New Trade Accord Could Benefit Dairy Farmers

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New Delhi, October 04, 2018: Dairy farmers and agriculture officials in the Twin States say they’re cautiously optimistic that an updated trade deal between the United States, Canada and Mexico will help ease the industry’s economic woes by increasing the price of milk.

The deal, which would revise the 1994 North American Free Trade Agreement, or NAFTA, could open a small portion of now-closed Canadian markets to American dairy products. It’s a move some believe will alleviate the overproduction of milk in the United States.

It’s unlikely that New England will begin shipping large volumes of milk and cheese to Canada anytime soon, according to John Porter, a professor at the University of New Hampshire Cooperative Extension.

Instead, he said, American farmers would be helped by rising milk prices, the result of higher Canadian demand and the country’s new ability to purchase from overseas.

“Anything that can get milk out of our country and into the market will lessen the supply a little and help the price,” said Porter, who edited the book The History and Economics of the New Hampshire Dairy Industry.

New Hampshire Agriculture Commissioner Shawn Jasper agreed, saying dairy farmers most likely would benefit from a ripple effect that starts with Wisconsin and New York producers gaining access to Canadian markets.

“Given that New Hampshire doesn’t have a surplus of milk, I think the only way that it can help is from the pricing structure,” he said in a phone interview on Tuesday.

For years dairy farmers have struggled to cope with declining milk prices, which now stand at levels last seen two decades ago.

The price of milk per hundred pounds now is $16.33, which is down $9.16 from the market’s peak in 2014, according to the U.S. Department of Agriculture. By comparison, farmers were paid $15.98 per hundred pounds of milk in 1998.

The downturn has resulted in many farmers selling off their herds to invest in other forms of agriculture, while others chose to leaving farming altogether according to vnews.com.

Walhowdon Farm in Lebanon sold off its herds of Holsteins in the spring of 2016, followed just a few months later by Green Acres Farm in Randolph. This summer, Taylor Farm in Meriden also announced the winding down of its commercial milking operation.

The price drop also was cause for dairy co-op Agri-Mark to send farmers the phone numbers for suicide prevention hotlines and other mental health services last winter. The company, which owns Cabot Creamery, collects milk from farmers through the Northeast and sells it to large producers.

“We do feel the pressure of the price. We do feel the tightening of the belt,” said Liz McNamara at McNamara Dairy in Plainfield.

“We’re watching a lot of our friends struggle. We’re watching a lot of our friends go out,” she added. “That’s tough. It’s not a good industry to be in right now, that’s for sure.”

McNamara Dairy is insulated from some of the pressures facing the milk market, largely because it bottles and distributes its own milk within 60 miles of the farm, McNamara explained. Still, she said, the family-operated farm is optimistic the trade deal will result in higher prices.

To prevent similar economic woes, Canada has a system that restricts how much milk can be produced in the country. That’s coupled with high tariffs on American milk products, resulting in continually high prices.

While much of that system will remain intact, if the trade deal is approved, the milk industry hopes that American prices will rise again by simply breaking into the Canadian market.

The deal would grant U.S. farmers access to 3.6 percent of the Canadian domestic market, according to the Canadian Broadcasting Corp, or CBC. It also would eliminate Canadian discounts on milk ingredients, such as skim milk and protein concentrates, that are designed to price out American equivalents.

However, Canadian trade groups argue that the deal is unlikely to fix the underlying problems facing dairy farmers — an oversupply of milk.

“There are a lot of farmers in Wisconsin and Illinois who are advocating for a system like Canada because they’ve identified that their problem is excess production,” Graham Lloyd, CEO of Dairy Farmers of Ontario, told the CBC on Monday. “This is more about political pressure. Gaining access to a market that is literally one-tenth the size of the United States won’t be a solution to any of their problems.”

But the Twin States’ political leaders appeared to welcome the deal’s reported dairy provisions.

Vermont Gov. Phil Scott, a Republican, said in a statement on Monday that he’s “optimistic the updated agreement will have a positive impact” on the state. Meanwhile, U.S. Sen. Jeanne Shaheen, D-N.H., said she is “encouraged to see some positive improvements that will help New Hampshire’s dairy farmers and small businesses.”

“For decades, American dairy farmers have struggled with exporting their products across the border to Canada due to their protected milk market,” U.S. Rep. Annie Kuster, D-N.H., said in a statement on Tuesday. “I have long called for increased market access of American dairy exports into Canada, and I am encouraged that the (trade deal) will provide additional market opportunities for American dairy products being sold in Canada.”

President Donald Trump next needs to submit the treaty to Congress. The trade deal will require the approval of all three countries — the United States, Canada and Mexico — before it is ratified. Even then, most provisions wouldn’t take effect until 2020.

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