By Rod Nickel
WINNIPEG, Manitoba (Reuters) - The Canadian government will spend C$1.75 billion ($1.32 billion) over eight years to compensate dairy farmers who face greater competition after free trade deals were struck with European Union and Trans-Pacific nations, Agriculture Minister Marie-Claude Bibeau said on Friday.
The support to dairy farmers, who form one of Canada's most influential lobby groups, comes two months before Prime Minister Justin Trudeau's government faces an election.
Bibeau, speaking on a dairy farm in Compton, Quebec, said the Liberal government would not make further dairy market-access concessions in other trade negotiations.
Canada's 11,000 dairy farmers are concentrated in the vote-rich provinces of Quebec and Ontario, which will be key battlegrounds for the governing Liberal party and its main opponent, the Conservatives.
The trade pacts have eroded Canada's system of production quotas and high tariffs that is designed to support prices of dairy, poultry and eggs. As part of the European and Trans-Pacific trade deals Canada signed, it agreed to allow greater imports into the Canadian market, although the supply management system remains in place.
Of Canada's aid to dairy farmers, C$345 million will be paid directly to farmers in the first year according to the size of their production quotas, Bibeau said.
Ottawa gave further access last year under a new North American free trade deal that has not yet been ratified. Bibeau said when it is in place, the Canadian government would give dairy farmers further compensation.
Compensation for poultry and egg producers is still being negotiated, she said.