Dairy organizations are calling for the U.S. Trade Representative to use the U.S.-Mexico-Canada Agreement (USMCA) joint review process to address what they are calling distortionary nonfat milk solid (NFS) export practices.
The International Dairy Foods Association (IDFA) said a new U.S. International Trade Commission’s (USITC) report on global competitive conditions in the nonfat solids market highlights strong U.S. and global demand for milk-based protein and offers timely analysis of global dairy pricing and production policies as the United States prepares for the upcoming review of the USMCA.
The USITC report identifies the European Union, New Zealand and the U.S. as leading global suppliers of NFS products, with the U.S. showcasing the “greatest capacity for milk supply and component growth.”
In addition, the report zeroed in on the investments and policies which have enabled Canadian NFS products to become a “growing presence in global markets,” despite the small scale of milk production in Canada relative to competitors. The USITC found that Canada’s milk supply management system effectively “unlinks” milk farm prices from milk component prices, allowing for greater competitive advantage for Canadian NFS production.
The National Milk Producers Federation (NMPF) and U.S. Dairy Export Council (USDEC) note that the report acknowledges that Canada has to date limited its exports of products formally classified as nonfat milk solids, it also cites a marked increase in Canadian exports of products categorized under tariff codes for “blended dairy products” and “protein isolates,” that fall outside of the USMCA-disciplined tariff categorization. The report estimates that from 2013 to 2015 exports under the “protein isolate” tariff code were just 76 metric tons. Post USMCA implementation, the volume of protein isolates has grown dramatically to over 32,000 metric tons from 2022 to 2024. While the tariff code is not exclusive to dairy proteins, USITC estimates that most of the exports were dairy based.
“The report confirms what NMPF and USDEC have long documented: that Canadian milk production quotas that ‘aim to match domestic supply and demand for butterfat lead to a level of raw milk production that results in a domestic structural surplus of [nonfat milk solids] components,’” the NMPF and USDEC wrote in a joint statement.
“IDFA applauds the U.S. government’s commitment to examining the global NFS marketplace,” said IDFA President and CEO Michael Dykes. “For years, IDFA members have raised concerns about Canada’s policies that distort global NFS markets. While the report findings are a welcome development, there is still work to be done to mitigate the continued threat of Canada’s policies and their impact on the global market.”
USITC notes that the dairy products are entering the United States from new and expanded processing plants in British Columbia and Manitoba. The report cites that “[i]n addition to access to cost-competitive sources of [nonfat milk solids] components, these facilities received grants and loans from national and provincial governments.”
