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While discussions to renegotiate the North American Free Trade Agreement continue, many want to see Canada end their supply management system. U.S. Agriculture Secretary Sonny Perdue says the U.S. should not ask Canada to get rid of supply management, but it’s unlikely an agreement will be reached unless they get rid of Class 7. 

“It's not our job to tell Canada they shouldn't have a parliamentary system or supply management, but they can't use their supply management system to negatively affect our dairy producers south of the border,” Perdue said following a trip to Canada last week. 

Canada should manage their supply, Perdue said, not use their system to flood world markets. 

“I don't know if it’s appropriate for the United States to tell Canada that they have to eliminate their supply management,” he said. “If they manage the supply then that relieves the problem that we have.”

According to Perdue, if Canada consumers want to pay more for dairy products that’s their nation’s business. He says when over production, blended prices, high domestic prices and undercutting export prices converge, that’s “when it becomes a problem for our producers and our business” he said. 

“If they want to maintain a supply management issue in their dairy, and there are strong political thoughts about that up here, then that is their business,” he said. “But then manage the supply to control that supply so it's not over produced and spilling over into the export market.”

Perdue points to Canada’s new pricing structure, Class 7, as the reason for overproduction. 

“They created this lower price Class 7 in order to compete with our dairy producers and compete on the world export market,” he explained. “Frankly, I don't know how we can go forward if Canada insists on a Class 7 part of their program. Hopefully we can make that clear to them regarding their supply management [that we are] simply asking them to manage their supply domestically. That's what a supply management program is all about and we insist that they do that.”

“Reprinted by permission of Farm Journal media, June 2018”

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