I have often asked the question, I wonder how Canadian dairy farmers might like selling milk like I sell corn? Of course, instead of corn you could put soybeans or wheat or any other type of grain in that sentence. Simply put, its preposterous to many in the Canadian dairy industry. I have posed that question in the past but it seems this week with dairy farmers on the move, it is getting a whole new meaning.
For those of you who don’t know, Eastern Ontario and Quebec dairy farmers were on the move this week protesting in front of Parliament Hill as well as the border between the US and Québec. I must say it brought back some memories when I saw some Eastern Ontario dairy farmers lining up tractors on the main street in front of Parliament Hill. Then I saw live dairy cattle walking around on the streets amid protest signs. These farmers, whether they were from Eastern Ontario or Québec are doers. They see their industry in trouble and they captured much media attention this past week as the Trans Pacific Partnership (TPP) continues to be negotiated in Atlanta Georgia.
It is an interesting paradox in Canadian agriculture regarding the TPP. Many farmers mainly in Western Canada are from the school of free markets and are looking toward a conservative Prime Minister’s emphasis on the TPP with anticipation. On the other hand, supply management farmers in Eastern Canada are looking at the TPP as a political exercise to erode their industry. Many people in the supply management industry are making the implication that this trade agreement will compromise much of the basis of their industry. So you have some farmers vehemently supporting the agreement and other farmers in Eastern Canada very much against it.
You would think that this would be politically unpalatable for any Canadian Prime Minister. However, remember this is Canada and there are big differences between regions. The Canadian Shield and coniferous forest might form the boundary between Western Canada and Ontario and Québec, but it also represents a cultural border where people think differently. Our Agriculture minister Gerry Ritz has always preached marketing freedom for Western Canadian farmers, but he says no such thing in Eastern Canada. This is normal. However, many people especially in urban areas don’t think it makes any sense and so the threat of supply management being irrevocably changed, is frightening people. It has led to protests in the streets.
Things are somewhat complicated because of the federal election, which is going into the home stretch. I came to the conclusion this past week that maybe we should take Prime Minister Harper at his word. He said he is going to be defending supply management and maybe for the moment we should leave it as that. However, that did not deter Agriculture Minister Gerry Ritz, who openly complained that many Canadian media outlets like the CBC were undermining the negotiation effort in Atlanta because of their constant mention of losing supply management.
So it is a big issue, but let’s get back to selling milk like corn or soybeans. I got a message the other day on Twitter from a young producer in the supply-managed sector. He wondered why the basis for soybeans was so high in Ontario, currently at about $2.25 a bushel positive. I was somewhat amazed with his question and I replied back that it had everything to do with the 74-.75 loonie. He went on to say that the low loonie is “saving us”, but of course American farm equipment is very expensive. I replied back that maybe instead of saving us it was fooling us. With the American US soybean basis at -55 cents, that foreign exchange is giving us a false sense of security.
Of course, that’s all old news to those of you who read my grain analysis on a weekly basis. However, when it comes to the demise of supply management and possibly selling milk like we do grain, it was completely obvious my young friend wasn’t part of that world. He surely wouldn’t want to get started using milk futures and basis, etc. etc.
Will that be the road ahead, pricing Canadian milk and poultry products like I price corn and soybeans? Oh, I hope not, because dairy and poultry producers have fought forever to sustain their system. However, there are lots of others, even among Canadian farmers who think that would be a great idea. This next week we may find out. Agreement on the TPP might break this election open. With some Canadian farmers protesting in the streets, its being taken very seriously.