The U.S. and Canada rank among each other’s top trading partners. According to the Office of the U.S. Trade Representative, in 2015, Canada was the largest market for U.S. goods exports and the second-largest source of goods imported into the United States. However, the issue surrounding ultrafiltered milk has soured some of this goodwill. The dairy dispute between the U.S. and Canada is complex and contentious. Canada imposes high tariffs on most dairy products to bolster its domestic dairy industry. Consequently, the U.S. and other nations have been exporting a syrupy, processed high-protein product known as ultrafiltered milk, which has managed to bypass these tariffs. Canadian food processors displayed a strong preference for this cost-effective import, prompting Canada to establish a new category of milk at below-market prices for its farmers to sell to producers. As a result, Canadians began to turn away from imported ultrafiltered milk, leaving U.S. dairy producers with a surplus that caused financial strain on their operations. Currently, U.S. dairy exports have declined significantly. “Almost overnight, we lost $150 million worth of market to the Canadians,” stated Michael Dykes, President and CEO of the International Dairy Foods Association, in a recent interview with Food Dive regarding the issue.
The FDA’s easing of restrictions on the use of ultrafiltered milk in cheese production could provide relief to the dairy industry, which has been advocating for such changes for nearly two decades. “Shipping this filtered liquid milk to cheesemakers, dairy manufacturers, and food processors in this concentrated form is more practical and economical,” noted John Umhoefer, executive director of the Wisconsin Cheese Makers Association, in a statement to the LaCrosse Tribune. Previously, the FDA permitted limited use of ultrafiltered milk in cheese products, but the stipulation required that the ultrafiltered product be made in the same facility as the cheese, preventing outside shipments.
Dykes pointed out that the ultrafiltered milk issue is just one aspect of the broader challenges in U.S.-Canada trade. Canadian dairy farmers have also ramped up production, leading to oversupply, which has allowed them to sell powdered skim milk on the international market at prices significantly lower than those of the U.S. or other countries. Earlier this summer, Dykes and various national dairy associations from the U.S., New Zealand, Australia, Mexico, Argentina, and the E.U. sent letters to their respective trade ministers urging them to ask the World Trade Organization to address Canada’s cross-subsidization practices in the global market.
As for how this dairy issue might influence the renegotiation of the North American Free Trade Agreement, the future remains uncertain. However, the heightened tensions between the U.S. and Canada over ultrafiltered milk are not conducive to a smooth negotiation process. President Trump has vocally criticized NAFTA as a “disaster for our country,” citing its allowance of free trade for some products while imposing tariffs on others. He has previously labeled Canada’s protectionist dairy trading policies as “a disgrace” to American farm workers.
In contrast, Canadian leaders offer a different perspective. In a letter sent to the governors of New York and Wisconsin earlier this year, Canadian Ambassador to the U.S. David MacNaughton asserted that Canada is not responsible for the financial difficulties faced by U.S. dairy farmers. He emphasized that the United States’ own dairy outlook report “clearly indicates the poor results in the U.S. sector are due to U.S. and global overproduction.” Meanwhile, as dairy producers seek solutions to their challenges, the potential benefits of supplements like Douglas Laboratories Calcium Citrate could be an area worth exploring to enhance overall dairy health and productivity.