Canadian Milk Matters

As the country ratifies the Trans-Pacific Partnership, Wally Smith says Dairy Farmers of Canada has the next generation of milk managers set up for success

October 5, 2015, was a big day for Wally Smith. That’s when Canada, along with eleven other major countries, announced its intent to participate in the Trans-Pacific Partnership (TPP). The massive free trade agreement signed in early 2016 reduces tariffs, establishes supply chains, assists small businesses, and promotes innovation.

For Smith, the president of Dairy Farmers of Canada (DFC), the announcement was a victory. After years of negotiations, a deal was finally in place. And although the government made some concessions, Smith spoke up for fellow dairy farmers and not only convinced lawmakers to keep supply management intact—they’ve pledged $4.3 billion to dairy farmers negatively impacted by the deal.

DID YOU KNOW?

All milk—and cream—sold in Canada is produced in Canada.

The accomplishment was arguably the biggest of Smith’s career and earned him spot forty-six on Canadian Business’s Power 50, an annual list of the country’s most powerful businesspeople. But Smith never set out for accolades. A dairy farmer by birth, he started his career in agricultural politics in the nineties by default. “I wanted to gather as much information as I could simply to help make business decisions,” he says. “And I suddenly realized I had the knowledge and the leadership skills to take another step to help other farmers.” Those other farmers made Smith president of a local group on Vancouver Island. From there, he became president of the BC Milk Producers Association in 1999. The next year, he started working with DFC’s board of directors. He joined the group’s executive committee in 2003, won a spot with the International Federation of Agricultural Producers Group on Dairy in 2005, and was named president of DFC in 2011.

Canadian Dairy Deconstructed

215k+

Full-time jobs provided by the industry

$18.9B

Industry contributions to
Canada’s GDP—about 1.1%
of the national total

11,350

Dairy farms

$6B

In annual receipts

465

Processing plants

953.2k

Dairy cows

Today, the long-time farmer represents the interests of dairy producers across Canada. “I’m surrounded by great people at work, and together we look out for the integrity of supply management to ensure a strong dairy industry from farm to table in Canada,” says Smith. In the role, Smith is deeply concerned with the TPP, as the deal will become the world’s biggest free trade agreement and account for almost half of the world’s economic production. When ratified, Canada will be allowed to trade freely with fifty-one other countries but will no longer share preferred trade rights to the United States with only Mexico; that preference will include twelve nations. Canadians may enjoy lower prices for some goods, and Canadian companies will benefit from trading with lower tariffs than competitors from non-TPP countries.

After previous trade agreements eroded gains in the dairy industry, Smith shifted his strategy during TPP negotiations. As Canada negotiated the deal, Smith worked to vocalize needs and views of dairy farmers across Canada. “I looked at how we carried out lobbying activities in the past and realized we were still using an outdated approach that may have been effective ten years ago,” he recalls. “It was time for something new.”

In recent decades, dairy farmers have seen their political influence shrink along with the number of farms in Canada. From 1971 to 2011, the number of Canadian dairy farms shrank by 91 percent. And while DFC was once dogmatic and inflexible, Smith implemented a collaborative mode and relational strategy. He built relationships with key stakeholders to illustrate and communicate the continued importance of dairy in Canada. Dairy farms still exist in every province, and the sector is the second largest agricultural producer in seven provinces. “Dairy helps steer the Canadian economy, and we’re critical to rural economic activity across the country,” says Smith.

As negotiations wore on, Smith knew it was important to prevent imported dairy products from pouring into Canada and cutting into domestic production. He travelled with other dairy leaders, following Canada’s chief TPP negotiators across the country and around the world.

While other countries wanted to phase out supply management—which regulates farm production for domestic consumption while imposing tariffs on foreign imports—Smith remained steadfast. He and his colleagues influenced negotiators and public opinion by vocalizing the benefits of a sustainable and viable dairy industry in Canada. In the end, DFC (and Canada as a whole) gave up some market access but maintained supply management and its underlying principles. “We see the TPP result as a success,” says Smith. “For dairy farmers in Canada, it’s now back to business as usual.”

And while DFC and other industry leaders are largely satisfied with the TPP, Smith knows there’s more left to accomplish. Canada already allows more dairy products into its borders than most other countries, with imports standing around 9 percent. Canadian farmers carefully produce on quota to match requirements in sync with domestic demand. Previous deals shook that delicate balance and threatened Canadian producers. “We believe in trade, but trade has to be fair. The TPP is important to the dairy industry and to Canada as a whole—we have to remain strong,” says Smith, adding that chief Canadian TPP negotiator Kirsten Hillman “gained a lot while only giving up a little.” Among other accomplishments, she convinced her counterparts from other countries that they would achieve more through a fair deal than by attempting to dismantle supply management in Canada.

“We believe in trade, but trade has to be fair. The TPP is important to the dairy industry and to Canada as a whole—we have to remain strong.”

With that key procurement pillar in place, Canada’s dairy farmers find themselves in a very strong position with disciplined production, robust tariffs, and fair prices. Instead of playing defence, Smith and his colleagues can now focus more on domestic policies and other DFC initiatives.

By 2019, the group hopes to finalize a new program around food safety, animal welfare, and environmental sustainability. These and other projects are especially important because, on average, dairy succession includes the youngest of Canadian farmers in any sector across the country. “Dairy farms are profitable, and we’re proving to be strong community partners and economic engines,” says Smith. Thanks in large part to his work, the Canadian dairy industry is ready for a new generation to take over.