Dairy Groups Challenge Canada

U.S. Industry Calls on Trump to Deal with Canadian Dairy Policies

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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U.S. dairy groups have sent a letter to President-elect Donald Trump calling on him to challenge protectionist Canadian dairy policies. (DTN file photo)

WASHINGTON (DTN) -- The U.S. dairy industry is telling President-elect Donald Trump that Canada's dairy policies are protectionist and meant mainly to block imports from the U.S.

Further, Canada's policies are a direct violation of the country's commitments under the North American Free Trade Agreement, dairy organizations wrote the president-elect in a letter on Wednesday.

The letter to Trump came from the International Dairy Foods Association, the National Milk Producers Federation and the U.S. Dairy Export Council, as well as the National Association of State Departments of Agriculture.

Canada has operated its dairy industry under a long-standing agricultural supply management program regulating production from roughly 12,000 dairy farmers and maintaining high import tariffs to protect the market for those producers.

Canada's domestic dairy protections were largely saved in the Trans-Pacific Partnership negotiations. Canada essentially agreed to give up roughly 3.25% of its projected 2016 milk production to more imports. That was a sore spot for both the U.S. and New Zealand, which wanted more access to Canada's dairy market. However, the U.S. is expected to drop out of the 12-nation TPP deal just as soon as Trump is inaugurated.

In their letter, the U.S. dairy groups and state departments of agriculture told Trump that Canada is expanding those dairy controls. The groups urged Trump and his administration to take action. The groups point to Canadian provincial policies for ingredient class milk prices that the groups state are displacing U.S. exports to Canada. The policy "is conservatively estimated at $150 million worth of ultra-filtered milk exports being lost by companies in Wisconsin and New York, which are highly reliant on their trade with Canada," the dairy groups wrote Trump.

The situation is causing a ripple effect, the groups said, because more volumes of skim powder milk "will be forced onto a thinly traded global market" that will further depress milk prices globally, the dairy groups stated to Trump.

The dairy groups explained that the U.S. dairy industry is limited in sales to Canada because of "exorbitant tariffs" with only limited market access granted under NAFTA. "Canada is one of America's top trading partners, yet the country is clearly flouting its trade obligations by implementing and enforcing these policies."

Further, the U.S. dairy industry sees exports driving growth for farmers, noting that the U.S. was once a net dairy importer but now has a trade surplus of more than $2 billion. "Enforcement of current trade agreements, whether bilateral or multilateral in nature, is central to strengthening the U.S. economy."

The letter was sent to Trump as well as cabinet nominees such as Robert Lighthizer, the Trump Administration's nominee for U.S. trade ambassador, Wilbur Ross, nominee for Secretary of the Department of Commerce, and White House trade advisor Peter Navarro, as well as members of the House and Senate agricultural committees.

The letter comes as it has been reported that outgoing Agriculture Secretary Tom Vilsack could take a job with the U.S. Dairy Export Council as soon as next week, though Vilsack has declined to detail his plans.

Canada also has a trade deal with Europe that close to being finalized. With that deal, Canada has agreed to spend $350 million in Canadian dollars ($265.8 million U.S.) for farmers and processors to upgrade technology and diversify their products to deal with more imports of cheese and other products from Europe.

Chris Clayton can be reached at Chris.Clayton@dtn.com

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Chris Clayton