SALEM, Ohio — Dairy farmers in New York and Wisconsin are days away from losing part of their market share into Canada, a blow that could put some of those farmers out of business, and impact the dairy industry across the U.S.
In Wisconsin, as many as 74 dairy farmers who had supplied milk to Grassland Dairy, for the production of ultrafiltered milk, received letters that their milk would no longer be accepted beginning May 1, because of Canadian milk policy designed to protect its markets.
Ultrafiltered milk is protein liquid concentrate used to make cheese. Canada’s newly created National Ingredients Strategy and Class 7 milk pricing program disadvantages U.S. exports, while making domestic milk more affordable.
Dan Smith, an administrator with the Wisconsin Department of Agriculture, Trade and Consumer Protection, said at least 800,000 pounds of milk a day in Wisconsin could be affected.
“This is a heart-wrenching situation. It’s almost like the impact of a natural disaster in the area,” he said.
And even though the bulk of the milk is coming from Wisconsin and New York, the issue has the potential to affect the market for all producers, including those in Ohio.
It could also set a bad precedent for the future of U.S. exports.
In a congressional letter to the Office of the U.S. Trade Representative, lawmakers point out that the U.S. exported about 15 percent of its milk production in 2016, valued at about $5 billion.
Taking away even part of that market can affect the rest.
“Trade affects all of us,” said Scott Higgins, chief executive officer of the Ohio Dairy Producers Association. “Every state is impacted by it.”
Higgins has been encouraging lawmakers to sign a letter calling for market access and holding Canada accountable.
Smith said the Wisconsin ag department is working with state and federal agencies, and with other milk processors, to try and find a market. In the worst case, he said it is possible that some U.S. farms could go out of business.
“I’m working as hard as I can so that doesn’t happen, but it’s a very serious concern,” Smith said.
But the battle will not be easy.
Andrew Novakovic, professor of ag economics at Cornell University, said U.S. processors had been supplying Canada with milk through a loophole in the North American Free Trade Agreement (NAFTA). Canada caught on, and enacted policy to protect its own industry.
“U.S. manufacturers discovered that they could sell ultrafiltration milk to Canadian cheese makers through a loophole in our trade agreeement,” said Novakovic. “Canada and its provinces quickly reacted to defend their border and producers.”
According to Novakovic, the back and forth of protectionist policies between the two nations has continued for decades. He said Canada’s current action amounts to “neutralizing the advantage that the U.S. had.”
He expects U.S. dairy producers to appeal the action through NAFTA, and possibly the World Trade Organization, but he’s not sure either action will bring relief.
However, U.S. milk producers and processors are hopeful.
Former U.S. Secretary of Agriculture Tom Vilsack, who is now the CEO of the U.S. Dairy Export Council, said in a released statement, the U.S. “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.”
Jim Mulhern, president of the National Milk Producers Federation, said Canada’s protectionist policies are “having precisely the effect Canada intended … despite long-standing contracts with American companies. This export access has suddenly disappeared, not because the market is gone, but because the Canadian government has reneged on its commitments.”
The Canadian dairy industry said it’s just looking out for its own markets, and has done nothing wrong.
“It’s so unfortunate that this is happening to these farmers, but it is not our fault,” said Therese Beaulieu, assistant director of communications and policy for Dairy Farmers of Canada. “Every processor has a right to choose who they get their milk from.”
She said Wisconsin has more dairy cows (1.2 million) than all of Canada, and that Canada is just looking out for its own industry.
In an article in Milwaukee’s Journal Sentinal newspaper, Isabelle Bouchard, director of government relations for Dairy Farmers of Canada, said, “We don’t feel good about U.S. farms going out of business. But you know what? It’s not our responsibility. It’s your own responsibility, as a country, to manage your production.”