U.S. farmers doubtful trade deal will solve troubles
Might not be the ‘victory’ Trump predicted
As he proudly unveiled his new trade deal with Canada this week, President Donald Trump heralded it as a “great victory” for American agriculture, offering far more access to this country’s dairy market.
“Our farmers were not treated properly by Canada,” he said outside the White House Monday. “Now they’re going to be treated with respect.”
But industry representatives in the milk and cheese heartland of Wisconsin — where Trump first began hammering Canada for its dairy protectionism — were not so effusive about the agreement’s benefits Tuesday.
The state has seen a net loss of more than 400 dairy farms this year alone as low prices and over-supply plague the U.S. business. Canada’s agreement to free up another 3.6 per cent of its milk market to Americans will do relatively little to lessen those troubles, they said.
“It’s probably not going to have any impact at all as far as saving farms,” said Darin Von Rudin, a third-generation dairy producer and head of the Wisconsin Farmers Union. “I can certainly see the Canadian dairy farmers’ side of this. It’s going to hurt them … but it isn’t going to help the U.S. dairy farmers.”
Compared to overall production in the U.S., the increased access to Canadian customers is “tiny,” not even enough to meet annual growth in American production, he said.
As for the low milk prices U.S. farmers are facing, announcement of a tentative trade agreement had no effect on the market, said Mike North, president of the Wisconsin Dairy Business Association.
“The price of milk, the price of product, there has been no movement on this news,” he said. “The net impact has been zero.”
Still, North is confident that as the deal is ratified and the new U.S. quotas in Canada take effect, it will move the market positively.
“Unto themselves, the Canadian consumer will not be the solution for U.S. dairy supply or oversupply. But they are part of it,” he said. “The fact that we are again talking about growing access for U.S. dairy in Canada is something that makes U.S. dairymen happy.”
According to U.S. figures, America exported about $600 million worth of dairy products duty-free to Canada last year — over three times what it bought from here — with anything above that subject to tariffs of up to 300 per cent.
It was at an April 2017 event in Wisconsin that Trump first blasted Canada’s “very unfair” treatment of U.S. dairy farmers, after Gov. Scott Walker highlighted the issue to him. He has repeated the complaint repeatedly since, often threatening to punish Canada with devastating automobile duties.
The United States Mexico Canada Agreement would grant the States the ability to export an additional 100,000 metric tons or so of various dairy products here.
Yet that is less than half a per cent of total American production. Just the U.S. over-supply of milk-fat — surplus above domestic and foreign customer demand — is the equivalent of about 8.1 million metric tons, according to the U.S. Department of Agriculture.
What was offered dairy farmers in the deal is “mainly symbolic,” and represents only a small reduction in Canadian protectionism, Economist Ethan Harris of Bank of America Merrill Lynch said in a note to clients, CNBC reported.
Even so, Gov. Walker called the new trade deal “a big win for Wisconsin farmers,” while Jim Holte of the Wisconsin Farm Bureau said he welcomed it with “open arms.”
The trade agreement “kind of brings hope,” said Jay Heeg, president of the Wisconsin Professional Dairy Producers, adding that he appreciated the two countries were paying heed to his industry.
But he said he’ll need more information to determine if it will have a tangible impact on overall demand and prices, noting the lack of reaction this week from the U.S. milk market.
“It could change,” said Heeg. “But markets wait for any kind of signal, and there didn’t seem to be much of a signal there.”