Donald Trump called Canada’s supply-managed dairy sector a “disgrace.”
Indeed, Canada’s strict system of production quotas, import restrictions and price and quality controls is a perennial target for free traders.
But guess who likes it? The biggest market Canada is wooing right now: China.
Supply management is a big reason why a Chinese corporation is investing an unprecedented $225 million in eastern Ontario. Feihe International, Inc. wants cows. Goats, too. Lots of them.
That’s because as China’s one-child policy phases out, it’s going to need a lot of baby formula.
“It’s one of the largest economic development projects in our city’s history,” said Kingston, Ont., mayor Bryan Paterson, calling Canada’s largest-ever foreign investment in agri-food “off the charts.”
“It might be out of the ordinary, but I think that’s what was most exciting.”
The first concrete trucks are already pouring at the future site of a 28,000-square-metre infant formula plant. When the state-of-the-art facility opens in 2019, it will employ over 200 people in manufacturing and research jobs. Over a thousand more could come from its construction and eventual supply chains.
A small team of Chinese managers have moved to Kingston. Everyone else will be local.
Last winter, Feihe brought the mayor and a delegation from Kingston over to northeastern China for a tour of its factories and farms. Paterson was struck by how geographically similar it was to eastern Ontario.
With one big difference: scale.
A “typical rural village” they visited was three times the size of Kingston, he said.
“When you have millions and millions of babies, you need to be able to manufacture a lot of infant baby formula.”
Bringing formula production back
Canada hasn’t made its own baby formula for years. The Canadian Dairy Commission tried for a couple of years to find a domestic processor. Demand for butter was up, and baby formula uses the non-butterfat part of milk. But no Canadian processors were interested in expanding into formula.
The CDC broadened its search internationally, to European and Asian companies.