Changes ahead for Canadian dairy producers warns industry leader

Tuesday, February 24, 2009

by GEOFF DALE

Canadian dairy producers may be in an enviable trade position now but that is likely to change drastically when the latest round of the World Trade Organization negotiations conclude, says a representative of a multinational dairy corporation in Holland.

Speaking at the annual Southwestern Ontario Dairy Symposium in Woodstock last week, Sybren Attema of Royal Friesland Campina told producers the Canadian dairy sector needs to start asking serious questions before the WTO Doha Round concludes. Formed by last year’s merger of Royal Friesland and Campina, the company produces and markets dairy products and ingredients.

“You should repair the roof when the sun is still shining,” says Attema. “You need to look for answers now because the situation will change once the WTO negotiations are done.”

Canada may be facing several major changes including the virtual elimination of dairy exports, he says. Producers need to ask questions about how to deal with stagnating domestic and shrinking export markets, growing imports, higher costs and the foreign investment strategy of dairy processors.

He says Holland’s dairy sector has responded by focusing on continuous improvement, information exchanges about the industry, innovation in cattle breeding and achieving economies of scale through expansion (in recent years, the size of the average Dutch dairy farm has increased 5.3 per cent yearly). On the processing side, the merger of Royal Friesland and Campina has increased competitive power. 

Noting the latest round of WTO negotiations could end sometime this year, Attema stresses now is the time for Canadian dairy producers to prepare for a global marketplace without subsidies, quota systems and tariffs. He predicts the changes will be radical for Canadian producers, generated by a freer market but would not say whether it would mean the loss of supply management.

“Canadian producers need to ask these questions now, so they will have the answers when these changes take place.”
 
Royal Friesland Campina’s Dutch operations has annual revenues of about 9.1-billion Euros (about $14.5-billion (Canadian), with 22,000 employees and 100 production and sales locations in 25 countries. BF