U.S. dairy says Canada not big USMCA loser

American farmers argue that the Canadian supply management sector didn’t give up as much as it should have

An American farmer who has operated dairies on both sides of the 49th parallel says the new version of the North American Free Trade Agreement is good and could have been better.

“It was better than what we thought we would actually get,” Allan Huttema said about elements of the deal affecting U.S. dairy trade.

“But it still lets the dairy industry up there keep a lot of the market that they initially took.

“It really didn’t go far enough. It allows them to price their milk and still export on the world market at levels that either they’ve already been at or are going to be at, so as far as the farmers up there, they should be pretty happy because it really shouldn’t affect them that much. I think on their part, they did just fine.”

Huttema operates an 800-cow dairy near Parma, Idaho, which he bought after selling a dairy operation near Chilliwack, B.C., about eight years ago.

Idaho dairy producer Ted Vander Schaaf, who operates a 1,200-cow dairy near Kuna, said it was a relief to get a deal that includes Canada.

“We’re glad it got settled and glad we were able to come to a deal,” he said.

“Obviously we’re happy from our perspective on the Class 7 portion.”

In interviews with The Western Producer last month, both Vander Schaaf and Huttema said Canadian development of Class 7 milk in 2016 was the major beef for dairy producers in terms of the trade deal renegotiation.

The resulting deal, the United States-Mexico-Canada Agreement (USMCA), will see Class 7 eliminated. The pricing system allows Canadian milk proteins and skim milk to be sold to processors at world prices, displacing a market that used to be filled by American dairies.

Also in the new deal, the U.S. gained additional dairy export access amounting to about 3.6 percent of Canada’s domestic dairy market.

“As far as the access, it doesn’t really give us access,” Huttema said.

“It’s not like we can process dairy products down here and ship it, retail it to Canada. It’s got to be re-manufactured and it has to go through different channels, so that access is not going to affect that much at all.”

Vander Schaaf said he views the deal as establishing some boundaries among the trading partners.

“In the end result, I think that you guys gave up a few things but I don’t think you gave it all up, so it wasn’t necessarily a complete failure from your end either. I think that you guys still achieved a few things out of the agreement.”

For example, he said the market share that Canada regained at the expense of Wisconsin dairy farmers last year would likely be retained.

Both Huttema and Vander Schaaf belong to a 460-member co-operative called Darigold, which operates in Idaho, Washington, Oregon and Montana. The new deal appears to be an advantage for that co-op and likely other dairy organizations in the U.S. because they won’t have to compete on some of the export product.

“The other thing I think it will do is probably stop some of the investment in expanding Canadian processing, so I think that’s helpful, too,” Huttema said.

Creation of Class 7 in Canada was generally credited with encouraging expansion of dairy processing infrastructure in Canada.

An Oct. 1 statement from Dairy Farmers of Canada took issue with the Canadian government’s characterization that the new deal is better than no deal.

“This deal not only gives more access to the Canadian dairy market, while limiting our ability to produce and export home-grown dairy products, this deal lets the Americans dictate our dairy policies,” DFC said.

“Fairer trade is about win-win results. If our government fought for a good deal for Canadian industry, it wasn’t dairy.”

Huttema said he realizes Canadian dairy producers aren’t happy with the deal, but from the U.S. perspective it’s good that the three former NAFTA partners are signatories to USMCA.

“All in all, I was impressed that we got the attention we did in the dairy industry. I’m really happy about that. I’m glad something got done, and I think Canada should be quite happy too with where it settled out. I know they didn’t want to give anything up, but what they did have to give up, I don’t think is that big of a deal.”

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