We all have relatives or friends who live in some part of the USA. Just like many of my neighbours who now live in Canada when my ancestors came from different parts of Europe to North America, their families lived in what is now called the USA for generations before migrating to what is now Canada. We still see refugees trying to come north across the border legally or illegally.
The Free Trade Agreement (FTA) between the US and Canada was signed in 1989. It was replaced by the North American Free Trade Agreement (NAFTA) in 2004 when it included Canada, the US, and Mexico.
Countless debates and arguments have been held in board rooms, government buildings and on the street about gains and losses from both the FTA and NAFTA. From country to country, industry to industry and community to community we have seen both gains and losses.This time the renegotiation of NAFTA has made everyone concerned about the outcome.
When a trade war started in 2017 and both tariffs and embargos were placed on various products and goods by and to countries not even included in NAFTA, innocent consumers and taxpayers became financially hurt. Canada is the USA’s largest supplier of aluminum. It was one of the first products to be targeted when the USA placed a high tariff on aluminum. Many new US built cars and trucks now use aluminum in their construction to reduce weight. Beer cans are also made from Canadian aluminum and recently the price of US canned beer increased significantly.
When the USA targeted China with some restrictions, China immediately stopped buying soybeans from the US. This gigantic drop in US exports in soy lowered the price of soybeans by $2.20 per bushel. This was a terrible blow to the US grain farmer.
After the price of US soybeans dropped by $2.20 per bushel, China bought boatloads of these now bargain priced beans and filled up their grain storages.
By this time the US grain farmers were in financial distress and the US borrowed billions of dollars from China to bail out the US grain farmers. China has been a large financier of the USA for many years but now the US taxpayer has to pay interest on this last billion dollar bailout until they pay off the loan.
One of the present US president’s largest targets in the trade war has been the Canadian supply management system for marketing milk, poultry and eggs.
Canada’s supply management system of marketing has often been cited as the best system in the world. The free market system used in the USA for marketing dairy products has left them with the largest mountain of surplus cheese in history and much of it will rot before it is even used, given away, or rotated by cheese just produced.
The states of Wisconsin, Michigan and New York now produce more surplus milk each day than Canada’s most populated province Ontario can consume.
California is the USA’s largest dairy state. If we shot every milk cow in Canada, and gave 100 per cent of the Canadian dairy market to the US it would not solve their surplus milk situation!
Just last month, hundreds of US dairy farmers, milk co-ops and milk processors gathered in New York for a conference to put forward solutions to the enormous dairy surplus in the US where farmers are declaring bankruptcy on dairy farms that have been run by the same families for five and six generations. Suicide in the US dairy farming communities has been skyrocketing. This conference of dairy leaders from all over the US came up with the same proposals that Canadian dairy leaders did in Canada in the 1960s when Canada was dumping surplus dairy products and eggs in the ocean because of unregulated production.
Some of the suggestions presented were:
1. Introduce a floor price, like Canada’s cost of production formula;
2. Restrict production, like Canada’s Quota system;
3. Allow for farms to expand and bring in the next generation, like Canada’s supply management system does.
Some larger US dairy farms are losing more than $10,000 per day. An American dairy export agency has recently estimated that retaliatory tariffs on US dairy products exported to other countries in the world could cost the US more than 16 billion dollars.
Canada cannot solve all the problems our big neighbour to the south has but just like a little brother does to his unfortunate big brother, we can sympathize and offer ideas.
Chris Judd is a farmer in Clarendon
on land that has been in his family for generations.
gladcrest@gmail.com
