Milk Producer - December 2009 - (Page 26)

ISSUESUPDATE By Sharon Laidlaw and Bill Dimmick Seven Issues Tariff wall protection: holding firm for now Although the threat of a tariff wall breach has diminished to some degree due to recovering world dairy prices, a lot of volatility remains. This volatility will continue, according to various world dairy market analysts. Two main factors affecting overquota tariffs are the strength of the Canadian dollar and world market prices. The loonie has been gaining ground on the U.S. dollar, and has been hovering well above the 90-cent mark. Declining world dairy prices and a strong Canadian dollar could threaten Canada’s tariff protection against imported dairy products. “With continued world price instability, there is potential for imports to have some impact on our markets and incomes even at current tariff levels,” says Rick Phillips, Dairy Farmers of Canada’s (DFC’s) director of policy and government relations. “This is the same reason why it’s imperative over-quota tariffs be maintained at currently negotiated levels during World Trade Organization negotiations to ensure the level of imports does not exceed the level of access offered through tariff-rate quotas.” Imports currently coming into Canada are brought in under: • tariff rate quotas (TRQ), within quota; • imported on lines that do not have tariffs, such as casein and food preparations containing high butterfat content, such as butteroil-sugar blends; • the import for re-export program. The last two categories of imports are not breaching the tariff wall, because they include products not currently covered by TRQs. Special safeguard measures (SSM) do not apply to them. “SSMs offer important protection for dairy products covered by a TRQ, but the measures have some limitations,” says Phillips. “It is a shortterm solution and only applies once significant imports have already taken place. It is a useful tool but it needs to be considered in a broader context.” DFC closely monitors dairy product and milk component imports for compliance with federal, provincial and territorial regulations related to composition, packaging, labelling, quality and safety. “If a product does not comply with one of these measures, DFC submits a complaint to the appropriate government department,” says Phillips. Promoting Canadian dairy products, so Canadian consumers can make informed decisions between imported and Canadian dairy products, is another strategy DFC is using to address the situation. Programs to stabilize producer incomes in other countries, such as business risk management programs, do not compare to the stability of a supply managed market, Phillips says. “None of these other programs provide producers adequate or stable income or pricing. That’s the benefit of supply management; it provides both,” he says. “Our supply managed system is the envy of the agricultural world. Those who have chosen to deregulate and rely on their co-operatives and government handouts are currently enduring financial hardship.” Pricing your milk: consensus emerging A general consensus has emerged that Canada’s industrial milk pricing mechanism needs to change, and low-key discussions continue about exactly what those changes should entail. 26 | December 2009 | MilkPRODUCER

Table of Contents for the Digital Edition of Milk Producer - December 2009

Milk Producer - December 2009
Contents
Editor's Notes
DFO Chair's Message
Dairy Update
Industry Roundup
DFC Promotion
Office Management
Seven Issues That Matter
Herd Health
Research
Applied Science
Ruminations
Markets
New 'N' Noted
Back Forty

Milk Producer - December 2009