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Canada's dairy sector worried Trump is trying to wipe them out

Dairy cows stand in a field near Stayner, Ontario, Canada, July 26, 2015. (REUTERS/Chris Helgren/File Photo)

Canada’s dairy producers and processors are anxiously waiting to see the results of the latest trade standoff, at a time when the industry is seeing some real success.

Months of NAFTA negotiations reached an even more tense point this week as U.S. President Donald Trump accused Canadian Prime Minister Justin Trudeau of being disingenuous at G7 talks.

The dairy industry — Canada’s versus America’s — has been in front of mind for the U.S. president, as highlighted by a tweet last weekend.

But according to Derek Holt, vice-president of Scotiabank Economics, the tweet isn’t entirely accurate.

“Trump is quoting a figure that applies to milk that accounts for a tiny fraction of Canada’s $33 billion of goods imported from the United States each month,” Holt said to CBC. “Better judgment would question whether an entire trading relationship needs to be jeopardized in order to appeal to dairy farmers in Wisconsin.”

But both Canadian dairy farmers and dairy processors are uneasy about the current state of affairs, concerned how the outcome will affect the massive Canadian dairy industry.

Mathieu Frigon, President and CEO of the Dairy Processors Association of Canada, says the tenuous nature of the current trade agreements come at a banner time for the industry.

“The dairy industry [in Canada] has been a success story in the last three years. We’ve grown our contribution to the Canadian GDP by ten per cent in the span of two years. That’s unheard of,” Frigon told Yahoo Canada Finance. “If you look in the last 25 years, there’s been a real taste from Canadian consumers for dairy and dairy products.”

Yet even with strong sales (it is a $15.2 billion industry, after all), Canada is facing some unique challenges which could hamper its continued prosperity.

“It’s been exciting times in terms of the growth we’ve seen in the marketplace, but it came with challenges,” said Frigon. “NAFTA 2.0 is obviously a challenge. Our position is that it should allow for continued growth of the Canadian dairy industry. It would have a positive impact on the sector, not only processing industry but the entire sector.”

The issue is highlighted further in comments made by to The Canadian Press by Pierre Lampron, President of the Dairy Farmers of Canada. “Canadian dairy farmers and their families are concerned by the sustained attacks by President Trump with an aim to wiping out dairy farmers here at home,” Lampron said.

The protection of the dairy sector remains highly contentious; U.S. farmers claim that the Canadian industry has been heavily protected from global competition thus far, and is even undermining other country’s dairy exports on certain products.

“They have decided to go significantly into the export market by undercutting the world price for milk powder,” U.S. Dairy Export Council Chief Executive Tom Vilsack told Reuters. He says that Canada can’t have a protected system and compete at a global level.

Nevertheless, Frigon says that Canadian farmers and processors are likely to be hurt if protections aren’t maintained.

“Every time we give access to our Canadian market, it hurts,” said Frigon. “Our members make an investment, like knowing the environment, develop markets, and it’s not only processors, dairy farmers invest a tremendous amount of money to promote dairy products, we all invest.

“When access is granted … it creates issues for us. Suddenly investments that were made in the past we don’t see the positive outcome.”

As NAFTA talks continue, Frigon says he and the rest of the dairy industry are looking for an outcome that continues to support the Canadian dairy producers and processors, and doesn’t hamper Canada’s second-largest food manufacturing industry.

“Our approach isn’t on the specifics, it’s about what the outcome should be overall,” said Frigon. “And the outcome should allow for the continued growth of the Canadian dairy industry.

“Any outcome that would mean we accept that the industry will shrink would not be acceptable.”

(With files from The Canadian Press)

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