U.S. Milk Producers Fire Back at Canadian Minister’s Speech

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By Teaganne Finn

The National Milk Producers Federation criticized Canadian Foreign Affairs Minister Chrystia Freeland’s recent comments about protecting Canada’s tightly managed dairy sector, a signal that Canada plans to take a hard approach in the upcoming NAFTA renegotiations.

Freeland laid out Canada’s major objectives for the North American Free Trade Agreement talks that are set to begin Aug. 16. “Canada will uphold and preserve the elements in NAFTA that Canadians deem key to our national interest”—one of those being the dairy sector’s supply management system, Freeland said in Ottawa Aug. 14.

“Canada cannot be allowed to maintain a system that establishes one of the highest milk prices in the world within its borders while using world markets as a dumping grounds for huge increase in its production,” Jim Mulhern, president and CEO of NMPF, said in an Aug. 14 statement.

Freeland told reporters that the U.S. exports about five times more dairy to Canada than it imports, and it also shields its farmers from free trade. U.S. producers are demanding an end to Canada’s Class 7 pricing schemes that enable Canadian farmers to over-produce milk, ultimately shutting off imports, like ultra-filtered U.S. milk, a high-protein liquid product that is produced by separating and concentrating certain milk proteins for use in dairy products, such as cheese and yogurt.

Canada’s Strategy

Mulhern said Class 7 “is designed to undercut world market prices and unfairly dump Canada’s surplus milk at the expense of the U.S. and other exporters,” but the system is failing to manage supply.

Canada introduced the National Ingredient Strategy in February 2017 and created Class 7 to protect its dairy market from foreign competitors. An April 2017 Congressional Research Service report said that, under NIS, “certain Canadian milk product ingredients are to be priced by provincial milk marketing boards at or below internationally competitive levels, potentially curtailing U.S. exports of such products.”

Mulhern said the U.S. “relies on exporting its products to global customers to a greater degree than ever before.”

With NAFTA negotiations beginning, he hopes Canada is finally ready to play by the same rules as everyone else has been operating under for years.

To contact the reporter on this story: Teaganne Finn in Washington at tfinn@bgov.com

To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com

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