The Impact of Current Doha Round Agricultural Negotiations on the Canadian Dairy Industry Xiangxiang Ye April 4th 2006.

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Presentation transcript:

The Impact of Current Doha Round Agricultural Negotiations on the Canadian Dairy Industry Xiangxiang Ye April 4th 2006

Background l Dairy industry profile in Canada ◆ Second largest in the agri-food economy (2004) total net farm cash receipts =$4.6 billion 38,000 people on the farm and 26,000 at the processing level ◆ Dairy supply management system supervisory price support, production quota and border protection measures ◆ Trade performance dairy imports have continued to increase while exports have decreased. Exports=$264.3million, Imports= $588.1 million (2004) l WTO agricultural negotiations impact the dairy industry ◆ Domestic support ◆ Market Access ◆ Export competition

Previous work l Romain, J.(2001) The Future of the Dairy Industry in Canada. Advances in Dairy Technology 13: The mechanism for transferring quotas and the mechanism for discriminating prices in milk products to expand the domestic and export market. l Phillips, R. (2003) Future Dairy Policy in Canada. Advances in Dairy Technology 15: Canada has pursued a policy of giving real and expanding domestic market access and keeping government out of producer and processor decisions to participate in lower export market. l Gifford, M. (2005) Canada’s Dairy Industry: Can Supply Management Survive an Open Trade Environment? Policy Options Nov P olicy adjustment package to adjust dairy supply management under current Doha Round mainly for producers.

Objective of this study l Investigate the impact of Doha Round on the dairy industry in Canada l The possible policy adjustments for the dairy industry l Alternatives available for the dairy supply management system

Content l Doha Development Agenda and the impact on the dairy industry l Policy adjustment proposals for the dairy industry l Alternatives for the dairy supply management

Doha Development Agenda and the impact on the dairy industry l Doha Development Agenda ◆ Substantial reductions of 50%-70% in trade distorting domestic support with a cap on product specific trade distorting support; ◆ Market access is improved with higher tariffs facing deeper cuts; ◆ The deadline for the complete phase out of export subsidies is l The impact on the dairy industry ◆ Constraint on the increase of the support price; ◆ Increase of import quotas and reduction of over-quota tariff rates; ◆ Loss of export market.

Policy adjustment proposals for the dairy industry l From producers’ perspective ◆ A voluntary production quota buy-back program accompanied by a one-time compensation payment; ◆ Assurance that the production quota system to be continued for at least next 10 years and a continued access to the national direct income stabilization program; ◆ Assurance of the emergency import safeguard to prevent imports from entering Canada. l From processors’ perspective ◆ Guarantee that dairy and other food processors will continue to have unrestricted access to imported milk and dairy products used to manufacture food products for re-export; ◆ Promote market development and innovations in the dairy sector in response to the market demand.

An alternative for the dairy supply management ----Deregulation in the dairy industry l An example from Australia for Canada ◆ Dairy support prices and quotas eliminated in 2000; ◆ Adjustment assistance and transitional assistance are provided; ◆ Recovery in milk production and the industry’s export performance has been maintained. l Reform the dairy industry ◆ Transitional aid for all producers; ◆ Aid for producers who decided to leave the industry; ◆ Aid to regions with large communities dependent on the dairy industry; ◆ Programs specifically aimed at aiding particular producers.

Conclusion and future work Conclusion : ◆ Current Doha Round will challenge the Canadian dairy industry; ◆ Policy adjustments have been provided to adjust the dairy supply management system; ◆ Deregulate the market accompanied by adjustment assistance is a promising alternative for the dairy supply management. Future work : ◆ Provide more specific and detailed policy adjustments; ◆ Evaluate the potential outcomes of deregulating the dairy market.

Thank you!