Dairy producers reject their inclusion in the Trans Pacific Partnership
Matilde Perez U., La Jornada, via the Institute for Agriculture and Trade Policy (IATP)1
On 5th October, international trade ministers from 12 countries2 finally concluded an agreement in principle, on a Trans-Pacific Partnership (TPP). The agreement, which must still be approved by many national parliaments, covers a new group that represents over 40% of global GDP, the largest free trade area in the world.
The potential impact on agricultural trade and national production, both positive and negative, are already the subject of heated discussions.
For Canadian producers subject to the supply management system, this agreement is a disappointment to the extent that the agricultural markets which fall under it will be partially open to foreign countries over five years. The agreement provides an additional access of 3.25% to the Canadian dairy market . On the other side of the US border, Mexican dairy farmers also mobilized to exclude their dairy sector from TPP negotiations by advancing the risk of further liberalization on prices, producers' incomes and agricultural jobs, especially when facing dairy exports from New Zealand. On this subject, we recommend reading a section of a Mexican political blog relayed by the IATP3. It reports that dairy industry profesionals refuse to be used as bargaining chips, particularly since this sector is going through a major crisis, like that found elsewhere, Europe in particular.
The mobilization of Mexican but also Canadian producers is further evidence of the specific and strategic character of Agriculture which will remain a sticking point in any economic partnership agreement as long as the consequences of unregulated liberalization in agricultural markets has not be taken into account. Because this liberalization risks not only being accompanied by a worsening of the economic situation of most countries and increased price volatility on agricultural raw materials, but also significant challenges for agriculture.
momagri Editorial Board
The Union of Dairy Producers of the Mexican Republic and the Mexican Dairy Federation asked the government to refrain from presenting offers in the negotiations for the Trans Pacific Partnership (TPP), which are being carried out in Atlanta, Georgia, United States, that have not been agreed to by the national sector.
The National Front of Dairy Producers and Consumers demanded that the product be removed from the negotiations. Alvaro Gonzalez Muñoz, the group’s president, explained that the risks are very high, since the nations that make up the commercial bloc will offer very low prices for dairy products, which will lead to the bankruptcy of the majority of the 250,000 producers.
Vicente Gomez Cobo, president of the Mexican Dairy Federation, indicated that the national negotiators “should not use milk producers as a bargaining chip. We are not like textiles or patented medicines.”
Salvador Alvarez Moran, president of the Union of Dairy Producers of the Mexican Republic, explained that the sector is going through a profound crisis, created by the oversupply of milk on world markets, which has led to a 70 percent drop in prices in the last year and a half. “The situation could get worse if we include dairy in the TPP, since New Zealand is the main exporter of milk and cheeses in the world. Its competitive advantages allow it to produce milk at half of what it costs in Mexico.”
He referred to the Mexican dairy supply chain, which is made up of 250,000 farms, of which 96 percent have fewer than 100 heads of cattle, and which generate 635,000 direct and indirect jobs.
Both reported that the 240,000 dairy producers continue to confront a complicated situation due to the low prices they receive, which are below the costs of production. “Hundreds of small and medium producers are at risk of disappearing,” they indicated in separate interviews.
Gomez Cobo said that production costs have risen 30 percent due to the effects of the devaluation of the peso against the dollar, since 85 percent of inputs are priced in that currency.
1 Initially published on this blog
2 Canada, United-States, Japan, Mexico, Chili, Peru, Australia, New-Zeland, Malaysia, Vietnam, Singapour and Brunei
3 The entire article is available from :