently that when it comes to trade agreements, details matter. So I just want to correct a few details.

What my friend Mr. Lemieux called phenomenal growth in the industry.... When I do my math, out of 425,000 tonnes, an increase in growth of 6,000 to 8,000—say an average of 7,000 tonnes a year—is 1.6% per year.

Is that the annual growth you see in the cheese market, 1.6% at the retail level?

[Richard Doyle]

That's retail, and that's 60% of that $425,000. You have to make a distinction again that retail is about 63% of the total $425,000. That is growing at about 1.6% per year.

[Don Davies, NDP, Vancouver Kingsway, BC]

Right. I'm looking at the government's technical summary that they put out. They say the total cheese TRQ for the EU will comprise 16,800 tonnes of cheese and 1,700 tonnes for industrial-use cheese. That's 18,500 tonnes of extra cheese. So even if it's 7,000 tonnes a year for two years, that's 14,000. The amount of increased access we have given the Europeans actually will not be absorbed by the growth in the market, just on the numbers they've given us.

Would you agree with that?

[Wally Smith]

We find it very doubtful that the market will be able to absorb the high-quality cheese or fine cheeses that are being sold in that category of cheese sales, yes.

[Don Davies, NDP, Vancouver Kingsway, BC]

I want to talk about geographic indicators for a minute. In the same document the government has given out they said we've conceded 179 geographical indications to the Europeans. When I asked the chief negotiator this morning at the trade committee how many Canada got, the answer was zero.

Does Canada not have any geographical indications worth fighting for?

[Wally Smith]

The answer is no, I'm told.

[Don Davies, NDP, Vancouver Kingsway, BC]

Are there any in the cheese industry that our Canadian marketers...that we could have gotten?

[Richard Doyle]

Geographical indication is really a European system. Most of our cheese makers today use trademarks. We get protection of our names through trademarks or standards of identity for what I call the “common name”, which is one of the issues we have: how protected is it?

[Don Davies, NDP, Vancouver Kingsway, BC]

So not in your industry; we've heard about Montreal smoked meat, Atlantic salmon, Saskatoon berries. There are a number of GIs in Canada.

I want to ask about TPP, because here's the thing. One of the three pillars, I understand, of supply management is import controls. Now, this government has taken the 4% tariff rate quota on cheeses and they've extended that to 8%. We're currently negotiating TPP. We're negotiating with India, Japan; Korea is stalled at the moment, we'll get that opened; the Pacific Alliance.

Do you have any concern that by opening up this tariff rate quota from 4% to 8% this is where it will end, or do you have concerns that this is just a gradual opening of the wedge when it comes to foreign access to our cheese market?

[Wally Smith]

That's a really interesting question, and a hypothetical one, I would say, because obviously CETA has been taking our full energy and attention.

We are concerned about precedent in any deal. We have been saying for years that the government has concluded successfully 14, 16, or however many trade agreements, and exempted supply management—even in NAFTA, which is trumpeted as sort of a comparably sized deal to CETA, although CETA is supposed to be even bigger. Supply management had been exempted.

I think it's difficult to speculate on what comes next. In our view, it certainly does set a precedent.

I would be very interested to know what kind of answer you would get in the House of Commons if you posed that to the minister during question period.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thanks.

I know that in agriculture products there are a number of different phase-out periods for tariffs, including for milk protein concentrates. I know that there are three-, five-, and seven-year phase-out periods for tariffs on top of the three years' start. I know that for sugar, for instance, the tariffs won't be completely phased out for ten years. Why that's the case I don't know.

What is the phase-out period for the dairy industry, which I see as having to absorb quite a significant material shock to the producers in this country? Do you know what that period is?

[Wally Smith]

We don't know exactly what it is, but it should be no less than ten. Then again, is it a phase-in or phase-out? I refuse to consider the idea that supply management would be phased out under any way, shape, or form.

[Don Davies, NDP, Vancouver Kingsway, BC]

No, I meant the tariffs; I meant as the tariffs are reduced—

[The Chair, Conservative, Bev Shipley]

Your time is up.

[Don Davies, NDP, Vancouver Kingsway, BC]

Oh, I'm sorry.

[The Chair, Conservative, Bev Shipley]

Thank you, Mr. Davies.

Mr. Payne, you have five minutes, please.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Chair.

Thank you to the witnesses for coming.

I just wanted to say at the outset, Ms. Peters Morris, that one of my staff members loves your new cheeses.

I haven't had the opportunity to try them yet, so I'm hoping that you might—

[Margaret Peters Morris]

I brought some.

[LaVar Payne, Conservative, Medicine Hat, AB]

Oh, did you?