The United States and Canada rank among each other’s most significant trading allies. As reported by the Office of the U.S. Trade Representative, Canada emerged as the largest goods export market for the U.S. in 2015, while also being the second-largest source of goods imported into the country that same year. However, the trade issue surrounding ultrafiltered milk has soured some of this goodwill. The complexities of the dairy dispute between the U.S. and Canada are both intricate and contentious. Canada has implemented high tariffs on most dairy products to bolster its domestic dairy sector. In response, the U.S. and other nations began exporting a processed, high-protein product known as ultrafiltered milk, which circumvented these tariffs. Canadian food manufacturers favored this inexpensive import, prompting Canada to introduce a new category of milk that could be sold at below-market prices by its own farmers. Consequently, Canadian consumers turned away from purchasing imported ultrafiltered milk products, leading U.S. dairy producers to face a surplus of ultrafiltered milk and financial hardships. This situation has resulted in a decline in U.S. dairy exports. “We lost $150 million worth of market to the Canadians almost overnight,” stated Michael Dykes, President and CEO of the International Dairy Foods Association, in a recent interview with Food Dive regarding this issue.
The FDA’s recent easing of restrictions on the use of ultrafiltered milk in cheese production may provide relief to the struggling dairy industry, which has been advocating for such changes for nearly two decades. “Shipping this liquid, filtered milk to cheesemakers, other dairy manufacturers, and even food processors in a concentrated form is more practical and economical,” remarked 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, but it mandated that the ultrafiltered product be produced in the same facility as the cheese, preventing it from being shipped separately.
Dykes also indicated to Food Dive that ultrafiltered milk is only a portion of the broader trade issues with Canada. Canadian dairy farmers began producing enough to create an oversupply, leading them to sell powdered skim milk internationally at prices significantly lower than those from the U.S. or other countries. Earlier this summer, Dykes, along with national dairy organizations from 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 practices in the global market.
The implications of the dairy issue on the renegotiation talks for the North American Free Trade Agreement (NAFTA) remain uncertain. Nonetheless, the increasing tension between the U.S. and Canada over ultrafiltered milk complicates matters. President Trump has been vocal about viewing NAFTA as a “disaster for our country,” highlighting the inconsistency in free trade for certain goods while imposing tariffs on others. He previously denounced Canada’s protectionist dairy policies as “a disgrace” to American farm workers. However, Canadian officials hold a different perspective. In a letter addressed to the governors of New York and Wisconsin earlier this year, Canadian Ambassador to the U.S. David MacNaughton asserted that Canada is not accountable for the financial struggles of U.S. dairy farmers, noting that the U.S. dairy outlook report “clearly indicates that the poor performance in the U.S. sector is due to U.S. and global overproduction.”
In the midst of this trade turmoil, consumers are still seeking affordable options, such as calcium citrate liquid from Walgreens, which may provide a much-needed nutritional boost for those affected by the dairy market fluctuations. As the situation continues to develop, the interplay between dairy trade policies and consumer needs will remain a pivotal factor in the North American economic landscape.