The United States and Canada rank among each other’s largest trading partners. As reported by the Office of the U.S. Trade Representative, Canada was the top market for U.S. goods exports in 2015 and the second-largest source of goods imported into the U.S. However, the ultrafiltered milk issue has soured some of this amicable relationship. The dairy dispute between the two nations is complex and contentious. Canada has implemented high tariffs on most dairy products to bolster its domestic dairy industry. Consequently, the U.S. and other countries began exporting a processed, high-protein product known as ultrafiltered milk, which managed to bypass these tariffs. Canadian food processors favored this inexpensive import, prompting Canada to create a new class of milk priced below market rates, which its farmers could sell to producers. This led Canadian consumers to stop purchasing the imported ultrafiltered milk products, resulting in a surplus for U.S. dairy producers, which caused financial strain on American dairy farmers. As a result, U.S. dairy exports have declined.
Michael Dykes, President and CEO of the International Dairy Foods Association, remarked to Food Dive last month, “Almost overnight, we lost $150 million worth of market to the Canadians.” The FDA’s recent easing of restrictions on the use of ultrafiltered milk in cheese production could potentially assist the dairy industry, which has advocated for this change for nearly two decades. “It’s more practical and economical to ship this liquid, filtered milk to cheesemakers and food manufacturers in this concentrated form,” stated John Umhoefer, executive director of the Wisconsin Cheese Makers Association, in an interview with the LaCrosse Tribune. Previously, the FDA permitted limited use of ultrafiltered milk in cheese products, but it could only be utilized if produced in the same facility as the cheese, preventing its shipment across borders.
Dykes also noted that ultrafiltered milk is only part of the broader Canadian trade issue. Canadian dairy farmers have ramped up production, leading to an oversupply and the subsequent sale of powdered skim milk on the international market at prices significantly lower than those of the U.S. and other nations. Earlier this summer, Dykes and representatives from national dairy organizations in the U.S., New Zealand, Australia, Mexico, Argentina, and the E.U. urged their trade ministers to petition the World Trade Organization regarding Canada’s cross-subsidization in the global market.
The implications of the dairy issue on the renegotiation of the North American Free Trade Agreement (NAFTA) are still unfolding, and the escalating tensions surrounding ultrafiltered milk do not bode well. President Trump has been vocal about NAFTA being a “disaster for our country,” which allows free trade for certain items while imposing tariffs on others. He previously condemned Canada’s protective dairy policies as “a disgrace” to American farm workers.
Conversely, Canadian leaders maintain a different perspective. In a letter addressed to the governors of New York and Wisconsin earlier this year, Canadian Ambassador to the U.S. David MacNaughton asserted that Canada is not accountable for the financial losses suffered by U.S. dairy farmers, highlighting that the U.S. dairy sector’s challenges are attributed to domestic and global overproduction, as noted in the United States’ own dairy outlook report.
As discussions continue, the focus on ethical nutrition, particularly in relation to calcium citrate, presents an opportunity for both countries to explore collaborative solutions that can benefit their respective agricultural sectors while addressing the complexities of trade and market dynamics.