Small and mid-sized Canadian cheese makers may be able to cash in on the expected increase in European Union cheese imports.
The group was unhappy with the Comprehensive Economic and Trade Agreement between Canada and the EU, which opened the door to about 17 million kilograms of additional, tariff-free cheese from Europe, to be phased in over six years.
Now they want a share in the tariff rate quotas (TRQs), which would give them the right to import cheese, as a means to adjust to the new business environment and build alliances with European cheese makers.
“The question is, who will have quota when all this cheese comes in?” said James Oliver, general manager of the Empire Cheese Co-op in Eastern Ontario.
“Everyone is after it, the TRQs. If Loblaws or Sobeys get it, it will hurt us quite a bit.”
Denis Brassard of the Canadian Alliance of Cheesemakers said the organization expected that the TRQs will primarily be filled by fine EU cheeses that compete directly with the types of cheese produced by the 37 companies that are part of his organization.
Most alliance members are located in Quebec and Ontario. There are also members in Nova Scotia, New Brunswick, Manitoba, Alberta and British Columbia.
“The government has understood that this is very important to us. We are the specialists in this market and we’ve been growing each year,” Brassard said.
Brassard said the alliance feels they could lose 50 percent of their current revenue under the present CETA deal.
Having TRQs would provide small and medium cheese makers with a new source of revenue that would support the continued production of fine Canadian cheeses at a lower cost to consumers, Brassard said. It could also help alliance members to grow despite the limits imposed by milk supply rules.
This could in-volve access to advanced technologies and licensing arrangements allowing Canadian companies to produce European-style cheese here in Canada.
Oliver said there’s strong support among Canadian dairy farmers for Canada’s supply-management system but it does put cheese makers at a disadvantage. Canada has some of the highest milk prices in the world, he added.
In United Kingdom, the export manager with Long Clawson Dairy, Martin Harris, said it’s been challenging to export the company’s Blue Stilton and other specialty cheese to Canada.
“The problem with Canada is you have these draconian import restrictions,” he said.
“We can and do sell to Canada but it’s a finite amount.”
UK cheese makers, are unlikely to be able to capitalize on Canadian TRQs, given the United Kingdom’s plans to leave the European Union. However, companies like Long Clawson, a co-operative owned by 43 family farms, is experienced with the export trade.
The majority of the co-operative’s exports are to the United States and Harris said the company, while small, has been successful.
“We focus on quality and you have to be efficient and your farmers have to be efficient.”
A Canadian cheese importer, Pat Pelliccione with Jan K. Overweel Limited, said that while Long Clawson is small, they’re also the largest maker of Blue Stilton in the world, one of just six English dairies operating under the British Protected Designation of Origin status.
According to Paul Eggleston, who sits on the Clawson co-operative’s board of directors, the U.K. had its own quota system but it wasn’t effective because U.K. farmers were not producing enough milk to meet the domestic demand.
“I don’t see the merit to supply management. I believe in a free economy,” he said.
Co-operatives are a popular business structure for farmers in the U.K., and Europe, Eggleston said. Depending on the price of milk, farmers can be profitable through milk sales, through the co-operative they have ownership in or both.
Eggleston, whose family helped found Long Clawson Dairy in 1911, moved from a high-production, confinement system to a seasonal, pastured-based production in 2004. He said his cows with their British Friesen genetics are not high producers but are cost-effective.
Eggleston and his family have 500 acres that support 450 head. Another 60 heifers are kept on a neighbouring farm.
Last fall, federal Agriculture Minister Lawrence MacAulay announced two programs worth $360 million for Canada’s dairy industry. Of that amount, $250 million is designed to help farmers update their farms to boost productivity.
The rest is to help dairy processors modernize their operations.
Source: Western Producer