Wisconsin Dairy Faces International Challenges
Although Wisconsin dairy is world famous, it is not every day you hear the president talking about our state’s dairy farmers. Until this week.
A decision by the Canadian government to lower prices on Canadian produced ultra-filtered milk, a key ingredient in cheesemaking and a major Wisconsin export to Canada, has made Wisconsin dairy an international issue. The price change is an effort by the Canadian Government to get Canadian dairy processors to buy milk produced in Canada rather than importing it. This small change is having a big impact on Wisconsin farmers and processors.
Grassland Dairy Products in Greenwood told dozens of Wisconsin dairy farmers that it will no longer be able to buy and process their milk after losing their Canadian customers. The change, effective May 1, has farmers across the state looking for buyers for their milk. In response, some Wisconsin cheese makers are pitching in by increasing processing to help keep farmers afloat, while cooperatives and farming groups consider scaling back production to help the industry weather the storm.
Wisconsin legislative leaders have opened a dialogue with Canadian trade officials and are urging the federal government to help solve the dispute. Wisconsin Secretary of Agriculture Ben Brancel met with congressional staff and dairy cooperatives from Wisconsin and Minnesota to talk over next steps. In the short term, Governor Walker announced that the Wisconsin Housing and Economic Development Authority will provide amended loan guarantees to dairy farmers and processors, allowing more access to low-cost capital through August.
Canada is Wisconsin’s largest international trade partner, buying more than one-third of Wisconsin-made goods sold internationally. That is more than our next six largest foreign trade partners combined. Dairy products are not included in the North American Free Trade Agreement, America’s 1994 free trade agreement with Canada and Mexico, leaving dairy as one of just a few industries where Canadian tariffs still exist. However, the new administration has pledged to renegotiate the agreement, which could include more favorable terms for American dairy.
During his recent trip to Kenosha to sign the “Buy American” executive order, President Trump said he would negotiate directly with Canadian officials to resolve the trade issues affecting the sale of US milk to Canada. After initial talks failed to bring a resolution, the US government announced tariffs of 3% to 24% on Canadian lumber companies. The US last imposed tariffs on Canadian lumber in 2002, citing unfair government subsidies to the industry, but the dispute ended with a 2006 temporary agreement that expired last October.
Increasing tariffs on Canadian products in order to reverse their milk pricing decision does come with risk. Wisconsin’s paper industry exports $525 million worth of products to Canada and sand mined in our area is used by Canadian oil companies. Wisconsin imports $4.5 billion in Canadian goods annually, including natural gas, plastics and fertilizer, and more than 320,000 Canadians visit our state each year, contributing $65 million to our state’s economy.
Despite the challenges facing our farmers, it is encouraging to see our President, Governor, congressional delegation and state legislative leaders putting the full force of American negotiating power behind an industry that is so important to communities across Wisconsin.
If you or someone you know has been affected by the change in dairy prices need help, please contact the Wisconsin Department of Agriculture, Trade, and Consumer Protection Farm Center. They have a number of resources to assist affected farmers and those who have lost their processor. You can reach them toll-free at 1-800-942-2474.
Senator Terry Moulton is Chair of the Senate Committee on Agriculture, Small Business, and Tourism and represents the 23rd Senate District in the Wisconsin Senate. The district includes Chippewa and Clark counties and parts of Dunn, Eau Claire, Trempealeau, Jackson, Wood, and Marathon Counties. You can reach his office at 608-266-7511 or by visiting senatormoulton.com.