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Canada's dairy trade actions hurting rural America

U.S. dairy groups urge federal and state governments to retaliate against protectionist Canadian trade policies.

U.S. dairy organizations this week urged the Trump Administration to fight back against protectionist Canadian trade policies that are slamming the door shut to American dairy exports, in violation of existing trade commitments between the two nations. The National Milk Producers Federation (NMPF), the U.S. Dairy Export Council (USDEC) and the International Dairy Foods Assn. (IDFA) called on the federal government, as well as on governors in northern states, to take immediate action in response to Canada’s violation of its trade commitments to the U.S.

Because of Canada’s National Ingredients Strategy and new Class 7 milk pricing program, which the groups say is expressly designed to disadvantage U.S. exports to Canada and globally, multiple dairy companies in Wisconsin and New York have been forced to inform many of their supplying farmers that the Canadian market for their exports has dried up. For some farmers, this means that the company processing their milk and shipping it to Canada can no longer accept it starting in May.

“Canada’s protectionist dairy policies are having precisely the effect Canada intended: cutting off U.S. dairy exports of ultra-filtered milk to Canada despite long-standing contracts with American companies,” said Jim Mulhern, president and chief executive officer of NMPF. “American companies have invested in new equipment and asked dairy farmers to supply the milk to meet demand in the Canadian dairy market. This export access has suddenly disappeared, not because the market is gone but because the Canadian government has reneged on its commitments.”

Tom Vilsack, president and CEO of USDEC, said U.S. federal and state governments “cannot abide by Canada’s disregard for its trade commitment to the United States and its intentional decision to pursue policies that are choking off sales of American-made milk, to the detriment of U.S. dairy farmers.”

He added, “It is deeply concerning that Canada has chosen to continue down a ‘beggar thy neighbor’ path of addressing its internal issues by forcing the U.S. dairy industry to bear the harmful consequences.”

Vilsack noted that while farm families in the Northeast and Midwest are suffering the immediate consequences of the loss of Canadian markets, “thousands more will suffer if Canada persists in using its programs to distort the global milk powder markets so critical to tens of thousands of American dairy farmers.”

Grassland Dairy Products Inc. in Greenwood, Wis., is one of the companies that recently had to inform its farmer suppliers that it was reducing intake. Mitch Breunig, president of the Professional Dairy Producers of Wisconsin (PDPW), confirmed to a new outlets that his organization was notified Monday that between 65 and 75 farmers received a letter from the company.

“Grassland recently made the difficult decision to reduce our milk intake volumes. After years of selling milk product into Canada, our Canadian partners notified us that, due to their new Canadian dairy regulations, they would stop purchasing our products, effective immediately,” the company said in a statement. “The Canadian business affects Grassland up to 1 million lb. of milk per day. After evaluating and adjusting as much milk as possible, we were forced to decrease our milk intake.”

Grassland Dairy said despite the sudden news, it hopes farms will be able to transition during the next several weeks. “This was a difficult decision and made with the utmost respect for the hard-working dairy farmers,” the company said.

Breunig said the PDPW board of directors would be discussing the issue at its meeting this week, as the issue could be devastating to some farmers.

"For an individual producer, losing your market is the single scariest thing you can go through," Breunig said, adding that market access is one of the most important things for a dairy farm.

“The U.S. dairy industry is united on this issue, because these restrictive policies effectively bar a significant U.S. export to Canada, with total losses estimated to hit $150 million worth of ultra-filtered milk exports from Wisconsin and New York. As we feared, these policies are now prohibiting our nation’s dairy processors from accessing the Canadian market,” IDFA president and CEO Dr. Michael Dykes said. “IDFA is speaking out against Canada’s protectionist policies on Capitol Hill and asking the Trump Administration and state governors and legislators to insist that Canada honor its trade commitments and allow more market access for U.S. dairy products.”

Despite efforts by the U.S. government and dairy organizations to shed more light on the Canadian program, Canada is refusing to share sufficient details. For instance, limited information has been posted online by certain provinces, and some of that information has subsequently been removed from provincial milk authorities’ websites in what appears to be an attempt to obfuscate how the program operates. Despite this lack of transparency, U.S. companies and their supplying farmers are already feeling the real-world consequences.

The U.S. is Canada’s largest export market, accounting for approximately three-fourths of Canada’s total exports. The organizations urged both federal and state governments to move swiftly to demonstrate to Canada that trade is a door that must swing two ways in order to have a functional relationship.

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