International Trade Committee on Feb. 24th, 2020

[Pierre Lampron]

It would be very important.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Perfect. Thank you, Mr. Lampron.

How much time do I have left, Madam Chair?

[The Chair, Liberal, Judy Sgro]

You still have two and a half minutes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

We still have plenty of time. We're going to have fun.

Given the planned elimination of what is called class 7 in the agreement, do you have a strategy to try to compensate for that or deal with that?

[Pierre Lampron]

In 2017, we found an innovative strategy to address dairy production issues with the government and dairy processors, our partners. Now we need to change our model. We have made proposals, but the solutions will have to come from the government. It is up to the government to respond to the abolition of class 7.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

You talked mostly about exports and supply management. Could you tell us a little bit more about the implications of that?

[Pierre Lampron]

As you know, American production is 15% higher than demand, and their objective is to sell their products on the foreign market. On our side, with supply management, our production is limited to the Canadian market. In the CUSMA, we are responding to the Americans' strategy. They want to have access to other markets and we have allowed them to sell their surplus production in Canada. That is what hurts. For our part, we are focused on Canadian production.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

It's an issue that has been going on for many years. In the beginning it was about diafiltered milk proteins, and the creation of class 7 was a bit of an answer to that. It was a way of dealing with that, because at the beginning, it was said that diafiltered milk was not real milk and therefore the law didn't apply. The creation of class 7 was a kind of compromise

[Pierre Lampron]

It was a way for dairy producers and processors to negotiate with the government to find a solution to the problems of product classification.

Mr. Lefebvre, is there anything you'd like to add on this subject?

[Jacques Lefebvre]

Yes. Thank you, Mr. Chair.

We created an innovation strategy with dairy processors, and the government was well aware of the creation of this strategy. In fact, we were encouraged to do so. However, that strategy was conceded in the agreement with the United States and Mexico, which leaves us in the lurch today. What is certain is that our room to manoeuvre has been reduced enormously and we will have to abide by the concessions that have been made by the government.

[The Chair, Liberal, Judy Sgro]

Mr. Blaikie.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

We have heard a few times in committee and even in the House of Commons that Canadians are paying more for their milk because of supply management. I think those were comments made by Mr. Arya. I was a little surprised, because the research says otherwise.

I wanted to give you an opportunity to talk to us about dairy price competitiveness in Canada.

[Pierre Lampron]

Thank you very much for your question.

The price of milk, if we take the same standards, that is, milk without somatotropin, is equivalent in Canada and the United States. In fact, over the past five or six years, the price of dairy products has increased by 2%, while the price of the grocery basket has increased more. Countries such as New Zealand have seen a $0.20 increase in recent years, which we have not seen in Canada. I don't know what you've heard, but by any standard, we're very competitive in terms of retail prices.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

We understand it's going to take a little while longer for this deal to go through committee and the House. After that, it has to go through the Senate. By the time it clears Parliament, it won't be that long before the May 1 deadline. It's our view the government should wait in order to make sure the dairy producers aren't needlessly affected.

If the implementation occurs prior to May 1, do you believe that government ought to account for that in the compensation package it creates for CUSMA?

[Jacques Lefebvre]

Yes, absolutely. Our hope is that the government.... We presume that CUSMA will be ratified. Assuming it is ratified, our expectation would be that compensation would be announced at that time and would include the impact of the caps on the exports.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

In terms of other administrative measures that might be taken to try to minimize the damage that is going to be done to Canada's dairy sector as a result of this deal, we understand that it matters whether the quota is allocated to retailers or to processors. I've spoken to folks from the dairy industry about how that's playing out under CETA, and I'm wondering if you guys have similar concerns and suggestions for how the quota under CUSMA ought to be allocated.

[Pierre Lampron]

Once again, thank you for raising this issue.

The position of our transformer colleagues is simple: it is the same as ours. If all the tariff quotas are to go to the processors to prevent the destruction of the market, they are the ones on the market.

There's a lot at stake. For example, when will these quotas apply during the year? We must not destroy the entire market, our products must be complementary to those already entering. Everything has to go to the processors.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Do you guys have a sense of how much should be allocated to processors over retailers, or do you think it's not really constructed to have that quota allocated to retailers at all?

[Pierre Lampron]

I believe 100% is to be allocated to the processors, people who are affected and who are in the marketplace. Our position is that these quotas really must go entirely to the processors.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

When we talk about the compensation package I have a further question. We've heard about compensation for producers and for processors. We've heard testimony at the committee that suggests that, as part of the package, there should also be some compensation for workers who are affected, whether it's pension bridging or training dollars to help them transition into other industries.

I'm wondering if the Dairy Farmers of Canada has a position on whether those interests ought to be included in the compensation package.

[Pierre Lampron]

Of course we have no objection if people feel affected by such a situation. At the moment, we do not have a firm position on this.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

[Pierre Lampron]

If people are being affected, we can't object.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will move to Mr. Carrie.