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If NAFTA negotiators double the amount of US dairy farmers' access to the Canadian market, thousands of dairy farms are likely to disappear.
The pressure group advocating for Canadian dairy farmers and a food policy professor who advocates easing the reins of the industry are in agreement that if US access to more than 10% of the Canadian market is the key to NAFTA trading. there will be consequences.
But the question of whether this cost could be worthwhile is another question.
READ MORE: Could access to the dairy market be the "bargaining chip" that Canada needs to reach a new deal with NAFTA?
"Such a concession to our national market would result in the elimination of one-third of Canadian dairy farms in Ontario or Quebec," said Jacques Lefebvre, Chief Executive Officer of Dairy Farmers of Canada, in an e-mail to Global News.
In 2017, federal estimates put the number of dairy farms in Canada at 10,961.
A 2016 estimate put that number at 11,280.
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The majority of these farms are currently based in Ontario and Quebec: 3,617 and 5,368 respectively.
The loss of one-third of farms in Ontario would increase to 1,193, while it would be about 1,771 in Quebec.
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An estimate by Sylvain Charlebois, a professor at Rowe School of Business at Dalhousie University, specializing in food distribution and food policy, was more conservative but noted that more than a thousand farms could be lost.
"If we look at the 10% threshold, it's the 1,100 dairy farms in Canada that will disappear overnight," he said.
"If you allow an extra 10 percent, it puts more pressure."
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The question is what access would dairy farmers from outside the country have in Canada's tightly controlled domestic market and whether the increased competition that would result from increased access to these products would have a negative financial impact on domestic farmers? .
"These imported products replace Canadian products, so fewer Canadian dairy products are available to our Canadian consumers," said a Dairy Farmers of Canada press release on August 29th before bargaining resumed. 39; NAFTA.
According to current estimates, US dairy farmers have access to only about 5% of the market.
The industry is worth $ 21 billion in total.
READ MORE: Federal government gives $ 250 million boost to Canadian milk producers
US President Donald Trump has lobbied for US dairy farmers to have access to about 10 percent of the Canadian market.
That is what the Trans-Pacific Partnership foresaw, from which it withdrew the United States in 2016.
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Without the United States, the modified Global and Progressive Trans-Pacific Partnership (CPPP) provides access to only 3.25% of the Canadian market to the other 15 member states of the agreement.
The Free Trade Agreement, the free trade agreement between Canada and the European Union, provides access to three percent of the Canadian market.
As a result, the federal government has agreed to provide $ 250 million to Canadian farms under a new dairy farm investment program to help them adapt and become more competitive before foreign imports expected from Europe.
READ MORE: Canadian dairy Saputo criticizes supply management system, siding with US in ongoing dispute
Controls, including supply management and high tariffs on foreign imports, maintain control of the domestic market in the hands of Canadians.
Charlebois said gaining greater market access for foreign imports could be detrimental, but could also spur innovation in the sector.
"Currently, the sector is anything but competitive," he said. "I think it's time."
If additional subsidies are granted to Canadian dairy producers in the event of market access, Mr. Charlebois said there should be clear conditions to force the industry to become more competitive.
"Grants should be on the table with attached conditions and these chains should be innovation and competitiveness."
Prime Minister Justin Trudeau has repeatedly stated that he would defend the supply management system during negotiations, but did not specify the same levels of access – the inclusion of a dispute settlement mechanism Canada will not sign an agreement without.
Foreign Minister Chrystia Freeland remains in Washington to continue negotiations that resumed Wednesday.
She should speak with reporters late Thursday afternoon to review the discussions.
© 2018 Global News, a division of Corus Entertainment Inc.
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