U.S. Dairy Companies Push Back Against Canada's "Protectionist Policies"

The US dairy industry is pressuring its government to act on Canadian dairy import policies.

A group of 17 dairy companies representing U.S. dairy farmers and processors sent a letter this week to governors in 25 states asking them to “urge Canadian policymakers to uphold existing trade commitments” and prevent the implementation of a national strategy that would “unfairly subsidize Canadian dairy products in its domestic and global markets.”

[U.S.-Canada] trade cannot be a one-way street with Canada expecting to enjoy the benefits of exporting its products of interest to our market while denying a sector accounting for hundreds of thousands of jobs in rural America reliable access to the Canadian market,” the group said in its letter to the governors. “[An existing provincial] program has already cost U.S. companies tens of millions of dollars in exports, thereby harming the dairy farmers, dairy plant employees and rural communities that depend on the benefits those foreign sales bring.

The group contends Canadian dairy farmers’ new national ingredient strategy, which introduces a new lower-cost milk class and was proposed to take effect February 1st, would “disrupt skim milk powder markets around the world by using the new program to dump excess milk powder on global markets.”

The 17 dairy companies targeted states that have large dairy sectors, citing “the damage Canada’s protectionist policies have already or are poised to have on these farms and companies, as well as their employees and many communities,” urging state officials to “consider all tools at their disposal to ensure Canada understands the seriousness of this issue.” (Read the letter here.)

Dairy Farmers of Canada strongly disputes the arguments in the letter.

“We understand that the American dairy lobby strategy is to make noise to get the attention of the new American administration, it is not a tactic unique to that industry,” said DFC spokesperson Isabelle Bouchard in a statement shared with Real Agriculture, noting the new class referred to by the U.S. dairy groups has not yet been implemented.

“Dairy producers and processors struck an agreement in principle last summer. Since then, they have continued to their discussions to move from principles to implementation. These discussions continue on our way to a new market environment,” said Bouchard. “Early on, we had set ourselves some timelines, but we agreed that we had to be flexible as we were in unchartered territory,” she continued. “It is important to recognize that we are in a transition period. As such, today, there is no national implementation of class 7.”

The letter to the 25 governors follows a similar memo last month from U.S. dairy organizations and state departments of agriculture sent to President Donald Trump that said Canada is violating trade commitments under NAFTA and the WTO. (The letter to Trump was signed by the International Dairy Foods Association, the National Milk Producers Federation, the U.S. Dairy Export Council and the National Association of State Departments of Agriculture.)

“In the current trade climate across North America, it is foolhardy for Canada to continue provoking the United States with a course of action that so blatantly violates our trade agreements,” said Jim Mulhern, president and CEO of NMPF. “We need our nation’s governors to join in our call for Canada to step back from the brink of what it is about to do and take steps to remind Canada how critical trade is to its own interests, as well.”

“Despite Canada’s efforts to distance itself from the administration’s focus on enforcement and improving how NAFTA functions, it is Canada – not Mexico – that has time and again chosen to disregard its dairy trade commitments to the United States and intentionally dismiss serious concerns from the United States about the impact its dairy policies are having on trade,” said the US Dairy Export Council’s Matt McKnight.

That’s not accurate, says Bouchard: “We all know that Canada has, and continues to be committed to respecting its international trade commitments, and this is true of the ongoing discussions between dairy processors and producers around a national ingredients strategy.”

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