How Canada Trade Deal Could Benefit US Dairy Farmers

Dairy farmers in states such as New York and Wisconsin will be able to sell more of their milk, butter and cheese to Canada under a new trade pact that replaces the North American Free Trade Agreement.

The two countries will now join Mexico in updating that 1994 accord, which will be renamed the United States Mexico Canada Agreement.

As part of the deal, the U.S. is getting expanded access to Canada’s protected dairy market.

Canada will ease restrictions on its dairy market and allow American farmers to export about $560 million worth of dairy products to its northern neighbor. That’s about 3.5 percent of Canada’s total $16 billion dairy industry.

“This is a very, very big deal for our farmers. Mexico and Canada will be opened up a lot more than they are now, and I think there will be a better spirit between our three countries, which is important for our farmers,” President Donald Trump said Monday in a speech at the White House.

Canada will eliminate its so-called Class 7 milk pricing system, which makes it cheaper for the country’s dairy processors to buy certain ingredients domestically. The system was a big obstacle in the trade talks.

And market access for the U.S. will exceed Canada’s concessions in the Trans-Pacific Partnership talks.

Canada will also add an export charge on skim milk products and infant formula, allowing U.S. producers to expand their presence overseas.

In early 2017, dozens of dairy farms in Wisconsin, the nation’s second-largest dairy producer, were nearly forced out of business when they lost their milk buyer following a trade dispute with Canada.

Grassland Dairy Products said it no longer would buy milk from those farms because it lost millions of dollars in business when the Canadian dairy industry made it harder for U.S. processors to sell ultrafiltered milk – used to make cheese – in Canada.

Trump promised to settle that fight, and other agricultural skirmishes, in the NAFTA negotiations.

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Source: USA Today