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Analysis shows free trade agreements benefit U.S. dairy industry

Estimates suggest FTAs increased average U.S. dairy farmer's income $7,560 over 10 years.

How important have free trade agreements (FTAs) been to the U.S. dairy industry?

An analysis by the U.S. Dairy Export Council (USDEC) and the National Milk Producers Federation (NMPF) shows that FTAs helped bring an additional $8.3 billion to the industry from 2004 to 2014.

According to the study, additional exports of U.S. dairy products examined during that period resulted in a 34 cents/cwt. higher average milk price, an average of $756 in additional income each year for the American dairy farmer and an additional $7,560 for the American dairy farmer over the 10 years studied.

“Positive ROI (return on investment) is not the automatic result of every free trade agreement, but this analysis shows that each individual agreement negotiated over the last 15 years has led to an increase in dairy exports. That’s why we focus so much energy on our trade agreements,” USDEC president Tom Suber said.

TPP still being examined

USDEC and NMPF are “still reserving judgment” as they carefully examine the full text of the Trans-Pacific Partnership (TPP) agreement released by the Obama Administration, said Jaime Castaneda, USDEC senior vice president of trade policy.

Although the impact of the TPP agreement on the dairy industry’s outlook remains to be determined, past FTAs have clearly been positive for the U.S. dairy industry, according to the analysis by USDEC and NMPF.

The 2004-14 report was done in response to an International Trade Commission investigation seeking to assess the economic impact of trade agreements implemented under trade authority procedures.

Dairy markets are in a global downturn that may not, according to USDEC forecasts, fully end until 2017, causing considerable pain in the meantime. However, the report makes the case that FTAs have, over the long haul, boosted U.S. dairy exports, which have, in turn, benefited U.S. farmers, processors and the U.S. economy as a whole.

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