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Pressure mounts for Canadian dairy producers to show they’re the best

As the New Year gets underway, Canada’s biggest trading partner, the US, has been active in ways that will have repercussions for consumers and farmers here.

News surfaced last week that a review panel overseeing the US-Mexico-Canada (USMCA) trade agreement ruled that Canada is breaching its trade agreement requirements for dairy.

Tariffs have traditionally kept most US dairy out of Canada. But that was supposed to change with the new trade agreement, which would see US dairy go directly into grocery stores and other retail outlets.

It has indeed been arriving in Canada. From January through October of the last year, the US exported $478 million of dairy products to Canada, making it the third largest export destination for US dairy products.

But it’s been going into further processing, which is less lucrative than retail. Americans didn’t think they were realizing the benefits they expected to see, and it angered them. They’ve long coveted the elusive Canadian market and argued the country’s protection of the dairy (and poultry) industry is unfair.

So before the review panel they challenged the way Canada was keeping US dairy products in a supporting role rather than giving them a spotlight centre stage. And it won.

Agriculture secretary Tom Vilsack used the victory to flex the Biden administration’s muscles.

 “This ruling is a big step for the US dairy sector towards realizing the full benefits of the USMCA and securing real access to the Canadian market for additional high-quality American dairy products such as milk, cheese and skim milk powder,” he said.

“This action reflects [our] deep commitment to enforcing the USMCA and to ensuring that trade rules work for American farmers, ranchers and producers. It also signals to our trading partners that the United States will stand firm against unjustified trade restrictions and continue fighting on behalf of our farmers and workers to ensure that we have full and fair access to foreign markets.”

Canada has 45 days to change its ways or face retaliatory tariffs on Canadian products.

However, not everyone in Canada had a long face.

In fact, an organization called the International Cheese Council of Canada, representing some companies that import cheese into Canada (including US firms), rejoiced.

Its chair, Patrick Pelliccione, was quoted in the US publication Prairie Farmer saying council members look forward to policies “that will ultimately reduce costs for Canadian consumers, deliver the stability and fairness that has been lacking in the existing system and allow importers to continue providing Canadians’ favourite cheeses at affordable prices.”

It was part of a tough week for Canadian dairy producers, who continue to reel from a chronic drop in milk consumption across the country and, most recently, negative press related to an animal welfare issue in BC.

Do you want more choice in the dairy showcase? I guess we all want as much choice and variety as possible. We’ll make buying decisions based on cultural values, quality and price – as well as availability.

Now, it looks like availability is about to increase. So it will be up to dairy producers everywhere, including Canada, to prove they’re the best choice.

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