Canada’s new milk-pricing policy poses billion-dollar problem, according to Darigold economist
U.S. milk producers will lose an estimated $1 billion over the next five years if Canada’s new dairy price system stays in place, a Darigold economist said Tuesday.
Ken Bailey, the cooperative’s lead economic planner and analyst, told the Washington Senate Agriculture Committee that he’s marshaling evidence to show that U.S. dairy farmers are being shut out of Canada and undercut in other countries.
“It’s an urgent, urgent issue,” he said after his presentation. “Our milk checks are going to go down.”
Darigold, headquartered in Seattle and owned by about 500 Northwest farm families, is among the dairy groups hoping to influence North American Free Trade Agreement negotiations.
Darigold is taking aim at the Class 7 price structure introduced in February by Canadian dairy producers and processors. The agreement lowered production costs for skim-milk powder.
Bailey said he’s pulled together numbers that show how the Canadian pricing strategy has affected U.S. producers. He said that Tuesday’s presentation was the first time he’s outlined him findings in public.
“We want to get the word out, it’s a big problem,” Bailey said. “Our goal for the dairy industry is to affect NAFTA negotiations.”
Milk is Washington’s second most valuable farm commodity, behind apples. Darigold is the state’s third largest privately owned company, according to the Puget Sound Business Journal.
Darigold is a major exporter of milk products. The cooperative opposes simply withdrawing from NAFTA.
The Dairy Farmers of Canada wants to continue to exempt its industry from NAFTA, according to comments the group submitted to its government in July. The group defended its pricing policy and said managing the supply of milk products is a “breath of fresh air” in an unsteady marketplace.
“The Canadian dairy industry has respected and will continue to respect existing international trade agreements and their associated regulations,” the group stated. “The same cannot be said for the U.S. dairy industry which time and again has proven they are not willing to play by the rules of international trade.”
Bailey accused Canada of dumping surplus milk products into the global market. “The system was designed to undercut world prices,” he said.
Aided by unfair subsidies, Canadian milk processors are increasing production, Bailey said. Canadian milk, even after traveling long distances, is arriving at the Mexican border cheaper than U.S. products, he said.
Bailey said Darigold members invested $97 million to upgrade the cooperative’s processing plant in Sunnyside, Wash., to compete for a share of the world’s market for skim-milk powder.
“We’ve done this on our own. You can imagine how frustrated our dairy family farmers are,” he said. “Canada is making similar investments, with help from the government to engineer a price system that undercuts us in the global marketplace. It’s extremely frustrating.”
Source: Capital Press