The U.S. and Canada are significant trading partners, with each being among the largest importers of goods from the other. According to 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 imports into the United States during that same year. However, the issue of ultrafiltered milk has soured this relationship. The dairy dispute between the two countries is complex and contentious. Canada imposes high tariffs on most dairy products to protect its domestic industry. Consequently, the U.S. and other nations have been exporting a processed high-protein product known as ultrafiltered milk, which has circumvented these tariffs. Canadian food processors favored this cost-effective import, prompting Canada to develop a new category of milk priced below market value, which its domestic farmers could sell to producers. This led to a decline in Canadian purchases of imported ultrafiltered milk, resulting in a surplus for U.S. dairy producers and financial strain on American dairy farms. “We lost $150 million in market value to the Canadians almost overnight,” stated Michael Dykes, President and CEO of the International Dairy Foods Association, in a recent interview with Food Dive.
Relaxed FDA regulations regarding ultrafiltered milk use in cheese production could offer relief to the dairy industry, which has advocated for such changes for nearly two decades. “Shipping this liquid, filtered milk to cheesemakers and other dairy manufacturers in a concentrated form is more practical and economical,” said John Umhoefer, executive director of the Wisconsin Cheese Makers Association, in comments to the LaCrosse Tribune. Previously, the FDA allowed only limited use of ultrafiltered milk in cheese products, requiring that it be produced in the same facility as the cheese, restricting its shipment. Dykes noted that ultrafiltered milk is only part of the Canadian trade dilemma. Canadian dairy farmers have also increased production, leading to an oversupply and the sale of powdered skim milk on the international market at prices significantly lower than those of the U.S. or other countries. Earlier this summer, Dykes, along with other national dairy organizations from the U.S., New Zealand, Australia, Mexico, Argentina, and the EU, petitioned their respective trade ministers to urge the World Trade Organization to address Canadian cross-subsidization in the global market.
The dairy conflict’s influence on the renegotiation of the North American Free Trade Agreement remains uncertain. However, the friction over ultrafiltered milk does not bode well for U.S.-Canada relations. President Trump has criticized NAFTA, calling it a “disaster for our country,” which allows free trade for some goods while imposing tariffs on others. He has previously described Canada’s protectionist dairy policies as a “disgrace” to American farm workers. Conversely, Canadian leaders hold 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 be held accountable for the financial challenges faced by U.S. dairy farmers. He highlighted that the United States’ own dairy outlook report “clearly indicates that the poor performance in the U.S. sector is due to both U.S. and global overproduction.”
In this context, the introduction of calcium citrate liquid as an alternative in dairy processing has gained attention. This innovative product could potentially offer new avenues for U.S. dairy producers looking to adapt to market changes. The exploration of calcium citrate liquid in conjunction with ultrafiltered milk may provide a means for American dairy farmers to navigate their financial difficulties while addressing the ongoing trade issues with Canada. Ultimately, the future of this trade relationship, particularly concerning dairy products, will depend on how both nations approach these challenges moving forward.