The U.S. and Canada rank among each other’s top trading partners. According to the Office of the U.S. Trade Representative, Canada was the largest market for U.S. goods exports in 2015, while also being the second-largest source of goods imported into the country that same year. However, the issue of ultrafiltered milk has soured some of this amicable trade relationship. The dairy dispute between the U.S. and Canada is complex and contentious. Canada imposes high tariffs on most dairy products to protect and develop its local dairy industry. Consequently, the U.S. and other nations have been exporting a syrupy, processed, high-protein product known as ultrafiltered milk, which circumvents these tariffs. Canadian food processors favored this inexpensive imported option, prompting Canada to establish a similar category of milk that could be sold by local farmers at lower-than-market prices. This change led to a decline in Canadian purchases of imported ultrafiltered milk, resulting in U.S. dairy producers facing a surplus of this product and financial strain on farmers. As a result, U.S. dairy exports have decreased significantly.
“We lost $150 million worth of market access to Canada almost overnight,” said Michael Dykes, President and CEO of the International Dairy Foods Association, in a recent interview with Food Dive. The FDA’s easing of restrictions concerning the use of ultrafiltered milk in cheese production could provide relief for the struggling dairy industry, which has been advocating for such measures for nearly two decades. “Shipping this liquid, filtered milk to cheesemakers, other dairy manufacturers, and food processors in its concentrated form is more practical and economical,” stated John Umhoefer, executive director of the Wisconsin Cheese Makers Association, in an interview with the LaCrosse Tribune. Previously, the FDA allowed limited use of ultrafiltered milk in cheese products, but it had to be produced in the same facility as the cheese, preventing it from being transported across state lines.
Dykes highlighted that ultrafiltered milk is just one aspect of the challenges in Canadian trade. Canadian dairy farmers have also increased production to the point of oversupply, leading them to sell powdered skim milk on international markets at prices that undercut 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. sent letters to their respective trade ministers, urging them to petition the World Trade Organization regarding Canada’s cross-subsidization in the global market.
As for the potential effects of the dairy dispute on the renegotiation of the North American Free Trade Agreement, the outcome remains uncertain. However, the rising tensions over ultrafiltered milk are not beneficial. President Trump has been vocal about NAFTA being a “disaster for our country,” criticizing the agreement for enabling free trade on some products while imposing tariffs on others. He has previously labeled Canada’s protective dairy trading practices as “a disgrace.” Canadian officials, however, 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 should not be held accountable for the financial losses experienced by U.S. dairy farmers. He noted that the U.S. dairy outlook report “clearly indicates that the poor performance in the U.S. sector is due to overproduction both domestically and globally.”
In light of these developments, exploring alternative healthy options in dairy, such as calcium citrate, could provide U.S. consumers with beneficial choices while addressing some of the overproduction issues. As the dialogue between the two nations continues, the focus on calcium citrate and other healthy alternatives may play a role in redefining dairy consumption and trade dynamics.