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“Free agricultural trade will never guarantee the quantity, quality and security of what we eat”
Interview with Marcel Groleau,
President of the Quebec Federation of Dairy Producers
While the situation of dairy farmers continues to deteriorate in the Europe of 27, as a result of the slump in international market prices and the progressive removal of regulation mechanisms1, the example of Quebec reminds us that other alternatives exist. Canadian dairy producers benefit from a complementary offer management system that is in keeping with the agricultural risk management policy (GRE program, see attached article). Consequently, they have been less affected by the crisis, as Marcel Groleau, President of the Quebec Federation of Dairy Producers,2 attests.
This is a particularly enlightening example, which calls into question the pertinence of agricultural market liberalization advocated by the WTO.
By Dominique Lasserre, expert of momagri
Dominique Lasserre: What are the advantages of the prevailing Canadian trade model in the dairy sector, i.e. offer management and collective marketing?
Mr. Groleau: Our model does not create imbalance on the international markets, because production is adjusted based on domestic needs. It is a model that favors a small-scale, family agriculture. Offer management and collective marketing ensure a stable income for producers, which comes from the market alone. There is no financial intervention by the State.
How do you ensure that you produce enough to meet market requirements while avoiding overproduction?
Butter and powdered skim milk are products of reference. If the stocks of these two products vary, the provinces’ right to produce is adjusted, and the provincial milk marketing offices then adjust the producers’ rights to produce accordingly. It is the Canadian producers who make the final decision regarding the required level of production, and they also bear the costs if production exceeds supply. In addition, producers jointly sell their milk to the industrialists based on the conditions negotiated by their provincial office. Therefore, all the industrialists have the same conditions.
Do you mean that offer management has protected Canadian dairy producers in the face of the crisis that is affecting world dairy protection?
In fact, the surge in input prices has pushed up the price of dairy products around the world. With these prices, producers in Europe and the United States naturally increased their production, and domestic and world supply quickly exceeded demand. In the end, what goes up must come down: dairy producers worldwide are now facing unprecedented falling prices. And the American and European governments have no other choice but to start supporting prices and subsidizing their exports once more.
Has this not occurred in Canada?
The Quebec and Canadian dairy producers have not been affected by the fall in world prices, and the Canadian government did not have to give billions of dollars in support, as it should have already done for other sectors of the economy. Offer management prevents price fluctuations on domestic markets, because it protects us from world market fluctuations. In the same way, we ensure price stability for our customers.
Do you maintain that the World Trade Organization (WTO) has gone off course by promoting agricultural trade liberalization?
It is time to revise the negotiation premises of the Doha Round, which started eight years ago, because the world has since changed. The food crisis has hit hundreds of thousands more people in 2008. The number of people suffering from hunger in the world now exceeds a billion, and 70% of them are farmers and farm workers. The countries most affected are those that have liberalized their agricultural trade, under pressure from the IMF and the World Bank, at the expense of abandoning their subsistence crops.
We can no longer negotiate opening up international agricultural trade without taking into account the hunger and food-related problems in the world.
Should the opening up of agricultural trade not help us get out of the food and economic crisis?
The opening up of agricultural trade will only widen the gap between the rich and poor countries. Food is not only a simple convenience; we have to eat to survive. When we can do without a toaster, we cannot do without bread. Free agricultural trade will never guarantee the quantity, quality and security of what we eat. The WTO has gone off course in treating agricultural trade separately from food and agricultural problems. It is only when these problems are dealt with jointly that we will find sustainable solutions. Agriculture, food and the environment should all be negotiated together!
The main problem with world agricultural trade is price fluctuation on domestic markets, which is generated by price fluctuations on world markets, while world markets represent only a small percent of what is traded. Therein lies the agricultural problem, and this is the problem that the WTO should resolve as a priority.
Are you not hurting developing countries by limiting access to your market with customs duty?
First of all, you need to remember that our borders are not completely closed. 8% of the cheese market is covered by imports that come mainly from Europe. More generally, we suggest that all countries open at least 5% of their market to each imported product, which we are already practicing widely, given that have opened up 8%. This single measure will enable an 80% increase in the volume of duty-free agricultural and food products traded. It should also be noted that we are not against trade. But, we insist that it be done in accordance with clear and transparent rules, which respect human rights.
In concrete terms, what do you suggest as a solution?
There needs to be an international organization where agricultural exception will be recognized, for agriculture is the larder of humanity. The WTO deals with trade-related issues, while the FAO examines those that are food-related. A single forum should be defined to address these issues. Countries have recognized cultural exception and cultural exchanges between countries are developing, but governments have the tools to protect their cultural heritage. We should use a similar approach for agriculture. The economic and food crises have shed light on the legitimacy of market regulation.
Recently, the G20 leaders have once more expressed their commitment to concluding the Doha Round; is it not a bit utopian to demand an agricultural exception?
More and more opinion leaders, citizen organizations, farmers and intellectuals worldwide, dispute the fact that agriculture and food-related issues are treated like any other trade sector. They feel that this is a dangerous orientation, which could exacerbate the world food crisis. This is the case, for example, of former US president, Bill Clinton and the United Nations Special Rapporteur on the Right to Food, Mr. Olivier de Schutter. Mr. de Schutter has recently submitted a report to the WTO and the UN, indicating that States should ensure that human and fundamental rights prevail over trade accords.
The labor unions and farmers throughout the world should unite around major themes such as agricultural exception and the predomination of human rights over trade rights. We are no longer alone. That is what gives me hope.
1 See, momagri, “Milk: the situation goes sour”, May 11, 2009, http://www.momagri.org/UK/A-look-at-the-news/Milk-the-situation-goes-sour_494.html
2 The Quebec Federation of Dairy Producers (FPLQ) is a federation of 14 labor unions, which group together some 7,000 dairy farms in Quebec. Together, they collectively market close to 3 billion liters of milk, or close to 38% of the Canadian dairy market.