TPP could harm Canada's dairy more than expected, expert says

Canada's dairy industry could face a bigger hit from theTrans-Pacific Partnership than previously thought, says an
agricultural expert who studied the text of the deal involving 12countries.

In addition to affecting milk, theTPPagreement would allow for moreimports of yogurt, ice cream and different types of cheese, saysSylvain Charlebois, professor of distribution and food policy at theUniversity of Guelph's Food Institute.

In a telephone interview from Austria where he's a visiting professor,Charlebois wondered if the long-term impact of more dairy imports onCanadian production was sufficiently evaluated.

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Canada's protected dairy sector remains mostly intact under theTrans-Pacific Partnership. However, another 3.25 per cent share ofimports would be allowed over five years, adding to the pressure from17,700 tonnes of cheese permitted under a separate trade deal withEurope.

The increase in imports from 11 otherTPPcountries will displaceabout 250 million litres of Canadian milk.

That's in addition to 2.3 per cent more imports of eggs and 2.1 percent of chicken.

Charlebois calculatesTPPwill increase dairy imports by four percent, a difference he says is not insignificant.

Deal doesn't address milk proteins

Moreover, he said the deal doesn't seem to clearly address the importsof milk proteins use by processors, a key concern of the Canadianagricultural sector.

Former prime minister Stephen Harper promised during the federalelection campaign that the Conservatives would provide $4.3 billionover 15 years to compensate Canadian farmers and processors butCharlebois said that the new Trudeau government must answer questionsabout that support.

Quebec dairy groups, the union of agricultural producers and the DairyFarmers of Quebec, declined to comment while it studies the 1,000-pagedocument.

For now, however, they said the agreement doesn't seem to include anybad surprises for supply management.

The agreement, which still needs to be ratified, creates a free tradezone for 12 countries including Canada, the United States, Australia,Japan, but not China, It will affect 800 million people, representing40 per cent of the global economy.

Canada's largest dairy processor, Saputo Inc. (TSX:SAP) saidThursdayit expects ratification could take about two years, followed by afive-year implementation.

With operations in three of the 12 countries, the Montreal-basedcompany is "well-positioned to withstand and even benefit from thenew trade agreement,'' said analyst Irene Nattel of RBC CapitalMarkets.