It’s watch and wait for B.C. dairy farmers, who are anxiously awaiting the outcome of contentious free trade negotiations with the U.S. government.
NAFTA negotiations hit another stumbling block on Friday, with Canada failing to meet a U.S.-imposed deadline to cut a deal.
One of the biggest stumbling blocks is supply management, the Canadian system that sets production quotas and prices for domestic dairy products, while applying tariffs to imports.
WATCH: Demands to get rid of supply management ‘not acceptable’: Trudeau
B.C. is Canada’s third largest dairy producer, after Quebec and Ontario, and local producers warn losing the system could be “devastating” to their industry.
According to the B.C. Dairy Association, the dairy in the province is worth about $1 billion a year in economic output, employing more than 11,000 people.
David Janssens, with Surrey’s Nicomekl Farms, argues the supply management system ensures a better regulated and safer product, though acknowledges it results in higher prices for consumers.
But he said even if the system opens up, it wouldn’t necessarily mean cheaper milk and cheese north of the border.
“It’s a fallacy,” he said. “The best example is Target.
WATCH: No confirmation if deal without continuation of dairy supply management system will be considered
“We thought, Target’s down there, all the cheap prices when they come up into Canada. Target realized, ‘Hey, the delivery driver is getting paid more, the Telus worker that’s installing the phone lines is getting paid more, gosh, our property taxes are higher.'”
Not everyone agrees with that assessment. The C.D. Howe research group has argued that, at least in the short term, increasing the supply of U.S. dairy would push prices lower.
While the prime minister has promised he won’t allow the U.S. to dismantle supply management as part of NAFTA negotiations, Canada has given some ground in previous trade negotiations not involving the U.S.
“There is precedent for weakening the dairy supply management system,” said Marie-Claude Fortin, a lecturer with UBC’s faculty of land and food.
“I can see dairy farmers are starting to worry. If you do this too much, the whole system is in jeopardy.”
From the dairy industry’s perspective, there were at least some encouraging signs on Friday.
U.S. Trade Representative Robert Lighthizer said that Canada has steadfastly refused to make concessions on the dairy issue.
However, Foreign Affairs Minister Chrystia Freeland refused to confirm Friday if she’d consider a deal with the U.S. that did not include the continuation of supply management.
That has dairy farmers watching the contentious NAFTA trade talks like hawks, on edge, with discussions suspended for the long weekend.
“We understand there is a little bit of give and take, said Janssens. “The disappointing part is where dairy is the last card played.”
Talks between Canada and the U.S. are slated to resume next week.