April 17, 2017
US dairy industry slams Canada for undercutting export of ultra-filtered milk
Canada's recent suspension of some dairy imports from US have exacerbated an oversupply in the latter, Bloomberg reports.
The development came as a result of a new policy which incentivises Canadian processors that acquire local supplies.
The US dairy industry has made an appeal for help to President Donald Trump as some companies claimed the loss of all Canadian sales of ultra-filtered milk, a concentrated ingredient used to boost protein content in cheese and yogurt. The Canadian incentives policy is also seen by the US Dairy Export Council and National Milk Producers Federation as a violation of trade commitments between the US and Canada.
Both countries are currently at a sensitive phase of trade relations given Trump's desire to redefine the terms of the North American Free Trade Agreement (NAFTA) as part of his "America first" promises, Bloomberg states.
Kevin Ellis, CEO of Cayuga Milk Ingredients, hopes that renegotiation of NAFTA can get something back for America", especially US dairy farmers who are suffering "a huge loss". The company based in Auburn, New York, has reported loss of Canadian exports, a source of about 30% of total sales.
The US dairy Industry also demands more action from the Trump administration and "convey to Canadians the importance of trade going both ways," Shawna Morris, vice president of trade policy at the National Milk Producers Federation (NMPF), said. Canada's new pricing system, called Class 7, has been decried as a protectionist policy that undercuts US ultra-filtered milk exports to the country despite "long-standing contracts with American companies," according to Jim Mulhern, president and CEO of NMPF.
Furthermore, the US sector complained about a lack of transparency in regards to Class 7 which, Morris said, is administered by individual provinces, with notifications issued throughout March.
The Class 7 programme was introduced in February, said Isabelle Bouchard, a spokeswoman for Ottawa-based Dairy Farmers of Canada, which represents 12,000 farms. Imports of US ultra-filtered milk have resulted in an estimated US$172 million in annual losses for Canadian companies, the Dairy Farmers of Canada claimed.
"No new tariffs have been created that would restrict (American) access to the Canadian market," Bouchard said. "The problem is not Canada's dairy system, the problem is that there is too much milk produced in the USA, which is not Canada's fault."
During the last so-called spring flush, in May and June 2016, the amount of milk wasted or used for animal feed in the northeastern US exceeded 75 million pounds, the highest recorded in government data going back to 2000.
Supplies are forecast to expand this year, Bloomberg says.