Canada exports some skim milk powder, but it’s not dumping, says Thérèse Beaulieu, the Dairy Farmers of Canada’s assistant director for policy communications.
“We can export as long as it is the same price as the domestic market,” Beaulieu said in an interview April 13 in response to American allegations that Canada dumps surplus skim milk powder on world markets, depressing prices.
‘Dumping’ is defined as selling products in a foreign market for a price lower than received in one’s domestic market. It’s illegal under World Trade Organization rules.
“They (American dairy farmers) believe that Canada’s supply management program has not only prevented access for their products going up there, but it’s also resulted in surpluses of products that are then dumped onto world markets,” United States Deputy Agriculture Secretary Stephen Censky told reporters attending the North American Agricultural Journalists’ annual meeting here April 9.
Minnesota Congressman Collin Peterson also accused Canada of dumping, but added “they are allowed to do it.”
Canada’s supply management system, which also applies to eggs and poultry production, has been on the United States’ hit list for years.
Last year President Donald Trump blamed Canada’s supply management system for shutting down U.S. exports of ultrafiltered milk and vowed to restore U.S. exports through a renegotiated NAFTA deal.
Canada has a high tariff on imported ultrafiltered. The Americans got around it by exporting diafiltered (filtered twice) milk to Canada.
Canada reacted by matching American prices for the same product, Beaulieu said.
Diafiltered milk is a milk protein increasingly used as a food ingredient.
Their own fault
U.S. dairy farmers are suffering from low prices, and have been for several years, but it’s not Canada’s fault, she said.
“The problem the U.S. is having is because of overproduction,” Beaulieu said.
“Canada, with 35 million people, is a 10th of its size. If they flooded our whole market it’s 10 per cent of their production, so we’re not a solution for them.
“We import more (dairy products) from them than they import from us. The trade balance is in their favour.”
Under supply management, farmers control domestic supply through production quotas and restrict imports with high tariffs to keep supply in line with demand.
Critics say the system costs consumers more than in an open market and limits farmers’ and processors’ export opportunities.
But Canadian dairy prices are similar, and in some cases much lower than in the U.K., Australia, New Zealand and the European Union, according to a study prepared by Export Action Global.
“Virtually all of these jurisdictions swapped regulation for new and larger subsidies,” the report says. “Consumers pay for their products once at the retail level and again through their tax dollars.”
Most farmers participating in supply management like it because revenues are predictable and steady.
Although Peterson condemned supply management, he seemed envious of it too.
“Probably the wealthiest people in Canada are the ones who own (dairy) quota,” he said.
When told he could buy quota, Peterson replied: “Yeah, I know, but I don’t want to pay for it. Then it’s not such a good deal, but if they give it to me I figure I make $300,000, $400,000 net (a year).”
Beaulieu said that sounds high. Net revenues vary among farms, she added.
However, Peterson’s estimate that the quota for a 100-cow dairy farm costs $2 million “is in the ballpark,” Beaulieu said.
In Quebec quota costs around $24,000 per kilogram of milk produced per day, she said.
According to Beaulieu, Canadian dairy farmers, on average, are more efficient than their American counterparts.
Canadian dairy farmers aren’t much interested in exporting because international markets are often depressed, she said.
“We are exporting a small amount of fine cheese to New York and Florida,” Beaulieu said. “If you go to Disney you find some Canadian cheese there. We do have some niche market opportunities.
“We don’t see it as a big opportunity when it’s a dumping ground.”
While the U.S. condemns supply management, it restricts access to its dairy market and also subsidizes it.
“We may have 300 per cent tariffs (on butter in Canada), but they (U.S.) have equivalent protective trade measures that… have the same effect,” Agri-Food Economic Systems agricultural economist Al Mussell said in a recent interview with Glacier FarmMedia. “It is very hard to export to the U.S., I would argue it’s almost equivalent (to Canada).”
Meanwhile, the U.S. government recently added another $1 billion to its Margin Protection Program to help bolster dairy farmers’ returns.
The U.S. government also buys surplus milk to donate to food banks.
Not all Wisconsin dairy farmers blame Canada for their woes.
A year ago Shane Sauer, who farms east of Madison, told CBC he and other farmers were producing more milk because processors said there was a demand for it.
“We don’t blame you (Canada),” Sauer told CBC at the time. “We just want solutions.”
According to CBC, Wisconsin alone has more dairy cows than all of Canada.
VegNews, which promotes veganism, claims Americans are shifting from milk to plant-based alternatives and the dairy industry hasn’t adjusted.
“In the first eight months of 2016, dairy farmers nationwide purged 43 million gallons of excess milk into manure lagoons, fields, and animal feed — with the surplus hitting an all-time high of 78 million gallons last year,” according to a Feb. 13 VegNews story condemning the U.S government’s dairy aid.