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NAFTA Sticking Point Number One: The Dairy Industry

by John Brian Shannon

One of the main sticking points in the ongoing NAFTA re-negotiation is Canada’s regulated dairy industry vs. America’s market-driven dairy industry. And it shouldn’t be.

The dairy industry in Canada uses a system called ‘Supply Management’ to produce only as much milk as is required (with no waste) for the Canadian market, and unlike the American dairy industry it isn’t an export-driven model.

Yet, it’s the United States under President Donald Trump that is pressing Canada to accept American milk into the Canadian market. That same United States subsidized its dairy industry to the tune of $22.2 billion (2015) a number that increases every year. In fact, without massive subsidies American dairy producers would go bankrupt in a year.

U.S. dairy subsidies equal 73% of producer returns, says new report

“Based solely on the USDA’s national average farm-gate price and national average costs of production, Clark says American dairy farmers lost money every year from 2005 to 2016. The report figures support granted to U.S. dairy farmers in 2015 represented approximately $0.35 per litre — almost three-quarters of producers’ revenue.” — RealAgriculture.com

Why President Trump or anyone in America’s dairy industry would want to subsidize Canadian consumers by $1 per gallon is a complete mystery.


American Milk Has High Levels of Growth Hormone and Antibiotics that are Illegal in Canadian Milk

Not one gallon of U.S. dairy product is allowed to be sold in Canada for this reason, although some Canadians do cross the U.S. border and are allowed by the Canada Border Services Agency to return with small amounts of American dairy products for their own consumption (but not for resale).

There are up to 20 chemicals, hormones and antibiotics in milk and Monsanto’s glyphosate is toxic to dairy cows

“According to the Daily Mail, a study published in the Journal of Agricultural and Food Chemistry released information that cow’s milk contains traces of anti-inflammatory drugs such as niflumic acid, mefenamic acid, ketoprofen, diclofenac, phenylbutazone, naproxen, flunixin, diclofena. The researchers also discovered hormones (both natural oestrogen and 7-beta-estradiol), antibiotics, anti-fungal drugs, steroids and Anti-malaria drugs (pyrimethamine) in milk and dairy products.” — excerpt courtesy of SeattleOrganicRestaurants.com

Will Canadians want to purchase dairy products sourced in the United States where such growth hormones, chemicals and antibiotics are on the ingredient list? Likely not.

However, those living in poverty might. Prison administrators in Canada who feed thousands of people every day might enjoy saving $1.00 per gallon of milk and save even more by purchasing American cheese and other dairy products — those savings courtesy of the American taxpayer.


Canadian Cows are Happy Cows!

(Because they don’t have to take bovine growth hormone or other nasty medicines or chemicals)

The happy cows at Harmony Organic in Ontario, Canada

The cows at Harmony Organic in Ontario, Canada are happy because they don’t have to take bovine growth hormone or other chemicals or drugs. Image courtesy of HarmonyOrganic.ca

But it’s not all cowbells and sunny meadows for the Canadian dairy industry. Canada employs the Supply Management system which plots exactly how much milk will be required annually and the country’s milk producers must comply.

Canada’s dairy industry regulates the supply to ensure the optimum amount of milk for the Canadian market without the oversupply spikes or undersupply crashes that other countries experience due to market forces.

It means that every year some amount of Canadian dairy product is poured back onto the fields so that prices will stay high enough for Canada’s milk producers to stay in business. While pouring milk on fields re-adds vital nutrients to the soil it’s an expensive way for farmers to condition their soil. Consequently, it doesn’t happen very often.

Canada’s dairy industry is sized to fit the Canadian market and very little of the country’s milk is exported, therefore, American milk producers rarely compete with Canadian milk producers anywhere on the planet.

Canada’s dairy industry contributes about $20 billion CAD to Canada’s GDP, which is smaller than the $21 billion USD that the California dairy industry sells to Californians — but California also exports an additional $44 billion USD worth of dairy products to other U.S. states — and good for California! Both the Golden Bear state and other U.S. states benefit from the excellent growing and production conditions in California.


Summary

The Canadian industry threatens no other country’s dairy industry as it’s sized for Canadian needs alone — therefore, one wonders why President Trump wants to flood the Canadian market with subsidized American milk and other dairy products.

And the reason Trump wants to export U.S. dairy products is because there’s a huge supply glut in the United States which means that dairy producers there must either downsize or find new markets.

If President Trump wants to export American milk, here’s some food for thought; The total annual demand for milk in China is more than the United States could produce in 10-yearsand 1.35 billion Chinese citizens pay an average of $7.00 USD per gallon of milk while 327 million Americans pay an average of $2.39 USD per gallon.

American milk producers could charge Chinese consumers $5.50 USD a gallon (and not require U.S. subsidies due to the higher retail price in China) and still sell every gallon they could ever hope to produce!

America’s leaders must stop focusing on microscopic markets like Canada where the market is already saturated with established Canadian producers and concentrate their efforts on the huge unfilled demand economies like China where they pay so much for milk that American subsidies could be discarded entirely and U.S. dairy products would still be cheaper than what Chinese consumers pay now.