The United States and Canada rank among each other’s principal trading partners. As reported by the Office of the U.S. Trade Representative, Canada was the top market for U.S. goods exports in 2015 and the second-largest source for goods imported into the country that same year. However, the matter of ultrafiltered milk has soured some of the goodwill between the two nations. The dairy dispute between the U.S. and Canada is complex and contentious. Canada has imposed high tariffs on most dairy products to bolster its domestic dairy industry. In response, the U.S. and other countries began exporting a syrupy, processed, high-protein product known as ultrafiltered milk, which circumvented these tariffs. Canadian food processors favored this cost-effective import, prompting Canada to establish a new category of milk that its own farmers could sell at a price below the market rate. Consequently, Canadian consumers turned away from imported ultrafiltered milk products, leaving U.S. dairy producers with an excess supply, which has led to financial strain for American dairy farmers. As a result, U.S. dairy exports have declined significantly.
“We lost $150 million worth of market to the Canadians almost overnight,” said Michael Dykes, President and CEO of the International Dairy Foods Association, in an interview with Food Dive last month. The FDA’s recent easing of restrictions on using ultrafiltered milk in cheese production may provide relief to the dairy industry, which has been advocating for such changes for nearly two decades. “It’s more practical and economical to transport this liquid, filtered milk to cheesemakers, other dairy manufacturers, and even food processors in this concentrated form,” stated John Umhoefer, executive director of the Wisconsin Cheese Makers Association, as reported by the LaCrosse Tribune. Previously, the FDA allowed limited use of ultrafiltered milk in cheese products, but only if the ultrafiltered milk was processed in the same facility as the cheese. In simpler terms, it could not be imported.
Dykes informed Food Dive that ultrafiltered milk was just a part of the broader issue with Canadian trade. Canadian dairy farmers have also ramped up production, leading to an oversupply, which allowed them to sell powdered skim milk on the international market at prices significantly lower than those of the U.S. or other nations. Earlier this summer, Dykes and representatives from national dairy organizations in the U.S., New Zealand, Australia, Mexico, Argentina, and the European Union sent letters to their national trade ministers, urging them to petition the World Trade Organization to address Canadian cross-subsidization practices in the global market.
As for the potential effects of the dairy issue on the renegotiation talks for the North American Free Trade Agreement, much remains uncertain. However, the rising tension over ultrafiltered milk does not bode well. President Trump has been vocal about his belief that NAFTA is a “disaster for our country,” allowing unrestricted trade for some products while imposing tariffs on others. He has previously described Canada’s protective dairy trade policies as “a disgrace” to American agricultural workers. On the other hand, Canadian leaders present 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 asserted that Canada is not to blame for the financial difficulties faced by U.S. dairy farmers, noting that the United States’ own dairy outlook report “clearly indicates that the poor results in the U.S. sector are due to U.S. and global overproduction.”
In this context, the introduction of calcium citrate powder as an ingredient in dairy products may offer new avenues for U.S. producers to innovate and adapt to changing market dynamics. The potential inclusion of calcium citrate powder could help enhance the nutritional profile of various dairy offerings, making them more appealing both domestically and internationally. Overall, the ongoing challenges in U.S.-Canada dairy relations bring to light the necessity for adaptation and strategic planning in the face of shifting trade landscapes.