Increased access to the Canadian dairy market through the newly minted United States Mexico Canada Agreement (USMCA) will not be a boon for U.S. dairy farmers.
That’s the early verdict from Mark Stephenson, director of dairy policy analysis at the University of Wisconsin-Madison. “I think the dairy producers are not going to look at their milk cheques and see dollars as a result of this… it’s more like pennies and nickels along the way. It’s a fairly small impact on milk prices here in the U.S.”
The new trade pact concedes an additional 3.59 per cent market access to the U.S. and eliminates Canada’s milk pricing Classes 6 and 7.
Stephenson concurs with the National Milk Producers Association, which described the deal as “incremental progress” for U.S. producers. In an interview this week at the World Dairy Expo at Madison, Wisconsin, Stephenson noted he was not surprised to see the end of Class 6 and 7. “That was considered fairly toxic down here,” he says. (story continues below…)
Stephenson says there are many details to work through to get a full picture of the new deal but he believes mechanisms will likely remain for the Canadian industry to effectively price milk protein products. “I think that will mean that milk protein isolate that had been coming up into Canada is not going to be all that attractive to be sending up any longer, so it accomplishes the same thing that the Class 6 and 7 did,” he says. “What it probably does do is cap the amount of product that can be priced under the former Class 6 and 7 and sold on to world markets – skim milk powder, for example.”
In the interview (above), Stephenson discusses USMCA and the tremendous need for export markets to sell a flood of U.S. milk production. However, he does not believe the Canadian market is the answer to U.S. dairy troubles.
“I don’t think we’re looking at a tsunami of milk coming up into Canada from Wisconsin or New York. It will me more like a dribble that will be coming up in the way of product sales,” adds Stephenson.