Canada will pay a CA$1.75 billion (£1.09bn) compensation package to its 11,000 dairy farmers to mitigate producer losses due to the ratification of three international trade agreements.
The sum will be paid over eight years starting with CA$345 million (£115m) in the first year in the form of direct payments to existing milk quota held. A farmer milking 80 cows will be awarded a direct payment of CA$28,000 (£17,000) in the first year.
Canada operates a quota system known as Supply Management based upon domestic supply requirements.
The system aims to give producers a fair return for milk supply based upon an agreed pricing formula.
International market critics state the Supply Management system is protectionist and prevents access to Canada’s domestic market.
Three recent Canadian trade agreements between the EU, transpacific countries and US and Mexico have opened the door to foreign trade being granted market access estimated at an 8.4 per cent annual loss to domestic milk production.
Added to these trade agreements, with access already agreed under existing World Trade Organisation terms, it is estimated nearly 20 per cent of dairy products will now be met via imports by 2024.
The agricultural sections of the trade agreements were met with a furore by Canadian dairy producers, processing plants and domestic market supporters regarding issues such as milk quality, animal welfare and food provenance.
Domestic market supporters were concerned the agreements would open-up the market to US products flooding across the border threatening food sovereignty and placing Canadian dairy farmers and rural economies at risk.
Conceding part of the domestic dairy market has had a major impact on dairy producers according to the president of Dairy Farmers of Canada, Pierre Lampron.
He said: “We are grateful for the announcement but would have preferred no concessions to our domestic dairy production.
“Prime Minister Trudeau has made a commitment that no further concessions will happen to our domestic dairy market in any future trade negotiations.”