Ottawa To Pay Dairy Farmers $1.75 Billion In Government Aid

The federal government is bailing out the country’s dairy farmers.

Prime Minister Justin Trudeau has announced that Ottawa will spend $1.75 billion over eight years to compensate dairy farmers facing greater competition due to new free trade deals, notably the one with the U.S. and Mexico.

Political pundits see the bailout as an effort by the Trudeau government to appease an influential group of voters two months before a national election is held. The payments to dairy farmers recognize sales they have lost after trade pacts were struck with the European Union and North American allies, Agriculture Minister Marie-Claude Bibeau said in an announcement made at a dairy farm in Compton, Quebec.

Canada’s 10,600 dairy farmers are concentrated in the vote-rich provinces of Quebec and Ontario, which will be key battlegrounds for the governing Liberal party and its main opponent, the Conservatives, in an October election that is expected to be close.

The trade pacts have eroded a Canadian system of production quotas and high tariffs designed to support prices of dairy, poultry and eggs. As part of new and recent trade deals, Canada agreed to allow greater imports into the Canadian market while retaining its supply management system.

Of Canada’s aid to dairy farmers, $345 million will be paid directly to farmers in the first year based on the size of their production quotas. Once new quotas for European, Pacific and North American exporters are fully phased in after six years, imports will displace just under 20% of Canadian milk production.