President Donald Trump recently declared that (free and open trade of U.S.) milk does a body (Wisconsin and New York dairy farmers) good.
Earlier this month, April 18 to be specific, the POTUS was visiting the stomping grounds of House Speaker Paul Ryan in Kenosha, Wisconsin.
Trump talked a lot about “Buy American, Hire American” while visiting the headquarters of Snap-on Inc. But then Trump fired a high-hard one across Canada’s chin that will certainly put some additional heat on the upcoming NAFTA negotiations.
Let the war on milk commence.
Up to now, Trump had been unleashing most of his disdain on Mexican-U.S. trade. But if Canada believed its part of NAFTA negotiators with the U.S. would be a cakewalk, those notions are now out the window.
Probably prompted by Senate Minority Leader Chuck Schumer of big-time-milk-state New York, Trump took issue with pending Canadian rules that will curtail some U.S. milk imports.
Here’s the issue in a nutshell. U.S. dairy producers produce a lot of milk. In fact, too much milk. Part of the problem has to do with Americans drinking far less milk now. Domestic consumption of milk has been falling for six straight years, and USDA thinks that trend will continue in 2017.
So, U.S. dairies need some place else to sell all that extra milk or face the unappealing prospect of dumping it on the ground as worthless.
Canada has been a buyer of U.S. milk for decades. But Canada has recently developed a renewed love for butter, which requires butterfat made from a post-NAFTA American invention — diafiltered milk.
Diafiltered milk production facilities have been built all along the U.S. border in Wisconsin and New York to supply Canada, which can’t produce enough on its own to meet all that new butter demand.
Because diafiltered milk is not covered by NAFTA, Canada can’t regulate how much of the stuff flows from the U.S.
And that has Canadian dairy farmers calling foul who say all that U.S. milk is putting their operations at risk
So, the Canadian brass created a new lower priced class of milk to provide incentive for domestic farmers to ramp up production of diafiltered milk.
Now, a number of U.S. dairies say they are at risk of going out of business within weeks, unless they find another market.
For its part, Canada has zero sympathy for the U.S. milk producer. Canada Prime Minister Justin Trudeau made it quite clear that if Canada wants to protect its milk industry, it will do so.
Let me get beyond all the baloney and posturing.
U.S. dairy must shoulder a big part of the blame for the current state of affairs, by not paying attention to market forces that suggested it should had backed off on production, especially in light of a world-wide glut on milk in recent years.
And for its part, Canada’s milk supply management system is itself unfair — not so much on American farmers, but on Canadian consumers. The system sets prices on supply and not demand, which artificially inflates what Canadians pay for milk as well as eggs and poultry.
A cool, measured response between the U.S. and Canada could produce a win-win for both nations’ dairy industries in new NAFTA talks. But given the heated rhetoric, perhaps both sides should take a cold milk shower before proceeding.
About Dave Dickey
Dickey spent nearly 30 years at University of Illinois at Urbana-Champaign’s NPR member station WILL-AM 580 where he won a dozen Associated Press awards for his reporting. For the past 13 years, he directed Illinois Public Media’s agriculture programming. His weekly column for Big Ag Watch covers agriculture and related issues including politics, government, environment and labor. Email him at email@example.com.
This column reflects the writer’s own opinions and not those of Big Ag Watch.