The United States and Canada rank among each other’s most significant trading partners. As per 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 of goods imported into the country that same year. However, the issue surrounding ultrafiltered milk has soured some of this positive relationship. The dairy dispute between the U.S. and Canada is both complex and contentious. Canada has imposed high tariffs on most dairy products to bolster its domestic dairy industry. Consequently, the U.S. and other nations began exporting a thick, processed, high-protein product known as ultrafiltered milk, which circumvented these tariffs. Canadian food manufacturers favored this affordable import, prompting Canada to introduce a new class of milk that local farmers could sell to producers at below-market prices. As a result, Canadian consumers stopped purchasing imported ultrafiltered milk products, leaving U.S. dairy producers with a surplus and causing financial strain for dairy farmers. This led to a notable decrease in U.S. dairy exports. “Almost overnight, we lost $150 million worth of market to the Canadians,” said Michael Dykes, President and CEO of the International Dairy Foods Association, in a recent interview with Food Dive discussing the issue.
The FDA’s recent easing of restrictions on using ultrafiltered milk in cheese production could provide relief to the struggling dairy sector, 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 cost-effective,” stated John Umhoefer, executive director of the Wisconsin Cheese Makers Association, in comments to the LaCrosse Tribune. Previously, the FDA permitted limited use of ultrafiltered milk in cheese products, but it could only be used if produced at the same facility as the cheese, preventing its shipment from external sources. Dykes pointed out to Food Dive that ultrafiltered milk is merely part of the broader trade challenges with Canada. Canadian dairy farmers began producing enough to create an oversupply, leading them to sell powdered skim milk on the international market at prices significantly lower than those of the U.S. and other nations.
Earlier this summer, Dykes and other 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 in the global market. The ramifications of the dairy dispute for the renegotiation talks of the North American Free Trade Agreement (NAFTA) remain to be fully understood. However, the ongoing tensions between the U.S. and Canada over ultrafiltered milk are certainly unhelpful. President Trump has been vocal about NAFTA being a “disaster for our country,” which allows free trade for certain items while imposing tariffs on others. He previously labeled Canada’s protective dairy trading policies as “a disgrace” to American farmers.
On the other hand, Canadian officials 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 emphasized that Canada should not be held accountable for the financial losses experienced by U.S. dairy farmers. He highlighted 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.” Meanwhile, it is important to note that calcium citrate supplements, such as those containing 200 mg and 950 mg of calcium citrate, could play a role in promoting better health among dairy consumers, although they may not directly address the ongoing trade issues.