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Opinion

How Trump can make American dairy farmers ‘great again’

By Jim Creskey      

Milk marketing boards help to create little islands of middle-class prosperity in the countryside that spin off into other areas of stability.

If he wants to protect the U.S. dairy industry, Donald Trump might want to have a look at how Canada handles this sector, writes Jim Creskey. Photograph by Gage Skidmore
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Dairy farmers across the world are in crisis, in the United States, in Australia and New Zealand, and in Europe—almost everywhere except in Canada.

But urban pundits, especially those who believe that the free market solves everything, have a hard time understanding what’s actually going on in the countryside. Town and country can be very different places.

An old farmer walks into a rural branch of a co-op credit union, which is also the location for renewing Quebec’s provincial licence plates. The farmer asks for his new “N” plate, at the time the special designation the province gave to farmers. There was nothing special about it except that it was a bit cheaper than a regular plate.

The young manager of the credit union, a “Caisse Pop,” in common parlance, was city educated and efficiently up to date on the province’s new, stricter rules for identifying an official farmer.

“You must prove that you are a farmer,” said the manager. “Show me your UPA [Quebec farmers union] membership card and I’ll issue the plate. Other wise no ‘N’ plate.”

“Not a farmer?” said the farmer. “Look at my boots.”

And with the flexibility of a man 20 years younger, he hiked his cow-manure encrusted boot onto the white plastic covered counter top.

The entire room full of people, mostly men, who were also there to pick up their new licence plates, myself included, broke into laughter.

The Caisse Pop manager, now red faced but wise enough to recognize the reality of cow shit when he saw it across his counter, issued the old farmer his new plates.

Country life can be like that and all the information you learn in the city about how things should be done sometimes hits a wall. That’s the way I think it is about dairy farmers and free-market trade in milk.

Most of the developed world is awash in milk, flooding the market at prices so low that farmers are losing money on every litre they ship. In many countries, milking cows every morning and every night, seven days a week, 52 weeks a year, only gets a farm family deeper in debt.

The European Commission came up with a 500-million-euro (C$740-million) aid package for dairy farmers who were once protected by a quota system that was killed in 2015. The export market was expected to sustain them but, as is often the case, was overtaken by international politics and changing currency rates. It crashed and burned when Russian sanctions froze out the farmers’ significant Eastern milk and cheese sales.

Australian dairy farmers, who were going under in droves as milk prices sunk below the cost of water, were offered a government support program of $600-million (Australian dollars). The government subsidy offered farm families a basic household living allowance of $1,000 every two weeks. It also allocated $900,000 to offer counselling and mobile mental-health assistance.

In the U.S., dairy farmers receive direct government subsidies that regularly amount to 40 per cent of their annual income. The assistance programs have amounted to billions in recent years.

The popular Band-Aid solution for national governments has been to come up with massive bailouts and subsidies for milk producers. It hasn’t worked well and now even U.S. President Donald Trump has noticed. What to do?

A solution that requires no government subsidies of any kind was offered to President Trump last week in a letter sent to the White House by Jan Slomp, who is the president of Canada’s National Farmers Union.

“We would like to offer you the solution that was developed here with the wisdom, foresight, and determination of farmers and political leaders, and which has worked well for over 50 years,” wrote the Alberta dairy farmer, who is now setting up a new farm in British Colombia.

Slomp was talking about supply management, and he offered the president a simple explanation of how it works in Canada.

“Farmers receive a fair return for their labour, management and investment in return for controlling their volume of production; dairy processors receive a reliable supply of milk at predictable prices; consumers receive high quality, wholesome dairy products at reasonable prices and are never faced with shortages. The whole system runs without a penny of government subsidy payments.”

I don’t expect that the president will get around to reading Slump’s letter, but I do wish some of the Canadian commentators who think supply management has no place in a global economy would give it a second thought.

Milk that’s sometimes sold at bargain-basement prices from industrial cow farms and then subject to market flux that, at other times make it a scarcity, is a bad alternative to a managed system. It’s bad for consumers, it’s bad for farmers, and it’s bad for rural life.

There is a reason why European dairy farmers fire-hose sprayed a EU Parliament building in Brussels with milk. It was because the loss of their quota system was rapidly driving them into bankruptcy, and, in some cases, suicide.

“The shift away from national milk production quotas, a system that stabilized European market for decades, was supposed to allow farmers to turn gradually toward the open market and grow their businesses,” reported the European edition of Politico.

“Instead, they started producing oceans of milk, slashing prices and profit margins. The human toll has been severe: Thousands of farms have already closed across the bloc, and in France, campaigners say hundreds of farmers commit suicide every year.”

There is another part of the supply-management picture that gets little notice by those of us whose grasp of rural life rarely extends past a weekend at the cottage.

Milk marketing boards help to create little islands of middle-class prosperity in the countryside that spin off into other areas of stability. Secure farming families keep country and village communities from falling apart. But it’s painfully difficult for farmers who don’t have the benefit of something like Canada’s marketing boards to earn a fair wage.

By many accounts, Canadian dairy supply management is good, though not perfect. It could be tweaked, for example, to open opportunities to allow smaller craft dairies. It could also provide innovative ways for younger farmers to get a start and find safe ways for the sale of unpasteurized milk.

But compared to the nightmare that dairy farmers are facing outside of Canada, it’s about as good as it gets.

Jim Creskey is a publisher of The Hill Times.

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