The United States and Canada rank among each other’s top trading partners. As stated by the Office of the U.S. Trade Representative, Canada was the largest export market for U.S. goods in 2015, and it also ranked as the second-largest source of goods imported into the U.S. Nevertheless, the issue of ultrafiltered milk has soured some of the goodwill between the two nations. The dairy dispute between the U.S. and Canada is complex and contentious. Canada imposes high tariffs on most dairy products to support its domestic dairy industry. In response, the U.S. and other countries began exporting a syrupy, processed, high-protein product known as ultrafiltered milk, which circumvented these tariffs. Canadian food processors developed a strong preference for this inexpensive import, prompting Canada to introduce a new type of milk at a lower-than-market price that its local farmers could sell to producers. Consequently, Canadian consumers shifted away from purchasing imported ultrafiltered milk, leaving U.S. dairy producers with a surplus of the product and placing financial strain on American dairy farmers. As a result, U.S. dairy exports have decreased significantly. “We almost instantly lost $150 million worth of market share to the Canadians,” International Dairy Foods Association President and CEO Michael Dykes informed Food Dive in a recent interview regarding this issue.
The FDA’s recent relaxation of restrictions on the use of ultrafiltered milk in cheese production could potentially benefit the dairy industry, which has been advocating for such changes for nearly two decades. “Shipping this liquid, filtered milk to cheesemakers, other dairy manufacturers, and even food processors in a concentrated form is more practical and economical,” stated John Umhoefer, executive director of the Wisconsin Cheese Makers Association, in a conversation with the La Crosse Tribune. Previously, the FDA permitted limited use of ultrafiltered milk in cheese but only if it was produced in the same facility. In other words, it couldn’t be transported from another location.
Dykes further explained to Food Dive that ultrafiltered milk is just one aspect of the broader issues affecting trade with Canada. Canadian dairy farmers have also ramped up production, leading to an oversupply, and they began selling powdered skim milk internationally at prices significantly lower than those of the U.S. and other countries. Earlier this summer, Dykes, along with other national dairy organizations from the U.S., New Zealand, Australia, Mexico, Argentina, and the European Union, sent letters to their respective trade ministers urging them to petition the World Trade Organization regarding Canada’s cross-subsidization practices in the global market.
The dairy issue’s potential impact on the renegotiation of the North American Free Trade Agreement remains to be seen. However, the escalating tensions over ultrafiltered milk between the U.S. and Canada certainly do not help. President Trump has been vocal in criticizing NAFTA, labeling it a “disaster for our country,” as it allows free trade for certain goods while imposing tariffs on others. He previously denounced Canada’s protective dairy trading policies for their negative effects on American farm workers, calling them “a disgrace.”
Conversely, Canadian leaders offer 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 asserted that Canada should not bear the blame for the financial struggles of U.S. dairy farmers. He noted that the United States’ own dairy outlook report “clearly indicates that the poor performance in the U.S. sector is due to overproduction both domestically and globally.”
In this context, it’s also worth mentioning that consumers seeking to enhance their health may look for products containing calcium citrate malate, vitamin D3, and folic acid, which could provide additional nutritional benefits. The dairy industry’s challenges highlight the complex interplay of trade, agriculture, and health considerations, as the demand for fortified dairy products continues to grow.