Ongoing trade disputes — Mexico and China placed tariffs on American dairy products in July — and the unclear fate of the North American Free Trade Agreement (NAFTA) are having a major impact on American dairy farmers.
“The milk price has dropped, and it’s been a challenge for a number of years,” Beth Ford, President and CEO of Land O’Lakes, said this week on Market Movers (video above). “And then adding this tariff challenge to the mix has really resulted in some real pain in the country.”
The U.S. Dairy Export Council recently reported exports could slide by more than $115 million this year, and another $415 million next year if tariffs on American dairy exports stay in effect.
“I saw a story the other day that 43 producers went out of business in August alone,” Ford said. “So this has got a direct impact on dairy producers in this country. “
‘We’re very unhappy with the negotiations’
U.S. trade negotiations with Canada are at a standstill ahead of an American-set September 30 deadlines to renegotiate NAFTA. Starting with the G7 summit in June, President Trump has repeatedly proclaimed that he is not happy with Canada’s system of placing tariffs on certain imported products after a quota is met.
“We’re very unhappy with the negotiations and the negotiating style of Canada — we don’t like their representative very much,” Trump said on Wednesday, apparently referring to Canadian Foreign Minister Chrystia Freeland.
According to the Brookings Institution, Americans sold $792 million in dairy products to Canada in 2017 while Canadians sold only $149 million in dairy products to the U.S. Brookings experts surmised that “either the President isn’t aware of all the facts about Canadian dairy tariffs … or like his misuse of trade deficit statistics to justify import restrictions, he is using another poor justification for offending one of our closest allies.”
Ford pointed out that dairy farmers need to have markets to consistently send their products.
“Export market access has been critical for producers and growers,” she said. “Taking away that market and that access is challenging.
“And as you know, when we step out of the market, others come in and try to take the place of the United States in those markets. Where are the major markets for [U.S] dairy production exports? Canada, Mexico, China, the EU. And so it’s all of the areas that we’re seeing this tariff challenge. “
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