The chairman of Dairy Farmers of Ontario (DFO), Gordon Coukell says the demand for a cut in tariffs by the World Trade Organization (WTO) threatens Canadian producers but the axe that could fall is at least a decade away.

Any pressure to change supply managed systems is too far down the road to worry most farmers, he said, adding "This needs to be in the back of producers’ minds that things could change. Unless you have extreme, long-term debt there is no reason to worry. But there are no guarantees." The negotiations are slated to end by 2004.

At the Farm Products Marketing Tribunal hearing of Georgian Bay Milk Company, Canada’s largest milk processor, Saputo, complained of a static market for dairy products and the need to expand production to service the international market. With net earnings of almost $49 million last year, the company said in its annual report that it needs a cheaper milk supply than can be found in North America to become a world class processor. The chief obstacle to higher profits is the cost of milk, it said.

While the WTO is calling for maximum tariffs of 90 per cent, a dramatic decrease from the current Canadian level for milk of 245 per cent, Coukell says the report has no supporters. However, the U.S is pushing for tariff limits of 25 per cent. The Cairns Group, a group of smaller nations with major agricultural exports, has called for the elimination of tariffs, calling them trade distorting subsidies.

Milk on the optional export market selling for 31 cents per liter, with a maximum tariff of 90 per cent, would be cheaper than the price now obtained by quota holders.

While there is no evidence that the export milk would be used on the domestic market, the previous system was less than transparent. Last summer, when Farmers Forum tried to determine where the export contract milk was going officials at DFO were evasive. Plants were audited on an on-going basis but six months could elapse between audits. Details of the destinations were not revealed.

Any WTO pressure on the quota system would be at least 10 years away, Coukell said. It could take three years to reach an agreement among nations on the new WTO rules and another seven to 10 years to implement any changes, he said. "One thing about the WTO, nothing moves very quickly."

He added: "The WTO should never be allowed to meddle in the domestic milk supply. Their interest is world trade."