Price vs Value.. An example of the difference

 The Toronto Star, a generally progressive newspaper, has jumped on the anti supply management bandwagon.  Here's their take and a recent column I wrote for the Island farmer. This is one fight I won't give up, and gives me another chance to take a swipe at Walmart.

Angry about bread prices? Save some for supply management

• By Star Editorial Board, www.thestar.com
• December 20th, 2017

This costs the average Canadian consumer a lot. In 2014 the Conference Board of Canada estimated that higher prices for dairy products (milk, cheese, yogurt and so on) alone cost the average family $276 a year.
Another study in the journal Canadian Public Policy put the cost of all supply management policies at an average of $444 per family per year. That adds up to an awful lot. The OECD at one point estimated that supply management cost Canadian consumers a staggering $2.6 billion a year.
All these figures, of course, are sharply contested by the dairy and poultry industries, which profit hugely from existing policies. And it’s perfectly reasonable to defend supply management if you value keeping dairy and poultry farmers prosperous and stable and don’t mind putting the cost of that onto consumers.
Others argue that Canada should value “food security” over having the lowest possible consumer prices. And, even with supply management in place, food is cheaper in this country relative to average earnings than almost anywhere else in the world.
What’s harder to argue is that collusion on the price of some bread products on a scale that can be compensated for by a $25 gift card merits special public outrage while official policy dictates that Canadian consumers must pay far, far more than they need to for other basic foodstuffs.
To be clear, price-fixing on bread is illegal and wrong. But anyone angered by those revelations should bottle that feeling and direct it where it would count a lot more: against Canada’s consumer-unfriendly policies that hike the prices families must pay for milk, cheese, chicken and eggs.

From the Island Farmer


Unintended Consequences

We live in a time when most of us have easy access to endless amounts of information. We have to be smart about what to believe, but anyone with an even remote interest in economics and trade must remember the role our pals at Walmart played to shift production of consumer products from the United States to China during the 1980’s.  I haven’t read one word in the media about this drive to ensure low prices for consumers being at the heart of the huge trade imbalance  between the two countries, close to $350 Billion last year.  President Trump says China outsmarted the U.S., and he’s going to change that.  I’d argue the U.S. went into this relationship with its eyes wide open.

Walmart has done a lot of good work recently to upgrade its own environmental standards and those of its suppliers including companies in China.  However that doesn’t take away from Walmart’s direct involvement in U.S. job losses over the last twenty years, jobs President Trump says he’s going to get back. Good luck with that. 

This started with Sam Walton’s insistence on the lowest possible price for consumers, always.   Even when the company went on a well publicized “Buy American” campaign in the 1990’s (and set-up a wholly owned buying agent to continue overseas purchases)  it wanted U.S. producers to match Chinese prices, forcing even more out of business.  Sam Walton himself wrote in 1992 "We're not interested in charity here, we don't believe in subsidizing substandard work or inefficiency…"   Of course other big retailers followed suit, and the results are predictable.   A recent report  (http://www.epi.org/publication/the-wal-mart-effect/ )  pegs job losses caused by Walmart on its own at 400,000 between 2001-2013.   Throw in other retailers and the numbers climb.  According to the article: “The growing goods trade deficit with China displaced 3.2 million U.S. jobs in the United States between 2001 and 2013, and it has been a prime contributor to the crisis in manufacturing employment over the past 15 years.”    These displaced workers  were a big reason Trump was elected a year ago with his promise to “Make America Great Again.” 

I’m not on an anti-globalization rant here.  I accept that trade between countries with structural or climate differences can benefit buyers and sellers, and lift people out of poverty.  I’m trying to get back to the origins of the unintended consequences of this particular trade mis-match: Sam Walton’s determination that nothing else matters but delivering the cheapest goods to consumers. 

You can see where this is going.   Did you see these recent headlines:  “Supply Management is literally driving tens of thousands of Canadians into poverty” in the Financial Post, or “You’re Paying Too Much for Milk” in the Walrus, and there were many more.   After calling for an end to supply management what follows is advice like this from the usually very smart journalist David Akin  “… done right it would make dairy farmers even more prosperous because they could sell their wonderful product to the world.”

Well yes they could if there were markets in a world awash with surplus milk and dairy products, and more importantly willing to sell at the “world” price.  What Akin and others refuse to understand, much like Sam Walton, are the unintended consequences of always chasing cheaper.  When it comes to farming it goes beyond lost jobs to its severe  impact on the environment.  Just last week the Economist, hardly a radical publication, had this headline “Dairy Farming Polluting New Zealand Water.”   It outlines what happens as dairy farmers there try to produce milk at the low price needed to keep New Zealand an export powerhouse, the competition Canada would run into at every turn.  Intensive dairy farming has led to groundwater polluted with nitrates, and waterways full of algae and dangerous bacteria. From the article  “In Canterbury, one of the most polluted areas, expectant mothers are told to test tap water to avoid “blue baby syndrome”, a potentially fatal ailment thought to be caused by nitrates. The poisonous blooms have killed dogs.”

I can remember doing a  story on a dairy farm next to the Hillsborough River. The farmer worked with Ducks Unlimited to build a pond full of cattails to capture run-off from fields and the milk house before they get to the river. The farmer said the steady income he had from supply management allowed him to do this.  It reminds me now of the importance of the old Oscar Wilde quote:  “What is a cynic. Someone who knows the price of everything, and the value of nothing.”  Let’s stop being cynical about supply management, and recognize its value.

Time to Talk About Debt

This is from a column I wrote for the Island Farmer.

Debt is something most Canadians now accept as almost essential to getting by.  Many economists worry that record levels of household debt will be unsustainable as interest rates rise,  as expected.  What about farmers?  They’re clearly on the same path.  A recent headline  “Canadian Farmers Held Record Amount of Debt in 2016” received virtually no attention.  I think it matters.

I’m no puritan when it comes to debt. I’ve never forgotten reading John Kenneth Galbraith at university on the Great Depression. He wrote that there were excellent carpenters who needed work,  lumber, hammers and nails, people who desperately needed homes. What was missing was the capital required to finance building, and governments and banks were just too  stubborn to make it available.  Galbraith says the misery and suffering caused by this was unforgiveable.   Galbraith’s professional career took him to a number of top economic and diplomatic posts in the United States, but his roots gave him, in my opinion, an extraordinary amount of common sense.  He grew up on a farm in Iona Station, Ontario, and often said the long days and hard work of farming made everything else seem easy.

So let’s try to bring some common sense to farm debt.  The amount of money is one thing, $90.8 Billion nationally in 2016  (not including household debt like home mortgages and car loans), up 7.5% from the year before.  What’s more troubling  is that collectively debt levels continue to rise year after year.  Put differently, debt has not been paid down since 1993, despite what Statistics Canada has reported as some very good years for farmers.   On PEI some debt was paid down in 2012, but since then debt levels have gone up by $150 Million to more than it’s ever been,  $783 Million in 2016.  Loans from provincial agencies are also at record levels, up to almost $48 Million. What’s more worrying here was the increase last year in what’s called “trade credit’, up 16%.  Farmers use it when they can’t borrow any more from traditional lenders like banks. It can sometimes come from friends or family, but most often from suppliers or buyers.   The down side for farmers is that they lose control over where they’ll sell their crop,  and at what price. It’s virtually pledged to whoever supplied the credit, and dealers and processors can take advantage of this.  It keeps farmers in financial trouble in business for one more year,  one more roll of the dice, but a price is paid by the loss of control.   

Debt obviously isn’t always bad.  Money can be borrowed to buy more land or farm machinery, construct new buildings,  all can make a farm more productive. What I’ve seen over the years however is that farmers are continually chasing the market, which is always demanding lower prices, even as costs go up.  If the margins keep shrinking  then more volume can look like a solution. Until it isn’t, especially if other farmers are on the same track and markets become over supplied.  So yes borrowing can make a farm more efficient but not necessarily more profitable. What we do know is that the pressure on farmers to be more productive is relentless.

I’m certainly not saying that every farm is losing money every year. The smartest thing I was ever told about farm finances is that one third of farmers are making money, and another third are losing, all because of good luck and market conditions elsewhere. It’s the middle third you have to pay attention to. I’ve called them the solid family farmers, the ones who don’t brag or complain.  What I do hear from those willing to share  is that they’re treading water at best, or slowly eating into their equity year by year at worst, not enough to alarm their creditors,  but enough that the future looks uncertain. 

Equity is the final piece of the debt puzzle that looks worrying. Land and building values have been going up steadily,  10.9%  a year nationally for the last 4 years, but Farm Credit  is predicting just 4% growth this year, and 1% next.  PEI farmers have benefited (or been hurt if a farmer is looking to buy land) by farm purchases by Taiwanese monks, and Amish families from Ontario. 

Then there’s this.   A Farm Credit  economist  Craig Klemmer uses something he calls liquidity to measure the financial health of farmers. It’s the ratio of current assets to liabilities, and it determines the ability of farms to weather setbacks like poor harvests, or very low prices.  Grain, oilseed and poultry operations have the best liquidity numbers. The worst? Potatoes and dairy, two of the most important commodities on PEI.  Klemmer says the low number for dairy isn’t a problem because of “continuous production and predictable cash flows.”    He indicates about a third of potato producers nationally are on very poor footing financially, and that’s clearly not good for PEI.  I do worry many potato producers here feel boxed in by debt.    

But perhaps John Kenneth Galbraith can cheer us up a bit with one of his famous comments:  “The only function of economic forecasting is to make astrology look respectable.”  Maybe everything will work out. Maybe.

Monsanto Creating Its Own Myths

Monsanto calls  it myth busting.  I think there's another term for it.  Here's what the company says:


Busting 3 Common Myths About Weed Resistance
  
Weed control has always been a critical challenge for farmers, and herbicides are an important weed control tool. However, changes can occur in response to herbicide use and other management decisions. Changes in weed populations begin when a small number of plants within a species, called a "biotype," have a distinct genetic makeup that allows them to tolerate a particular herbicide application. Multiple weed biotypes can exist in a single field.
This myth-busting list debunks three common misconceptions about herbicide resistance.
MYTH 1: Overuse of glyphosate causes weed resistance.
BUSTED: According to the Weed Science Society of America (WSSA), the first reports of weed resistance occurred back in the 1950s. To date, there has been no evidence of glyphosate (or any other active ingredient) causing herbicide-induced mutation in any plant species. That is to say herbicides did not and do not cause resistance. Herbicide resistance is actually the plant's naturally inherited ability to survive and reproduce after exposure to what is considered to be a lethal dose of chemicals.
As a farmer continues to use a particular herbicide without any other herbicide modes of action, or doesn't use any other cultural practices (tillage, crop rotation, etc.), the resistant biotypes continues to survive and produce seed. Subsequent populations of the resistant biotype will continue to increase until they are the dominant weed in the field.
Common factors that are often present in areas where glyphosate resistance has developed are:
    •    Limited or no crop rotation
    •    Limited or no tillage practices
    •    Use of glyphosate alone or limited use of other actives
    •    Reduced or “cut” rates of glyphosate
Particular weed characteristics that can facilitate development of herbicide resistance include:
    •    Large amount of seeds produced per plant
    •    High level of germination of those seeds
    •    Several weed flushes per season
    •    High frequency of resistant genes

The best way to keep glyphosate powerful is to use it effectively. That mean including an effective tank-mix partner once per growing season and using a diverse crop rotation on your farm.

MYTH 2: Harsh residual chemicals are being used to control glyphosate resistant weeds.
BUSTED: All herbicides have to undergo the same testing and must meet the same health, safety and environmental standards.
Many farmers have grown accustomed to the convenience and effectiveness of using glyphosate alone. The best way to preserve its long-term effectiveness on weeds is to bring in other herbicide modes of action to support it. These complementary herbicides used with glyphosate are not “harsher”; they simply interact with the target weeds differently. They have met the same regulatory standards and have been through the same thorough health, safety and environmental evaluations as glyphosate.
MYTH 3: Herbicides are the solution to all our weed control problems.
BUSTED: Spraying alone is not enough – experts agree that herbicides are important, but other practices should also be implemented.
A successful Integrated Weed Management strategy includes agronomic best practices to limit the introduction and spread of weeds, including:
    •    Crop rotations
    •    Periodic tillage
    •    Seeding rates to promote crop competition
    •    Planting certified seed
    •    Cleaning equipment to minimize spread of weeds
Benefits of residuals:
Tank mixing with a herbicide that offers lasting residual effects is an added benefit of keeping fields cleaner, longer. Products like Monsanto’s Roundup Ready 2 Xtend™ soybeans are tolerant to both glyphosate and dicamba, allowing for the use of multiple modes of action and residual weed control.
Herbicides by the numbers
    •    Herbicide modes of action found to date: 20
    •    Most recent discovery of new herbicide: 80’s
    •    Anticipated time until discovery of new herbicide: 10+ years

Sources:
Weed Science Society of America. Weed Myths. (verified 04/12/14) http://wssa.net/
Ross, M. Childs, D. Herbicide Mode-of-Action Summary. Department of Botany and Plant Pathology. Purdue University Cooperative Extension Services. (verified 04/12/14)https://www.extension.purdue.edu/
 ______________________________________________________________________________

No one that I've read who's been critical of Monsanto's profitable adventures selling both "Round-up Ready" seeds (soybean, corn, etc.), and glyphosate herbicide (Round-up), has ever implied that glyphosate on its own has created resistance in weeds. It's HOW it's used, and simple biology that's led to resistant weeds. 

Developing commercial GMO "Round-up Ready" crops that can survive glyphosate allows farmers to blanket spray tens of millions of acres every season, vastly increasing the biological certainty  of  "a small number of plants within a species, called a "biotype," have a distinct genetic makeup that allows them to tolerate a particular herbicide".   In other words it's the combination of the two (GMO seeds, and use of Round-up, both profit centres for Monsanto)  that's created the problem.  Rolling dice a hundred times and the chance of snake-eyes is slim. Roll them millions of times and the chances get much better.

Some of the most critical comments have come from scientists not worried  about the use or safety of glyphosate, but that it's usefulness will disappear because of  widespread use of Round-up Ready crops. That's on top of the growing concern about glyphosate's possible link to cancer.

There's lots to worry about and question when it comes to glyphosate, but this issue of weed resistance is the most serious legal and technical issue. Monsanto is very clear in its submissions to have Round-up Ready crops approved that resistance wouldn't be a problem. It is.  If the cancer lawsuits weren't underway I suspect this would be the basis of more legal action.

Then there's the question of the newer herbicides needed  to replace glyphosate. One is called dicamba. A recent article in the Washington Post reported that spray drift from dicamba onto crops that have no resistance is a serious and growing problem. 





The genie is out of the bottle I know, but let's at least speak honestly about these things.









https://www.washingtonpost.com/business/economy/this-miracle-weed-killer-was-supposed-to-save-farms-instead-its-devastating-them/2017/08/29/33a21a56-88e3-11e7-961d-2f373b3977ee_story.html?utm_term=.0c50f83731d9

This miracle weed killer was supposed to save farms. Instead, it’s devastating them.

• By Caitlin Dewey, www.washingtonpost.com
• August 29th, 2017

Lyle Hadden, a soybean farmer, walks through a field he's planted that shows signs of being affected by the herbicide dicamba. Photo by: Andrea Morales/For The Washington Post

BLYTHEVILLE, ARK. — Clay Mayes slams on the brakes of his Chevy Silverado and jumps out with the engine running, yelling at a dogwood by the side of the dirt road as if it had said something insulting.
Its leaves curl downward and in on themselves like tiny, broken umbrellas. It’s the telltale mark of inadvertent exposure to a controversial herbicide called dicamba.
“This is crazy. Crazy!” shouts Mayes, a farm manager, gesticulating toward the shriveled canopy off Highway 61. “I just think if this keeps going on . . .”
“Everything’ll be dead,” says Brian Smith, his passenger.
The damage here in northeast Arkansas and across the Midwest — sickly soybeans, trees and other crops — has become emblematic of a deepening crisis in American agriculture.
Farmers are locked in an arms race between ever-stronger weeds and ever-stronger weed killers.
The dicamba system, approved for use for the first time this spring, was supposed to break the cycle and guarantee weed control in soybeans and cotton. The herbicide — used in combination with a genetically modified dicamba-resistant soybean — promises better control of unwanted plants such as pigweed, which has become resistant to common weed killers.
The problem, farmers and weed scientists say, is that dicamba has drifted from the fields where it was sprayed, damaging millions of acres of unprotected soybeans and other crops in what some are calling a man-made disaster. Critics say that the herbicide was approved by federal officials without enough data, particularly on the critical question of whether it could drift off target.
Government officials and manufacturers Monsanto and BASF deny the charge, saying the system worked as Congress designed it.

Leaves and a stalk from a soybean plant showing signs of being affected by dicamba. Photo by: Andrea Morales/For The Washington Post

The backlash against dicamba has spurred lawsuits, state and federal investigations, and one argument that ended in a farmer’s shooting death and related murder charges.
“This should be a wake-up call,” said David Mortensen, a weed scientist at Pennsylvania State University.
Herbicide-resistant weeds are thought to cost U.S. agriculture millions of dollars per year in lost crops.
After the Environmental Protection Agency approved the updated formulation of the herbicide for use this spring and summer, farmers across the country planted more than 20 million acres of dicamba-resistant soybeans, according to Monsanto.
But as dicamba use has increased, so too have reports that it “volatilizes,” or re-vaporizes and travels to other fields. That harms nearby trees, such as the dogwood outside Blytheville, as well as nonresistant soybeans, fruits and vegetables, and plants used as habitats by bees and other pollinators.
According to a 2004 assessment, dicamba is 75 to 400 times more dangerous to off-target plants than the common weed killer glyphosate, even at very low doses. It is particularly toxic to soybeans — the very crop it was designed to protect — that haven’t been modified for resistance.
Kevin Bradley, a University of Missouri researcher, estimates that more than 3.1 million acres of soybeans have been damaged by dicamba in at least 16 states, including major producers such as Iowa, Illinois and Minnesota. That figure is probably low, according to researchers, and it represents almost 4 percent of all U.S. soybean acres.
“It’s really hard to get a handle on how widespread the damage is,” said Bob Hartzler, a professor of agronomy at Iowa State University. “But I’ve come to the conclusion that [dicamba] is not manageable.”

[Forget GMOs. The next big battle is over genetically edited foods.]

The dicamba crisis comes on top of lower-than-forecast soybean prices and 14 straight quarters of declining farm income. The pressures on farmers are intense.
One Arkansas man is facing murder charges after he shot a farmer who had come to confront him about dicamba drift, according to law enforcement officials.
Thirty minutes down the road, Arkansas farmer Wally Smith is unsure how much more he can take.
Smith’s farm employs five people — including his son, Hughes, his nephew, Brian, and the farm manager, Mayes. None of the men are quite sure what else they’d do for work in this corner of Mississippi County.
Dicamba has hit the Blytheville — pronounced “Bly-vul” — region hard. For miles in any direction out of town, the soybeans that stretch from the road to the distant tree line are curled and stunted. A nearby organic farm suspended its summer sales after finding dicamba contamination in its produce.

Eddie Dunigan, Photo by: center

At the Smiths’ farm, several thousand acres of soybeans are growing too slowly because of dicamba, representing losses on a $2 million investment.
“This is a fact,” the elder Smith said. “If the yield goes down, we’ll be out of business.”
The new formulations of dicamba were approved on the promise that they were less risky and volatile than earlier versions.
Critics say that the approval process proceeded without adequate data and under enormous pressure from state agriculture departments, industry groups and farmers associations. Those groups said that farmers desperately needed the new herbicide to control glyphosate-resistant weeds, which can take over fields and deprive soybeans of sunlight and nutrients.
Such weeds have grown stronger and more numerous over the past 20 years — a result of herbicide overuse. By spraying so much glyphosate, farmers inadvertently caused weeds to evolve resistant traits more quickly.

The new dicamba formulations were supposed to attack those resistant weeds without floating to other fields.
But during a July 29 call with EPA officials, a dozen state weed scientists expressed unanimous concern that dicamba is more volatile than manufacturers have indicated, according to several scientists on the call. Field tests by researchers at the Universities of Missouri, Tennessee and Arkansas have since found that the new dicamba herbicides can volatilize and float to other fields as long as 72 hours after application.
Regulators did not have access to much of this data. Although Monsanto and BASF submitted hundreds of studies to the EPA, only a handful of reports considered volatility in a real-world field setting, as opposed to a greenhouse or a lab, according to regulatory filings. Under EPA rules, manufacturers are responsible for funding and conducting the safety tests the agency uses to evaluate products.

Pigweed, a highly competitive plant that grows in cotton and soybean fields and has developed resistance to some pesticides, grows tall over soybean fields weakened by nearby dicamba use. Photo by: Andrea Morales/For The Washington Post

And although pesticide-makers often supply new products to university researchers to conduct field tests in varied environments, Monsanto acknowledged it did not allow that testing on its commercialized dicamba because it did not want to delay registration, and scientists said BASF limited it.
Frustrated scientists say that allowed chemical companies to cherry-pick the data available to regulators.
“Monsanto in particular did very little volatility field work,” said Jason Norsworthy, an agronomy professor at the University of Arkansas who was denied access to test the volatility of Monsanto’s product.
The EPA and chemical manufacturers deny that there was anything amiss in the dicamba approval process.
“The applicant for registration is required to submit the required data to support registration,” the agency said in a statement. “Congress placed this obligation on the pesticide manufacturer rather than requiring others to develop and fund such data development.”

[Trump’s FDA just took another swipe at Michelle Obama’s food legacy]

Manufacturers say that volatility is not to blame. In a statement, BASF spokeswoman Odessa Patricia Hines said the company brought its dicamba product to market “after years of research, farm trials and reviews by universities and regulatory authorities.”
Scott Partridge, Monsanto’s vice president of global strategy, thinks some farmers have illegally sprayed older, more volatile dicamba formulations or used the herbicide with the wrong equipment.
The company, which last year approved $1 billion investment in its dicamba production plant over the next three years, has deployed a fleet of agronomists and climate scientists to figure out what went wrong.
“We’re visiting every grower and every field,” Partridge said. “If there are improvements that can be made to this product, we’re going to do it.”
Regulators in the most-affected states are also taking action. In July, Arkansas banned spraying for the remainder of the season and raised the penalties on illegal applications.
Missouri and Tennessee have tightened their rules on dicamba use, while nearly a dozen states have complained to the EPA.
The agency signaled in early August that it might consider taking the new dicamba herbicides off the market, according to several scientists who spoke to regulators.
The agency would not comment directly on its plans. “EPA is very concerned about the recent reports of crop damage related to the use of dicamba in Arkansas and elsewhere,” an agency representative said.
Meanwhile, a class-action lawsuit alleges that dicamba manufacturers misrepresented the risk of their products. The Smiths are considering signing up. Monsanto says the suit is baseless.
There are also early indications that dicamba may not work for long. Researchers have shown that pigweed can develop dicamba resistance within as few as three years. Suspected instances of dicamba-resistant pigweed have been found in Tennessee and Arkansas.
A spokeswoman for Monsanto said the company was “not aware of any confirmed instances of pigweed resistance” to dicamba.

Soybean farmer Brad Rose's truck kicks up dust while heading down a road near his farm. Photo by: Andrea Morales/For The Washington Post

Some critics of chemical-intensive agriculture have begun to see the crisis as a parable — and a prediction — for the future of farming in the United States. Scott Faber, a vice president at the Environmental Working Group, said farmers have become “trapped on a chemical treadmill” driven by the biotech industry. Many farmers say they think they could not continue farming without new herbicide technology.
“We’re on a road to nowhere,” said Nathan Donley, a senior scientist at the Center for Biological Diversity. “The next story is resistance to a third chemical, and then a fourth chemical — you don’t have to be a rocket scientist to see where that will end.
“The real issue here is that people are using ever-more complicated combinations of poisons on crops, with ever-more complex consequences.”
In Blytheville, at least, one consequence is increasingly obvious: It’s a short, scraggly plant with cupped green leaves and a few empty pods hanging near its stem. At this time of year, this plant should have more pods and be eight inches taller, Mayes said.
“This is what we’re dealing with here,” he said, before shaking his head and turning back to his truck. “We go to work every day wondering if next year we’re still going to have a job.”

Why I Boycott Walmart

From the Island Farmer


The Big Get Bigger. Again.

I’m one of these irritating people who has never gone into a Walmart.  I know it’s self righteous crap,  and how lucky I am to have had work that paid well enough that I could take this stand.  My strong feelings about this are not because I think consumers should be deprived of good value, it’s because the business model being used finds profits by ruthlessly squeezing producers,  including farmers.  Walmart now earns more than half its revenue from selling food, and Canada’s big food retailers Loblaws (Superstores here) and Sobeys have little choice but to try to play the same game.  Now with Amazon buying Whole Foods and getting ready to take on Walmart,  Lidl, a German grocer known for low prices invading North America, Costco doing what Costco does,  and so on,  food retailing is starting to resemble The Game of Thrones, and I worry that farmers will be like those disposable armies that end up slaughtered on the field of battle.

When I studied economics at university  back in the late 1960’s (yikes) there were strong regulations called anti-trust laws to prevent companies from controlling too much marketshare. Canada lagged well behind the United States  in “trust busting”, and we allowed banks, telecommunication companies, airlines and so on  to get big in order to compete with American heavyweights.   The thing is someone was paying attention, and the ability to control markets through raw economic power  was considered wrong,  and if too extreme, illegal.  The thinking was this protected consumers by fostering more competition.  I would argue it did the same for producers. Farmers on PEI talk about a time when there were a dozen buyers. Now for most there’s 1 or 2. 

What does this mean? Research in both Canada and the U.S.  show that while food prices have gone up by about 1000%  over the last 40 years, the share that goes back to the farmer has been cut in half. It’s around 10% now. Some of that is explained by value added products that make food more convenient, bags of cleaned lettuce rather than heads for example, but the trend has been constant, and the market power of  shrinking numbers of processors, brokers, and wholesalers is a main reason why. They do it because they can.

I was reminded by an article in the U.K. Guardian how this trend began.  It started in the late 1970’s after Robert Bork, a failed U.S. Supreme Court nominee, wrote a book called The Antitrust Paradox.  He argued that legally enforcing competition allowed inefficient companies and producers to survive. He wrote that anti-trust regulations should focus solely on “the welfare of consumers.”  In other words, if consumers are getting good value because a very few dominant companies exercise their economic power, that’s just as it should be.  Court scholars acknowledge that ”consumer welfare” remains  ambiguous as a legal term, but this thinking has dominated U.S. Supreme Court rulings for decades now,  and tells us why no one is blinking an eye about the recent mergers and acquisitions in the food industry, and no one will.

And don’t look to politicians to change any of this.   With farmers now just 2% of the population politicians know they’d be crazy to question a system that promises such good value.

Farming and food prices have been central to economic development since the Second World War. As Canada industrialized government policy pushed farms to become bigger and more efficient. This freed up kids growing up on farms to become factory workers, and cheaper food gave families more spending power for industrial goods. Government programs backstopped farmers' incomes, but Canadian programs are nowhere near as generous as those in the U.S. And Europe.

More recently food prices have been discussed as social policy, especially the importance of food security for low income families.  I think steps to raise incomes through a higher minimum wage, or a guaranteed annual income are better approaches to solve this than using it to justify cheap food at Walmart.

Am I picking on Walmart? Yup.  Here's the thing. The Walton family, the main shareholders of Walmart,  has amassed a fortune of $139 Billion as of April this year not by charging consumers too much, the historical reason to worry about abusive market power,  but enforcing cheaper and cheaper prices from their suppliers.

With little market clout or bargaining power, the only defense for farmers is to work together to control over production. That's what United Potato Growers of Canada for example tries to do in open markets, and supply management achieves in regulated industries.

As for me I boycott Walmart. I’m sure it’s making a big difference.

Two Views on Farming, One a Pile of Crap (but probably true)

I'd read the first piece months ago. I didn't know whether to laugh or cry.   The others are pieces I wrote for the Island Farmer, one  to try to get a discussion going on efforts Maritime governments are making to develop new food policies. Now the Federal government has announced it wants to develop a national food policy.  Interesting times.

A Farmer Explains Capitalism

• By Rick O'brien, medium.com
• September 28th, 2016

Karl is long gone now. I first met him when he was 75 and I was in my early 20’s. A farmer friend of mine who lived across the road from Karl’s farm introduced us. Karl was born in Denmark near the start of the last century. He had come to Canada in the mid 1920’s, an optimistic young man in his own early 20’s, lured by the government of the day’s offer of free land to farm. The land turned out to be in Manitoba, north of Winnipeg. After a few years Karl moved to Southern Ontario where the land was better and the winters were shorter and not as harsh.

When my friend and I knocked on Karl’s door it was mid-afternoon and we were ushered into the kitchen, the normal farm home visiting spot that usually has its own convenient outside door. Karl had already been a widower for a few years but some vestiges of a woman’s touch still remained in the room with its old wooden chairs and worn linoleum floor. His kids had long since grown up and left the farm, so Karl lived alone. He was wearing the standard farmer work clothes: faded green work pants and shirt, suspenders and a matching cap. Karl was old school so his cap was plain, without the logo of some seed company or tractor manufacturer.

Karl’s attitude was old school too. He came from a time when farming was a way of life rather than a job or a “career path”. He was cynical, suspicious of politicians, suspicious of the government and anything they did that resembled central planning, suspicious of bankers and businessmen that set the prices and controlled the markets. His voice had a tone of mild amusement, as did his expression and the twinkle in his eye.

We discussed the usual topics of interest to farmers: the weather, the economy, politics and current events. I then asked him some inane question about farming and how he got started and his answer has stuck with me ever since. In many ways it sums up not just farming but much about our modern world, the economy and life in general. He paused, looked at me for a while as if to ask “are you serious?” and then replied as follows:

“When I started farming I grew some corn. I got a pig and built a shed for it. I fed it the corn and shovelled the shit into a pile outside. The next year I spread the shit on the field and grew more corn, enough to feed a couple of pigs. I had a bigger pile of shit. I spread the shit on the field and grew even more corn. I got a few more pigs so I had to build a barn. The pile of shit got even bigger, so big that I had to get a tractor with a loader to move it around and spread it on the field. I grew a whole lot more corn, enough to feed way more pigs so I had to put an addition on the barn. I have been doing this over and over again every year for almost fifty years. Now I have a really big pile of shit.”

Something Old Is New Again

First Published in Island Farmer

A century ago Islanders had no choice but to buy local. In fact PEI had become a breadbasket for the Maritimes and New England.  For the last fifty years, fuelled by free trade deals and international development schemes,   a global supply chain that delivers extraordinary value took over and consumers became hooked on “the lowest price is the law”.  Now we're seeing a change again.  Large food retailers are responding to a growing interest in “local”, and  provincial governments here in the Maritimes are announcing new efforts to get more consumers to think “local” when food shopping.  It’s a welcome development that needs to go well beyond just promotion.

Last week PEI announced  the Food Security and Food Education program. A $100,000 will be spent to supply 3 schools with fresh local products, and give students more information about the importance of nutrition, and where their food comes from. It's a start at ensuring that some of the 1 in 5 students who come to school hungry are fed.  "At the same time, we want to engage Islanders in a conversation about where their food comes from and the efforts of our hard working farming and fishing families" says Minister Alan McIsaac.   New Brunswick has upped its game too.   N.B. minister Rick Doucet wants to see a local food culture develop in the province.  “The promotion of local food and beverages has been identified as a key opportunity in the New Brunswick Economic Growth Plan”  says Doucet in a release.  New co-operatives are being developed to supply schools in the North-East.  And  “Agri-food” as it’s come to be known even got high profile recognition in the last Federal Budget.

What’s going on here?   I think especially here in the Maritimes other development initiatives that held promise like the energy sector, and high tech,  are stalled or failing, and governments are looking for something they think can succeed .  Obviously everyone has to eat, and the logic of  encouraging consumers to ensure food dollars stay local and get re-spent here rather than being whisked off to South America or China is pretty obvious, but that’s not to say that any of this is easy.  Don’t forget that large food retailers, especially with in-store brands,  have spent decades playing down or hiding where packaged food comes from, letting the brand and the price be the selling points.  And there's this: consumers want choice and don’t like to be told what to do. As Terry O’Reilly reminds us every week on CBC Radio’s Under the Influence very smart marketers struggle to get the right mix of information and emotional content to push people to buy products. There is a hard core group of consumers with enough time and money who are determinately local,  but while supporting the home team sounds good, cost will always be critical for  many other families.  I think Rick Doucet's idea of creating a “culture” of local food buying is important, but that will take time.

That's why I think PEI's new program is so important. A market is a very precious thing for farmers. A market that assures a fair return is even better. There's a lot of public money spent on food, not only in schools, but hospitals, prisons, nursing homes. Why not use that money to support local farmers and meet environmental goals at the same time.  Make a percentage of these purchases, say 10 to 15%, from organic farmers, and increase that over time. Make crop rotations or soil organic matter a condition of purchase. “Pulling” farmers into profitable markets with environmental standards would reward those already farming sustainably, and give others more reason to change. “Pushing” farmers to change with regulations or angry letters to the editor hasn't done much but make farmers feel angry and isolated.

This will require a lot of planning and some investment. Fresh produce and fruit is mostly available when school is out, so proper storage will be important. Over time it will take groups of farmers to meet the quantity required,  so some kind of “hub” will be needed.  The new provincial “free trade”  agreement will have language about equal access to government tenders which will complicate things. And if farmers are payed a “fair price”, as they should be, there will be complaints that taxpayers are being gouged.

Let's think about the positive side.  Small and medium sized farmers will have the chance at more income security. Larger farmers will have more reason to diversify, and turn away from commodity markets if they're not getting a fair shake. Consumers and taxpayers will have a direct stake in improving opportunities in rural areas, and protecting the natural resources we all benefit from.

I don't want to seem completely naive about this.  PEI's small population will always push our farmers into export markets dominated by larger players, but if consumers and governments create demand for local food and food products, there will be more food security at a time of climate change and political instability, and economic security in rural areas.  The food business is ruthlessly competitive.  Let's make sure as consumers we're thinking hard about where our food dollars go. It's one of the most important decisions we make every day. 

Who Pays for Surpluses

First Published in Island Farmer

It was the National Post headline that finally did it for me: “After a nuclear war, only cockroaches and supply management would be left.”  The vitriol coming from mainly the national business media against supply management has been astounding. It was unleashed with the bellowing of U.S. President “You Know Who” at a news conference in Wisconsin, uttering his usual mix of hyperbole (disgrace, disaster) and untruths.   It will end at a NAFTA negotiating table months from now, and it matters a lot to Maritime farmers.

My interest in, and yes support for, supply management comes not from being any smarter than anyone else, but how I look at the food system.  Most Canadians, and Toronto based business writers, only see the back end of the food chain, supermarket shelves,  where price,  competition, and variety can easily be judged.  And if a Toronto journalist can’t get fancy European cheeses at rock bottom prices, then something must be wrong.  I’ve spent most of my time trying to understand the front end,   how economics,  history,  environment, government and trade policies affect primary producers.  Yes farmers always complain that times are tough, but that anxiety comes from having so little control over what happens season to season. The weather, here and elsewhere,  disease and insect pressures, politics,  consumer tastes and so on are difficult  enough to control, but the real challenge is this:  thousands  of small business people make decisions for markets controlled by very few. The handful of processors, brokers, wholesalers, and retailers  have one interest, to pay the least they can, to support their own business interests, and convince consumers they’re getting good value, and they almost always get their way.  The quickest way  to assure low prices is a surplus, or at least the perception of one.  If farmers are convinced prices aren’t going to improve, they’ll sell for what they can get because  the alternative is even worse, getting nothing at all.

That’s what Canadian dairy farmers faced in the 1970’s when there were fierce demonstrations demanding government action. That’s what Wisconsin dairy farmers are facing right now.  The Canadian solution back then (thank you Eugene Whelan)  was supply management. Limit production to Canadian demand using quotas, and assure farmers a fair price (based on costs  of efficient producers). And yes to make the system work high tariffs are used to keep cheaper imports out.  That’s what the “free traders” and business media find so offensive.  The question that never gets asked is why are these imported dairy products cheaper? Two words, taxpayer subsidies.

Wisconsin bills itself as  “America’s Dairyland”.   Between 1995 and 2014,  Wisconsin dairy farmers received $1.2 Billion (with a B) in subsidies under a variety of programs:  “Milk Income Loss Payment”,  “Market Loss Assistance”,  “Market Income Loss Transitional Payment”,  “Dairy Economic Loss Assistance Program”,  “Dairy Disaster Assistance”, and so on.  They are asking for more support as you read this. The continuing  problem then and now,  no surprise,  surplus milk in the U.S., and over the last 18 months, world wide.   Wisconsin dairy farmer Sarah Lloyd  told CBC,  Canada isn’t the problem. "Suddenly, everyone was pointing the finger at Canada, but that's not really what's going on. We have overproduction here in Wisconsin, and we really need to address that here at home.”

Here in Canada milk producers receive no taxpayer subsidies. They get paid once by their dairy processor.  Yes many dairy products are more expensive than in the U.S., but so are cars, booze,  cell phones, airline tickets, I could go on.  

Three more things you won’t read about in the National Post or the Globe and Mail.  The U.S.  already has a trade surplus in dairy products to Canada worth $400 Million (don’t forget that dairy farmers here produce to supply Canadians, not compete in export markets).  Most American farmers use rBST, a controversial growth hormone outlawed in Canada, which extends the time cows can be milked before being bred again. There are human health risks, including increased levels of mastitis in these cows which leads to more use of antibiotics. And lastly, something very important I think ,  is how low prices are forcing medium and small dairy farmers in America  out of business.  25% of U.S. farms now produce close to 90% of the milk supply. That means very large operations milking a thousand cows and more.  In Canada, medium sized dairy farms (60-80 cows) can make it, especially if there’s good breeding stock for extra income.  These are farms with middle-class incomes,  paying their bills, taking care of their land. We need more farms like that in the Maritimes, not fewer.

I don’t expect Donald Trump to know much about anything,  I do blame many in the Canadian media for their lazy, one-sided reporting on this issue.  And to both,  let’s not have  a nuclear war to find out what’s left.

Asking the Right Questions about the Dairy Industry

There’s nothing like a few provocative if untrue  bellowings from President Trump to give supply management critics more reason to complain. 

“Dairy and poultry supply-management schemes operate as a combination of cartel and government-enforced monopoly”

Those are some of the nicer sentiments used by the national business press to talk about the regulated marketing system used by dairy, egg and poultry farmers.  Other stories are not so nice:   “If this sounds like an illegal racket, you’re half right: Any other industry…  that conspired to manipulate prices and aggregate supply in this way would be prosecuted under Canadian competition law, with jail sentences meted out to the scheme’s engineers.”  I guess this means the business know-it-alls  don’t like supply management very much.

This hostility towards supply management has been going on for years.  Critics argue that Canadian consumers and food processors pay too much because high tariffs limit the quantity of often cheaper dairy and poultry imports. What they don’t report is the enormous subsidies given U.S. and European dairy farmers that creates the cheaper imports in the first place. In Europe this includes direct payments to farmers and export subsidies when the world price falls too low.  Let’s let trade expert Peter Clark explain what’s goes on in the U.S.:

“………. the only way that US dairy farmers can sell at a loss, as they have over nearly 20 years, is for the government to subsidize and offset the losses.”

In Canada dairy farmers are paid once, based on their cost of production,  by dairy processors, with no further taxpayer funding.  

And we shouldn’t forget that American farmers have access to rBGH, a growth hormone that allows cows to produce milk for longer periods of time, often draining calcium from their bodies and causing hoof problems. That’s on top of  potential health risks to humans. This growth hormone is illegal in Canada.

In the background to this is a falling world price for milk. Reports say that dairy imports to China and Russia are down, while production quotas in Europe are disappearing, increasing the supply.   Again, because of supply management Canada is not adding to this surplus. This is the real price problem U.S. farmers are dealing with.

We’ll also begin to see the impact of the new European trade agreement, CETA.  In return for bigger market access for Canadian beef, pork and seafood, the  Europeans will be allowed to export more than 17,ooo tonnes more cheese into Canada, almost doubling what they can sell now.   Given that European dairy farmers need subsidies to cover their costs, cheese makers there benefit from cheaper milk, and are very competitive on export markets.  There’s no question that small artisanal Canadian cheese makers will be in trouble if Canadian consumers can buy European cheese for less than Canadian upstarts.

What does this mean for PEI’s big dairy ADL?  It’s an important cheese producer in Canada, with most of it going into the big central Canadian markets. If ADL loses market share because of the European imports, it will have to produce more lower valued butter and skim milk powder, which in turn means lower returns to dairy farmers.  The critical issue for ADL and other cheese makers is who gets to sell the European cheese.  In mid February Lino Saputo Jr., an executive with the big dairy processor Saputo,  told a Montreal business meeting last year: ““We’re saying that perhaps the incumbents—those that are part of the dairy industry, those that have import licences already, those that have a vested interest in the industry—should inherit those new licences,”.  The concern is that if food retailers for example control the new cheese imports, their only interest will be to undercut Canadian production.  Processors say they could meter out the imports so that consumers still benefit,  but limit the market shock to processors. 

It’s easy to give in to the hysteria around supply management (how dare farmers actually cover their costs) but don’t forget that professions from doctors to cab drivers to lobster fishermen limit who gets a licence to practice in order to protect their incomes,  and no one says they’re breaking the law.  Maybe once cheaper writers in India start competing for newspaper space with the columnists in the Globe and National Post, the business fire breathers will finally get it: the cheapest isn’t always the best.

Trump Notices Us, Now Let's Get the Story Right

There's nothing like Donald Trump hurling accusations about something he doesn't understand to get the media all excited. We saw it yesterday when he went to Wisconsin to complain about Canada's dairy industry.  Some in the media including the CBC had parts of the story wrong, implying that Canada wants to impose new duties on U.S. imports.  That's not the case. Here is a column I wrote about a year ago that gives some background to this story, and today's coverage from Daniel Dale in the Toronto Star. 


May 2016

A Shortage of Butter: Not Good News for Dairy Farmers

This is a classic case of a loophole, big business capitalizing on any chance to improve the bottom line, and serious unintended consequences.  The impact of what appeared to be a minor bureaucratic decision  is being felt in Canadian kitchens, food processing plants,  and disturbingly, could do serious economic damage to Canada’s dairy farmers.

A few years ago Federal officials were trying to decide where so called “protein isolates” would fit into the stiff tariff schedule that limits imports of cheaper dairy products like yogurt and cheese. These high tariffs maintain the integrity of Canada’s supply management system that tailors milk supply to Canadian demand using quotas, while assuring farmers a fair price.  Protein isolates are essentially raw protein, like the whey protein used as a dietary supplement. Think of whole milk with the fat and minerals stripped out.  The bureaucrats decided the isolates are a protein “substitute”, not necessarily a dairy product, so they come into Canada tariff-free.  No one paid too much attention then,  but  slowly, over time, a trickle of cheaper protein isolates, almost all from the United States,  has become a tidal wave.  Now Canada’s largest dairy processors like  Parmalat, Saputo,  and Agropur, are helping their bottom line by using the cheaper protein in their cheeses and other dairy products. But there’s a  wrinkle, the processors still need the fat from whole milk to mix with the raw imported protein to produce their cheeses.   This is happening at the same time that dieticians and doctors are telling Canadians it’s OK to eat butter again.  So over the last year  butter, and butterfat, are again in big demand, and for some, short supply.  Farmers nationally have stepped up production by more than 7% on a butterfat basis to meet the shortfall, but because there’s no additional demand for the protein in the whole milk  (usually made into skim milk powder), farmers aren’t paid the full cost of production price for this additional milk, and a lot of the surplus skim milk is being dumped or fed to livestock.

That’s unfortunate, but the more serious impact I think is that it’s given the business media a fresh opportunity to attack supply management.  “Supply management falls butter-side down”  in the Globe and Mail,  and  “Supply management is expensive, irrational — and doomed” in i-Politics amongst others.   What especially irritates me about these articles is that they blame dairy farmers (and always the articles are  accompanied by shots of Holsteins) for lobbying to protect a “broken” system, when it’s large multi-national dairy processors that have created the problem. There’s no benefit flowing back to dairy farmers from  the importation of this cheap protein (other than Quebec farmer-owned Agropur, shame on it.  Parmalat is owned by a large Italian dairy, and Saputo by a Montreal family).

Here’s some better news. As Islanders, we can celebrate the fact that PEI’s dairies, ADL and Purity, do not use this imported protein.  And let’s also enjoy the world recognition ADL cheeses have received recently:  ADL, using a recipe from Cows, produces the Avonlea Clothbound Cheddar that won SuperGold at the World Cheese Awards in England  in late November. And ADL’s own labeled cheddars won several awards at the British Empire Cheese Show in Ontario in mid-November.  I’m not an expert, but maybe the fact that only PEI whole milk, rather than a tasteless imported protein isolate, is used to make these cheeses had something to do with these successes.  

One more thing for consumers to watch for. There is a symbol:

 that says 100% Canadian milk.  That’s your guarantee too that there’s no imported protein in the dairy products. 

Unfortunately for farmers  the trade in protein isolates won’t end quickly. The U.S. dairy industry would launch a trade investigation before the ink was dry on any new government regulation trying to control it.  The big multi-national dairies themselves are playing a game of economic chicken saying they’ll stop only if the others do.  As well they’re getting ready for more competition from cheaper European cheeses if the big EU trade agreement is ever ratified.   So consumers will have to step up if there’s going to be any solution. On PEI at least that’s easily done.

April 19, 2017

WASHINGTON—Holy cow, he’s now coming after us.

U.S. President Donald Trump slammed Canada’s trade practices for the first time, vowing to call Canadian officials to demand changes to dairy policies Wisconsin farmers say threaten their livelihoods.

“We are also going to stand up for our dairy farmers in Wisconsin. And I’ve been reading about it, I’ve been talking about it for a long time, and that demands, really, immediately, fair trade, with all of our trading partners. And that includes Canada,” he said Tuesday, raising his voice to emphasize the country.

“Because in Canada, some very unfair things have happened to our dairy farmers and others.”

He did not specifically identify what he was talking about in his unscripted musings, which came during a Wisconsin speech in which he touted “Buy American” policies that are opposed by Canada. It appeared, though, that he was weighing in on an arcane but escalating bilateral dispute over ultrafiltered milk, a high-protein concentrate sometimes used to make cheese and yogurt.

Read the latest news on U.S. President Donald Trump

The Canadian dairy lobby and government say Canadian policies are not responsible for the crisis that has beset about 75 family farms in Wisconsin since a local milk-processing company cancelled their contracts April 1. But Trump joined the U.S. dairy lobby and a bipartisan group of U.S. lawmakers in attributing the problem to a Canadian reduction in prices that has made American imports less competitive.

His remarks were the latest in a series of signals that suggest Canada will not glide easily through the possible renegotiation of the North American Free Trade Agreement (NAFTA). After declaring in February that the trade relationship is “very outstanding,” his administration has floated a series of complaints.

Not until Tuesday had he called out Canada specifically.

“What’s happened to you is very, very unfair,” he told the farmers. “It’s another typical one-sided deal against the United States, and it’s not going to be happening for long. So . . . we’re going to get together and we’re going to call Canada, and we’re going to say ‘what happened?’ And they might give us an answer, but we’re going to get the solution, not just the answer, OK, because we know what the solution is, all right?”

He did not say what he believes the solution is.

Trump had been urged to take action on the dispute by politicians from both parties, including Republican Wisconsin Gov. Scott Walker and Democratic New York Gov. Andrew Cuomo. In an October letter to Prime Minister Justin Trudeau, Cuomo said the policy amounts to a trade barrier that flouts international agreements.

Trudeau’s government did not respond to Trump on Tuesday. Instead, Ambassador David MacNaughton wrote a letter to Walker and Cuomo, urging them to “not lay blame where it does not belong.”

MacNaughton said Canada “does not accept” the contention that dairy policies in Canada are causing financial hardship in the U.S. “The facts do not bear this out,” he wrote, citing a U.S. government report that says global and U.S. overproduction is the root of the U.S. dairy industry’s struggles.

“As made clear in the report, Canada is not a contributor to the overproduction problem,” MacNaughton said. He argued that Canada’s dairy industry is less protectionist than America’s.

Like most things related to Canada’s milk policy, the dispute is complicated.

At the beginning of April, Wisconsin’s Grassland Dairy Products informed 75 local farms that it would no longer purchase their milk. Grassland said it made the decision because it had just lost tens of millions of dollars worth of Canadian business as a result of the policy change in Canada.

The Canadian dairy industry, tightly regulated under a system of “supply management,” has long been protected from foreign competition by tariffs on imports. But ultrafiltered milk from the U.S. had been allowed to enter Canada tariff-free, and Canadian processors often preferred to import rather than pay higher prices to buy from Canadians.

A year ago, though, Ontario changed the rules: it allowed local processors to buy ultrafiltered milk and other kinds of skim milk from Canadian farms at world prices rather than the higher Canadian prices. All of a sudden, the need for U.S. imports evaporated.

Canada is now adopting a similar policy across the country, further alarming the U.S. industry already beset by a supply glut. In Wisconsin, some of the family farmers say they will have to sell off their cows if they can’t quickly find another processor.

The Canadian dairy industry says the entire issue has been misconstrued by the Americans. A spokesperson for the Dairy Farmers of Canada told the Washington Post in a front-page article Tuesday that the Wisconsin farmers were using inaccurate “alternative facts,” a phrase popularized by a Trump aide.

In the Canadian industry’s version, the real culprit for the U.S. woes isn’t Canadian policy but the U.S. supply glut.

“When too much milk is produced, prices crash and there is no incentive to invest in increased processing capacities. The end result is job loss, loss of income for farmers, and in some cases, farmers having to shut down their farms,” a Dairy Farmers of Canada official wrote in early April.

“No matter how one views the situation, exports to a comparatively small Canadian market — one that is already filled with Canadian milk — are a drop in the bucket that will not solve the problems currently impacting the U.S dairy industry. It is wrong to use Canada as a scapegoat for the situation in the United States.”

The Dairy Farmers declined to respond to Trump on Tuesday, referring questions to the Canadian government. A spokesperson said they are “very confident” Trudeau will “protect our industry.”

Trump has not criticized supply management more broadly. But in a draft letter to Congress that expressed a preliminary NAFTA wish list, his administration hinted that it wants to raise the subject during the upcoming talks.

Trump signed an executive order on Tuesday to crack down on exemptions to Buy American policies, which are supposed to require U.S. government projects to buy from American firms. Canadian Finance Minister Bill Morneau will raise objections to the order at this week’s meeting of G20 finance ministers in Washington, The Canadian Press reported.

With files from Bruce Campion-Smith