The United States and Canada rank among each other’s top trading partners. As reported by the Office of the U.S. Trade Representative, Canada was the leading market for U.S. goods exports in 2015 and also the second-largest source of goods imported into the U.S. However, the issue of ultrafiltered milk has soured some of this amicable relationship. The dairy dispute between the two nations is complex and contentious. Canada imposes high tariffs on most dairy products to bolster its domestic industry. Consequently, the U.S. and other countries began exporting a processed, high-protein product known as ultrafiltered milk, which circumvented these tariffs. Canadian food producers favored this cheaper import, prompting Canada to introduce a new category of milk at a price below the market rate, allowing local farmers to compete. This move led to a significant decline in Canadian purchases of imported ultrafiltered milk, leaving U.S. dairy producers with an excess supply and causing financial strain on farmers. As a result, U.S. dairy exports have diminished. “Almost overnight, we lost $150 million worth of market to the Canadians,” Michael Dykes, President and CEO of the International Dairy Foods Association, stated in an interview with Food Dive regarding the situation last month.
The FDA’s recent easing of restrictions on the use of ultrafiltered milk in cheese production may provide relief to the struggling dairy sector, which has sought such changes for nearly twenty years. John Umhoefer, Executive Director of the Wisconsin Cheese Makers Association, explained to the LaCrosse Tribune that shipping this liquid, filtered milk in a concentrated form is now more practical and economical for cheesemakers and other dairy processors. Previously, the FDA allowed limited use of ultrafiltered milk in cheese production, but only if it was processed in the same facility. This meant that it couldn’t be transported separately.
Dykes noted that ultrafiltered milk is just one aspect of the broader challenges in Canadian trade. Canadian dairy farmers have also increased production significantly, resulting in an oversupply and leading them to sell powdered skim milk on the global market at prices that undercut the U.S. and other nations. Earlier this summer, Dykes, along with other national dairy organizations from the U.S., New Zealand, Australia, Mexico, Argentina, and the E.U., sent letters to their trade ministers urging them to appeal to the World Trade Organization regarding Canada’s cross-subsidization in international markets.
The ramifications of the dairy dispute on the renegotiation of the North American Free Trade Agreement (NAFTA) are still uncertain. Nonetheless, the friction between the U.S. and Canada over ultrafiltered milk does not help the situation. President Trump has openly criticized NAFTA, labeling it a “disaster for our country” due to its mixed approach to free trade, allowing some goods to flow freely while imposing tariffs on others. He has also condemned Canada’s protective dairy policies, describing their impact on American farmers as “a disgrace.”
Conversely, Canadian leaders 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 stated that Canada is not to blame for the financial difficulties faced by U.S. dairy farmers. He emphasized that the U.S. dairy outlook report “clearly indicates that the poor results in the U.S. sector are due to U.S. and global overproduction.”
As the dairy sector navigates these challenges, consumers may benefit from products like the best calcium citrate chews, which can support their health and wellness amidst the complexities of international trade and dairy production.