Wednesday, June 20, 2018  
 
Weather |  Futures |  Market News |  Headline News |  DTN Ag Headlines |  AgBizDir.com |  Portfolio |  Crops |  Farm Life 
 Home
 Quotes iFrame
 
- DTN Headline News
Trump's Canadian Dairy Problem
Monday, June 18, 2018 11:14AM CDT
By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- President Donald Trump's tirade on Twitter over the weekend aimed at Canadian Prime Minister Justin Trudeau has elevated dairy trade between the two countries to the top political issue in Canada.

Dairy was once considered a lower-rung issue in the North American Free Trade Agreement talks, but President Trump tied high Canadian dairy tariffs to his own push for steel and aluminum tariffs.

On Saturday, the president tweeted: "PM Justin Trudeau of Canada acted so meek and mild during our @G7 meetings only to give a news conference after I left saying that, 'U.S. Tariffs were kind of insulting' and he "will not be pushed around.' Very dishonest & weak. Our Tariffs are in response to his of 270% on dairy!"

The president followed up with another tweet on Sunday: "Fair Trade is now to be called Fool Trade if it is not Reciprocal. According to a Canada release, they make almost 100 Billion Dollars in Trade with U.S. (guess they were bragging and got caught!). Minimum is 17B. Tax Dairy from us at 270%. Then Justin acts hurt when called out!"

Trump and leaders of the other G-7 nations, including Trudeau, have been embroiled in arguments over the White House move at the beginning of June to implement 25% tariffs on steel and 10% tariffs on aluminum. Trudeau has called the steel and aluminum tariffs "insulting." But Trump went further, roaring on Twitter about fair trade and dairy tariffs.

The U.S. held a dairy trade surplus with Canada in 2017 that ran anywhere from $113 million to $521 million, depending on the math of different agencies and trade associations.

Canada and the U.S. both use tariff-rate quotas to allow trading partners to export a certain volume of cheese, butter fat, butter milk, dry milk, cream, yogurt, whey products and ice cream at lower tariffs. Then the tariff volumes spike once the quota limit is reached. In Canada, once those quotas are reached, tariffs can reach as high as 294% for some products. The 270% number President Trump uses comes from blended dairy powder over the tariff-rate quota, which is 3% for the U.S., according to Canada's customs tariffs schedule. https://goo.gl/…

Following the trade rhetoric over the weekend, the leaders of the National Farmers Union and Canadian Federation of Agriculture issued a joint statement noting the two countries have more than $40 billion in annual agricultural trade between them, a dollar figure that continues to climb. And farmers in both countries need the certainty that comes from that trade, the groups stated.

"No heated rhetoric nor inflammatory remark could possibly represent the positive sentiment that American and Canadian farmers share for each other's nation. We urge our respective officials to engage in positive discourse that protects the strong trade ties that benefit American and Canadian farmers alike."

The National Milk Producers Federation responded to DTN regarding comments from the president and his advisers.

"We appreciate President Donald Trump's acknowledgement that Canada has not treated our farmers fairly," NMPF stated. "However, we do not believe that some of the language used by some White House officials was appropriate to describe this strong disagreement with Canada on trade policy. We agree that we need to express to Canada that trade needs to be a two-way street, and we are prepared to do it respectfully, but forcefully and with determination."

Canadian dairy producers dug in. Pierre Lampron, president of Dairy Farmers of Canada, said his group and all Canadians reject the White House's personal attacks on Trudeau. Lampron maintains the U.S. has a 5-to-1 dairy trade surplus with the U.S., and based on market studies, 10% of the Canadian dairy market is open tariff-free while only 3% of the U.S. market is open, Lampron said.

Canadian dairy farmers, who are politically influential in the country, "are concerned by the sustained attacks by President Trump with an aim to wiping out dairy farmers here at home," Lampron said.

"The root of the U.S.' problem is that they are producing too much milk in an oversaturated world market," he said. "Canada already produces enough milk to fill Canadian demand. As Canada has less population than the state of California, and that Wisconsin alone produces more milk than all Canadian farms combined, clearly, the Canadian market is too small to make a dent in U.S. overproduction."

It's hard to get a handle on actual dairy trade between the two countries. A Bloomberg article states that the U.S. exported $227 million in dairy products to Canada last year while Canadian dairy producers exported $114 million to the U.S., according to Statistics Canada. https://goo.gl/…

The U.S. Dairy Export Council cites that Canada was the third-largest market for U.S. dairy products in 2017, buying $636 million in products, up 1% from 2017.

But the U.S. Dairy Export Council also says people cannot just rely on the numbers posted on its website. That's because the Canadians demand most of the dairy products exported to Canada from the U.S. are required to be processed and re-exported, rather than used on the domestic market. So the real "export" volume to Canada is not actually known. https://goo.gl/…

After pointing out that the USDA export charts on the USDEC website don't tell the whole story, Jaime Castaneda, senior vice president of trade policy for USDEC, said, "We want to have the same fair trade that 99% of agriculture has with Canada."

Trump's continued focus on Canadian dairy tariffs comes as overall U.S. dairy exports are surging as well. March and April were record months for U.S. dairy exports, according to the U.S. Dairy Export Council. Much of the export growth is driven by higher product exports to China, Mexico, Southeast Asia and South Korea. https://goo.gl/…

Canada's Dairy Information Centre states Canada exported 137.1 million pounds of dairy products to the U.S. in 2017, a 32% increase from 2016, driven mainly by a spike in yogurt and whey products. Those sales were valued at $115 million in U.S. dollars, up from $86.7 million in 2016.

Comparatively, dairy trade ranging somewhere from $341 million to $751 million between the two countries still comes down to one-tenth of 1% of trade volume between the U.S. and Canada last year. U.S. exports to Canada were $341.2 billion in 2017 while Canadian exports to the U.S. were $332.8 billion.

Canada's dairy production with 941,800 milking cows would make it the third-largest dairy state in the U.S., behind California with 1.8 million head and Wisconsin with 1.28 million milking cows. Nationally, the U.S. has about 9 million milking cows. To keep Canada's dairy producers operating and largely profitable, Canada has a supply management system that it is increasingly determined to defend in the NAFTA talks.

The U.S. operates with programs such as the Margin Protection Program, which was revamped this spring because farmers and lawmakers determined the safety net wasn't strong enough. Based on the latest enrollment figures, USDA expected to issue roughly $90 million in checks this week to more than 20,000 dairy farmers because of MPP prices for the months of February, March and April.

The debate over Canadian dairy and its supply management system comes as Wisconsin Gov. Scott Walker announced last week that his state is creating a new dairy task force to make recommendation that would help the viability and profitability of dairy in his state. Walker modeled the proposal after a similar task force created in Wisconsin in 1985.

"Dairy farmers are facing challenges due to an extended period of low milk prices and market uncertainty," Walker said. "By creating this task force, industry experts can work together to create real solutions that can help our farmers, processors, and allied organizations, and to ensure that our dairy industry is not only our past, but our future."

Meanwhile, dairy farmers in states such as Wisconsin and Michigan are actually learning more about how the Canadian supply management works and asking why the U.S. can't look at a comparable model. Michigan Farmers Union will host meetings later this week in Michigan with Canadian dairy farmers.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(AG/ES/SK)


blog iconDTN Blogs & Forums
DTN Market Matters Blog
Editorial Staff
Monday, June 18, 2018 11:42AM CDT
Friday, June 15, 2018 9:12AM CDT
Monday, June 11, 2018 12:18PM CDT
Technically Speaking
Darin Newsom
DTN Senior Analyst
Monday, June 18, 2018 2:03PM CDT
Monday, June 18, 2018 1:38PM CDT
Monday, June 11, 2018 12:52PM CDT
Fundamentally Speaking
Joel Karlin
DTN Contributing Analyst
Wednesday, June 20, 2018 10:40AM CDT
Thursday, June 14, 2018 12:52PM CDT
Friday, June 8, 2018 7:16AM CDT
DTN Ag Policy Blog
Chris Clayton
DTN Ag Policy Editor
Wednesday, June 20, 2018 4:24PM CDT
Tuesday, June 19, 2018 3:37PM CDT
Sunday, June 17, 2018 1:36PM CDT
Minding Ag's Business
Editorial Staff
Wednesday, June 6, 2018 1:55PM CDT
Friday, May 25, 2018 7:03AM CDT
Monday, May 14, 2018 1:16PM CDT
DTN Ag Weather Forum
Bryce Anderson
DTN Ag Meteorologist and DTN Analyst
Tuesday, June 19, 2018 2:03PM CDT
Friday, June 15, 2018 1:49PM CDT
Tuesday, June 12, 2018 2:25PM CDT
DTN Production Blog
Pam Smith
Crops Technology Editor
Friday, June 15, 2018 6:01PM CDT
Friday, May 18, 2018 10:58AM CDT
Friday, May 4, 2018 4:29PM CDT
Harrington's Sort & Cull
John Harrington
DTN Livestock Analyst
Friday, June 15, 2018 5:51PM CDT
Friday, May 25, 2018 5:44PM CDT
Friday, May 18, 2018 6:40PM CDT
South America Calling
Alastair Stewart
South America Correspondent
Tuesday, May 29, 2018 6:08PM CDT
Tuesday, May 29, 2018 10:50AM CDT
Thursday, May 24, 2018 6:44AM CDT
An Urban’s Rural View
Urban Lehner
Editor Emeritus
Tuesday, June 12, 2018 5:17PM CDT
Monday, June 4, 2018 3:19PM CDT
Tuesday, May 22, 2018 3:21PM CDT
Machinery Chatter
Jim Patrico
Progressive Farmer Senior Editor
Tuesday, June 19, 2018 11:56AM CDT
Monday, June 11, 2018 3:00PM CDT
Wednesday, May 30, 2018 1:59PM CDT
Canadian Markets
Cliff Jamieson
Canadian Grains Analyst
Wednesday, June 20, 2018 3:59PM CDT
Tuesday, June 19, 2018 4:37PM CDT
Monday, June 18, 2018 4:52PM CDT
Editor’s Notebook
Greg D. Horstmeier
DTN Editor-in-Chief
Wednesday, April 25, 2018 1:24PM CDT
Thursday, March 29, 2018 4:58PM CDT
Friday, January 19, 2018 5:45PM CDT
 
Copyright DTN. All rights reserved. Disclaimer.
Powered By DTN