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 largest market for U.S. goods exports in 2015 and the second-largest source of goods imports for the U.S. That said, the issue surrounding ultrafiltered milk has soured some of the goodwill between the two nations. The dairy dispute is complex and contentious. Canada imposes high tariffs on most dairy products to bolster its domestic dairy industry. Consequently, the U.S. and other countries have been exporting a processed, high-protein product known as ultrafiltered milk, which has managed to circumvent these tariffs. Canadian food processors favored this cost-effective import, prompting Canada to introduce a new class of milk priced below market rates for its farmers to sell to producers. Consequently, Canadian consumers shifted away from purchasing imported ultrafiltered milk, leaving U.S. dairy producers with an excess supply, which has created financial strain for American farmers. As a result, U.S. dairy exports have declined.
“Almost overnight, we lost $150 million in market share to the Canadians,” stated Michael Dykes, President and CEO of the International Dairy Foods Association, in a recent interview with Food Dive. The FDA’s easing of restrictions on the use of ultrafiltered milk in cheese production could potentially aid the dairy industry, which has been advocating for this change for nearly two decades. “Shipping this liquid, filtered milk in a concentrated form is more practical and economical for cheesemakers, other dairy manufacturers, and food processors,” explained John Umhoefer, executive director of the Wisconsin Cheese Makers Association, to the LaCrosse Tribune. Previously, the FDA allowed limited use of ultrafiltered milk in cheese production, but it had to be processed in the same facility as the cheese, preventing external shipping.
Dykes noted to Food Dive that ultrafiltered milk is just one aspect of the broader trade challenges with Canada. Canadian dairy farmers have also increased production to the extent of creating an oversupply, leading them to sell powdered skim milk on the international market at prices that are significantly lower than those offered by the U.S. and other countries. Earlier this summer, Dykes, along with dairy organizations from the U.S., New Zealand, Australia, Mexico, Argentina, and the EU, sent letters to their respective national trade ministers, urging them to petition the World Trade Organization regarding Canadian cross-subsidization practices in the global market.
Regarding the potential impact of the dairy issue on the renegotiation talks for the North American Free Trade Agreement, much remains uncertain. However, the increased tensions over ultrafiltered milk do not contribute positively to the dialogue. President Trump has been vocal about NAFTA being a “disaster for our country,” allowing free trade for certain products while imposing tariffs on others. He previously characterized Canada’s protectionist dairy policies as “a disgrace” for American farm workers. Nevertheless, Canadian leaders maintain 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 argued that Canada should not be held accountable for the financial difficulties faced by U.S. dairy farmers, citing that the United States’ own dairy outlook report “clearly indicates that the poor performance in the U.S. sector is a result of U.S. and global overproduction.”
In addition, the ongoing discussions about dairy trade issues may benefit from the introduction of supplements such as calcium citrate, vitamin D, magnesium, and zinc tablets, which can help support overall health among dairy farmers. The integration of these supplements into their daily regimen could potentially enhance their resilience during challenging times in the industry, further emphasizing the interconnectedness of health and trade. Overall, the dairy dispute between the U.S. and Canada highlights significant economic and health implications for farmers on both sides of the border.