Western farmers worry they'll pay the price of saving supply management under NAFTA

Kevin Auch has been putting in long hours on his southern Alberta farm harvesting durum wheat — and also fretting about distant trade negotiations that may affect the price.

He wasn’t pleased, earlier this week, when Canada’s foreign affairs minister vowed to defend supply management on Canadian farms in the NAFTA negotiations just getting underway.

The system of controlled production and price protection doesn’t directly affect wheat farmers. But Auch, who is also chairman of the Alberta Wheat Commission, wonders who will pay the price of shielding supply management from competition.

“It seems like the government is overly concerned with this one sector of agriculture, and we [in grains] are part of the other 90 per cent of agriculture. We just want to make sure that the government doesn’t put that other 90 per cent at risk, to preserve that 10 per cent that’s involved in supply management.”

Auch recalls tariffs on wheat before NAFTA. What might the Canadian government be prepared to cede, he wonders, if it’s protecting the supply-managed sectors so tightly.

Earlier in the summer the Alberta Wheat Commission included these concerns in a formal submission to the federal government.

Barley growers made a similar point.

“We recognize that negotiations are a process of give and take,” said Jason Lenz, chairman of the Alberta Barley Commission, which made a joint submission to the government with the Barley Council of Canada. 

“If the Americans give us supply management, and allow Canada to protect areas like dairy, what are they going to take?” he asks. “That is what our submission asks negotiators to be mindful of. We want to make sure there are no unintended consequences.”

On Wednesday, Canada, the U.S. and Mexico began renegotiating the 23-year-old North American Free Trade Agreement. U.S. President Donald Trump instigated the talks, vowing to wrest a better deal for his country.

Protected farmers

Supply management affects only the dairy, egg and poultry industries in Canada.

Production quotas are set for Canadian farmers in those sectors, to manipulate prices; hefty tariffs, in some cases several hundred per cent, are levied on imports.

A field of canola ripens near Cremona, Alta. Wheat, canola and other crops get far less attention than the dairy industry, which is protected by supply management policies.

While the system reaches across the country, the overwhelming majority of farmers within the supply-managed system are in Ontario and Quebec. In dairy, the most valuable supply-managed sector, fully two-thirds of production is in those two provinces.

By contrast, concern that the defence of supply management will cost other sectors is most evident across the Prairies and centred in Alberta.

However, not all farm groups are worried. A spokesperson for the Pork Council said the issue is not nettlesome for hog farmers.

And other groups have been careful to articulate to the government only their own aims in the NAFTA talks. “We have not commented on other sectors,” a spokesperson for Soy Canada said.

Grounds for concern

But many analysts say the worry that protecting supply management will come at a cost to Canada, and potentially to other farm groups, is reasonable.

“Yes, it is likely other Canadian farmers will pay the price,” said Alexandre Moreau, public policy analyst at the Montreal Economic Institute. “Trump has promised increased market access to U.S. dairy farmers, he has directly taken aim at Canada’s supply management.… this is about politics, if he can’t deliver that [increased access to the Canadian dairy market] then he is going to need some other victory.”

Moreau said it is also possible the Americans would seek trade-off concessions from unrelated industries. “The price could be paid by the U.S. retaining buy-American provisions, [whereby government projects can favour domestic suppliers] it could be paid by the auto sector,” he said.

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