Will the potential new trade agreement with Canada help our dairy farmers?
Without any reservations, the last four years of low milk prices paid to dairy farmers have been in all probability, the worst years the dairy farmers have experienced in all my life.
The low prices have caused Pennsylvania dairy farmers to be underpaid by at least 500 million dollars for each of these last four years.
While New York dairy farmers have been shortchanged by over 600 million dollars during the same period, dairy farmers in most of our other states have also experienced the same problems.
However, it seems that no one wants to rectify the dairy crisis facing most of our dairy farmers. In addition to this low milk price, the value of dairy cows being forced to be sold has plummeted to about fifty per cent of their value, and in some cases, even lower than that.
Adding to this devastation of prices paid to dairy farmers: we now witness a trade war with Canada involving the trading of dairy products between the US and Canada.
I think most of us have always felt the relationship between the United States and Canada was very good until recently.
Looking back to 2016, Canada shipped 484 million pounds of dairy products into the United States (second only to New Zealand), while we shipped 631 million pounds of dairy products into Canada.
We also shipped over 1 billion pounds of products into Mexico.
So what has happened? Canada says they could not accept some of the dairy products they were importing. Without reviewing the trade agreements, we would not know if all the products that were geared to be shipped into Canada were covered by the former trade agreement, or were some of the extra products simply added on above the treaty amount.
However, what appears to have happened is because the US now has additional dairy plants that are manufacturing the questionable whey and milk protein concentrate, and some of these products were being shipped into Canada.
However, now Canada has the ability to manufacture whey and milk protein concentrate, so they in all probability feel they don’t need as many products from the United States.
(However, are they circumventing the treaty agreement?)
When Canada cut back on accepting some of these products, it resulted in nearly 100 dairy farmers in the Midwest to lose their market for their milk. (Most of these farmers eventually found new markets.)
Now the new proposed trade agreement calls for Canada to allow the United States to ship between 3.5 and 4 percent of Canada’s production into Canada from the United States. This would probably equate to 700 million pounds of milk shipped into Canada. This would be done in dairy products, not necessarily actual milk.
Reports that I have been given indicate that this agreement may cause Canadian dairy farmers to lose up to sixteen per cent of their dairy quotas.
I hope this potential agreement is not the first step to mandate that Canada drop their quota system. Something to look at: There are people indicating that the manufacture of whey and milk protein concentrate is helping our dairy farmers. Other people are claiming that the manufacturing of whey and milk protein concentrate could be displacing 20 billion pounds of milk in the United States. If this is true, one can only say, “Wow.”
Something else to look at: The population of the United States is at least 325 million people. Canada’s population is estimated to be 32 million people. The US dairy farmers produce nearly 216 billion pounds of milk per year, while Canadian dairy farmers produce 20 billion pounds of milk annually. The United States has around 37,500 dairy farmers, while Canada has only 11,000 dairy farmers.
The average annual production of milk per farm in the US is approximately 5.5 million pounds. While Canadian dairy farmers average annual production is slightly less than 2 million pounds.
What does this tell us? Assuming that the figures reported to me are accurate, and some of them have been difficult to obtain, then there are three main considerations.
1) It appears that the Canadian pricing and quota system is allowing the Canadian dairy farmers to thrive.
2) It appears that the present pricing system in the United States and the failure of the United States to accept a base excess plan with an adequate pricing system is causing severe grief on our United States dairy farms, and is causing many of our United States family dairy farms to go out of business.
3) It’s time for a truly fair evaluation of the use of whey and milk protein concentrate, and the possible adverse effect it is having on our dairy farmers’ prices.
I still have many consumers asking me: Why do our packaged cheese slices taste like plastic?
Pro-Ag can be reached at 570-833-5776.