2 October 2018

4 minute read

Canada has strictly controlled imports for decades to limit the supply of milk in the country. Recently, as milk production in Canada has grown, it created the Class 7 pricing system to dump surplus milk proteins onto global markets, in direct competition with exports from the United States and other nations.

From a strategic standpoint, the agreement announced Sunday night will benefit America's dairy sector because it preserves the overall structure of the 24-year-old North American Free Trade Agreement (NAFTA).

"The outlines of the NAFTA pact remain intact, which will allow the US agricultural sector to continue developing new international markets for our farmers," said Tom Vilsack, president and CEO of US Dairy Export Council. "We also need to pursue new free trade agreements with other nations and resolve our trade conflicts with China. It is imperative that the United States remains an integral player in driving the global trade agenda."

While Canada will remain a largely self-contained, protected milk market, "this agreement, when implemented, should give us additional marketing opportunities that will allow us to provide high-quality American dairy products to Canada, which means we've made incremental progress," said Jim Mulhern, president and CEO of the National Milk Producers Federation. 

"Maintaining dairy market access in Mexico and improving market access into Canada were International Dairy Foods Association's top priorities during the talks to modernize the North American Free Trade Agreement," said Michael Dykes, D.V.M., president and CEO of IDFA. "We're also pleased that the Administration was successful in getting Canada to eliminate Class 7 pricing. This new agreement will preserve our vital partnership with both countries and allow the US dairy industry to seek more export opportunities."

The dairy groups said that the ultimate benefit of the new USMCA will depend on how it is implemented. Also, now that a tentative trilateral agreement has been reached, the dairy organizations urged the governments of the three nations to remove their tariffs on agricultural exports - as well as steel and aluminum - that have been sticking points in relations between the United States, Mexico and Canada.

Canadian Dairy Farmers’ Feel Livelihood Has Been Sacrificed Again

According to the Dairy Farmers of Canada (DFC), dairy farmers across Canada are deeply disappointed over the news of the concessions made on the dairy sector in the new USMCA agreement, noting that once again, dairy farmers paid the price to conclude an international trade agreement.

“The announced concessions on dairy in the new USMCA deal demonstrates once again that the Canadian government is willing to sacrifice our domestic dairy production when it comes time to make a deal," said Pierre Lampron, President of Dairy Farmers of Canada (DFC). “The government has said repeatedly that it values a strong and vibrant dairy sector – they have once again put that in jeopardy by giving away more concessions,” he added.

USMCA follows two previous trade agreements in which access to the Canadian dairy market was granted, CETA and the CPTPP, which sacrificed the equivalent of a quarter of a billion dollars annually in dairy production to industries in other countries. This new agreement once again weakens the dairy sector which, among other things, employs more than 220,000 Canadians and contributes some 20 billion dollars a year to Canada’s gross domestic product. The livelihood of these thousands of Canadians and the future generations of dairy producers is seriously at risk.

“Today, the message sent to our passionate, proud and quality-conscious farmers and all the people who work in the dairy sector is clear: they are nothing more than a bargaining chip to satisfy President Trump,” added Mr. Lampron.

For consumers, each concession replaces Canadian dairy products, products made with great care by Canadians, using extremely high-quality Canadian milk with no artificial growth hormones. The USMCA agreement is opening the gate even further by letting foreign products, made according to standards inferior to our own, onto the shelves of our grocery stores.

The Canadian government has said loud and clear that it wants a prosperous dairy sector. It will be interesting to see how it can reconcile the concessions made in the negotiation of this agreement with its goal of prosperity.

TheCattleSite News Desk