US dairy sector express concern over New Zealand imports

US dairy farmers are pleading for protection from their counterparts in New Zealand as President Barack Obama's trade negotiators begin talks on a regional agreement in Australia this week.

 

New Zealand accounts for nearly a quarter of global dairy exports, according to Rabobank International, a large agricultural lender.

 

US dairy farmers are concerned that increased trade with the Asia-Pacific could result in New Zealand flooding the US with low-cost dairy products such as cheese and milk powder that could depress prices for US producers. Logistics and cost make it unlikely New Zealand would ship fluid milk to the US.

 

"We're in a bad way already," said dairy farmer Paul Rozwadowski, who milks about 60 cows on his northern Wisconsin farm. Making it easier for New Zealand to ship dairy products to the US would likely hurt the American producers. 

 

Last year, US Trade Representative Ron Kirk announced the administration would begin negotiations to further open markets in the Asia-Pacific region. Talks on the Trans-Pacific Partnership Agreement, which are scheduled to begin Monday (Mar 15), will include Australia, Chile, Brunei, New Zealand, Peru, Vietnam and Singapore.

 

"We're working with the dairy industry and other industries to consult with them on a regular basis," said Deputy US Trade Representative Demetrios Marantis.

 

In recent months, US food-and-agriculture industries have raised concerns the Trans-Pacific talks could result in more imports from the region to the potential detriment of US farmers.

 

American dairy farmers are just beginning to recover from nearly two years of severe losses and commodity-price swings. Last year, milk prices plunged to 30-year lows amid weak global demand and high production costs.

 

New Zealand's plentiful pastures and mild climate have helped it become one of the world's lowest-cost dairy producers. Its inhabitants can consume only a fraction of the milk and related products made there, which means much of it is sent overseas.

 

Dairy products account for nearly a quarter of total merchandise exports from New Zealand and about 7.5% of its gross domestic product, according to the US Department of Agriculture. The US imports some dairy products from New Zealand, but tariffs effectively limit the amount.

 

The New Zealand dairy industry is dominated by Fonterra Co-operative Group, a company owned by 13,000 dairy farmers that processes most of the country's milk. Fonterra said successful talks could produce "a major breakthrough in international trade policy."

 

A recent analysis by the American federation concluded that additional dairy imports from New Zealand would result in US dairy producers losing a cumulative US$20 billion in revenue over 10 years.

 

The American dairy industry has been mobilising members of Congress to lobby on its behalf. Nearly 50 lawmakers signed a letter to Kirk asking that dairy trade be excluded from the trade talks.