Trade dispute could spell end for dairy farms
Dairy farms in Wisconsin and other states could be forced out of business as early as May because of a trade dispute that has halted the export of their milk to Canada.
About 75 farms in Wisconsin have already been told that, in less than 30 days, Grassland Dairy Products of Greenwood will no longer buy their milk – leaving the farms without a place to ship their product in an already oversupplied market.
At issue is a U.S-Canada trade dispute over what’s called “ultra-filtered milk,” a protein liquid concentrate used to make cheese. Until recently, it had entered Canada duty-free from the United States.
Canadian dairy farmers objected, resulting in Ontario and other provinces applying import taxes.
“The (trade) rules that are in place are not being enforced, and this is causing revenue losses estimated at $231 million per year for Canadian dairy farmers,” the trade group Dairy Farmers of Canada said in 2016.
The losses for the dairy industries in Wisconsin and New York alone – in not having Canada as a market for ultra-filtered milk – could run into hundreds of millions of dollars, according to the National Milk Producers Federation, an Arlington, Va., trade group.
“More broadly, tens of thousands of dairy farmers will be affected by the larger scope of what Canada is doing, which is using pricing policy to offload milk powder in global markets where it will be competing with U.S. exports," said Chris Galen, afederation senior vice president."This is truly a national concern.”
For some Wisconsin dairy farmers, the pressure is on to find another milk buyer. Milk truck drivers and others face losing their jobs as well.
Dairy farmer Jennifer Sauer, of Waterloo, said she and her husband, Shane, are urgently seeking a processor for the milk from their 120 cows on their third-generation family farm.
The April 1 letter canceling their milk contract because Grassland lost its Canadian business shook them badly.
“One day you are looking toward the future for your kids. And the next day it’s all taken away from you, in a matter of minutes, when you open an envelope,” Jennifer Sauer said.
“You open that envelope, and you know that your business could be gone by May.”
Earlier, Grassland said ultra-filtered milk helped support more than 700 Wisconsin dairy farms and the company’s plant in Greenwood. For now, about 75 farms are losing their milk contracts with the company because of the new Canadian import tariffs, according to the farmers.
“Even one farm is one too many,” said Goedhart Westers, vice president of business development for Grassland.
“When you lose a market, there’s no easy fix. It puts a lot of people in a tough position.”
Members of Congress from Wisconsin and New York say U.S. exports of ultra-filtered milk are being unfairly blocked by Canada, in violation of trade agreements.
“These reductions in export sales impact dairy manufacturers, and their supplying farms, in areas of our states that are already struggling with depressed milk prices,” U.S. Sen. Tammy Baldwin (D-Wis.) said in a letter to the U.S. Department of Agriculture.
Legislators say they're bringing the issue to President Trump, who has pledged to renegotiate the North American Free Trade Agreement with Canada and Mexico.
“Our state’s dairy farmers are some of the best in the world, and they should not be the victims of a trade dispute they didn’t start," U.S. Sen. Ron Johnson (R-Wis.) said in an e-mail. "I urge the administration to work with the Canadian government and swiftly find a way to resolve this matter before hardworking Wisconsin farm families are hurt."
Dairy processors across Wisconsin and New York have told their farmers that the Canadian market for ultra-filtered milk has dried up, according to the National Milk Producers Federation.
“Canada’s protectionist dairy policies are having precisely the effect Canada intended: cutting off U.S. dairy exports … to Canada despite long-standing contracts with American companies,” Jim Mulhern, federation president and chief executive officer, said in a statement.
The prices that Wisconsin dairy farmers receive for their milk have fallen below a profitable level in many cases. A national glut of the product has resulted in milk being dumped on fields and processors refusing to take more of it.
Now, the Wisconsin farms losing their milk sales to Canada are having a tough time finding another market.
“There was no way to know that we, as a dairy, and 74 others would be the ones to get picked off,” said dairy farmer Kristina Hopkins of Oconomowoc.
Hopkins milks 150 cows. She and her family have been calling processors, farm cooperatives and anyone else who can help them find a milk buyer.
“Right now the imminent struggle is what do we do with 12,000 pounds of milk a day? We have less than 25 days to figure this out,” Hopkins said.
At first, she thought the letter from Grassland might have been a “sick joke” since it was dated April 1, which was April Fool’s day.
“There was nothing in the envelope that said ‘you need to read this now because your life is about to change drastically in 30 days.’ But little by little, reality set in that this is happening,” Hopkins said.
Dairy farmers face tough decisions because producing more milk lowers their cost of production, on a per unit basis, but adds to an oversupply problem and further depresses prices. Even without trade disputes, dairy farming is a tough business loaded with risks that range from volatile commodity prices to having good weather for growing crops.
Still, Hopkins said, farmers are scrappy.
“We are not going to settle for this being our fate. We are going to fight to the death to find a market for our milk,” she said.