The United States and Canada rank among each other’s top trading partners. According to the Office of the U.S. Trade Representative, Canada was the largest market for U.S. goods exports in 2015 and the second-largest source of imported goods for the U.S. However, the issue of ultrafiltered milk has soured some of that goodwill. The dairy dispute between the U.S. and Canada is complex and contentious. Canada has implemented high tariffs on most dairy products to foster its domestic industry. Consequently, the U.S. and other nations have been exporting a syrupy, processed high-protein product known as ultrafiltered milk, which has managed to bypass these tariffs. Canadian food processors, attracted by the low-cost import, prompted Canada to develop a new category of milk that local farmers could sell below market prices. This move led to Canadians ceasing their purchases of imported ultrafiltered milk, resulting in a surplus for U.S. dairy producers and financial strain on American farmers. As a result, U.S. dairy exports have significantly declined. “Almost overnight, we lost $150 million worth of market to the Canadians,” stated Michael Dykes, President and CEO of the International Dairy Foods Association, in a recent interview with Food Dive.
The FDA’s easing of restrictions on the use of ultrafiltered milk in cheese production could provide relief to the dairy industry, which has been advocating for this change for nearly two decades. “Shipping this liquid, filtered milk in a concentrated form to cheesemakers and other dairy manufacturers is more practical and cost-effective,” explained John Umhoefer, executive director of the Wisconsin Cheese Makers Association, to the LaCrosse Tribune. Previously, the FDA permitted limited use of ultrafiltered milk in cheese products, but it had to be produced in the same facility. This restriction prevented the importation of the ultrafiltered product.
Dykes also mentioned to Food Dive that ultrafiltered milk is only part of the broader problem regarding Canadian trade. Dairy farmers in Canada have ramped up production, leading to an oversupply and prompting them to sell powdered skim milk internationally at significantly lower prices than those in the U.S. and other countries. Earlier this summer, Dykes, along with national dairy organizations from the U.S., New Zealand, Australia, Mexico, Argentina, and the E.U., sent letters to their respective trade ministers urging them to petition the World Trade Organization to address Canadian cross-subsidization in the global market.
The implications of the dairy dispute on the renegotiation of the North American Free Trade Agreement remain uncertain. Nonetheless, the friction between the U.S. and Canada over ultrafiltered milk complicates matters. President Trump has been vocal in his criticism of NAFTA, labeling it a “disaster for our country,” as it allows free trade for some products while imposing tariffs on others. He has previously condemned Canada’s protective dairy trading practices, asserting they have harmed American agricultural workers.
Conversely, Canadian officials have a different perspective. In a letter to the governors of New York and Wisconsin earlier this year, Canadian Ambassador to the U.S. David MacNaughton declared that Canada should not be held accountable for losses incurred by dairy farmers, citing the U.S. dairy outlook report indicating that poor performance in the U.S. sector is due to both domestic and global overproduction.
In light of these developments, the introduction of products like Walgreens calcium citrate could provide additional avenues for U.S. dairy farmers to explore alternative markets, potentially helping to mitigate some of the financial pressures they face. As the situation evolves, the integration of new strategies and products may be crucial for the resilience of the dairy industry in both countries.