Milk Minute: A Producer’s Perspective on Trade

By Doug Chapin, MMPA Board Chairman

Earlier this spring, I was asked to take part in a new group formed by the U.S. Dairy Export Council (USDEC) and the National Milk Producers Federation (NMPF) called the Dairy Trade Envoy. The group is comprised of 28 dairy producers and industry staff who learn about trade policy and the value that trade represents now and in the future. The goal is to give producers and manufacturing representatives the expertise to engage with media and policy makers to provide a producer’s perspective on trade.

I’d like to frame where dairy trade is today. In 2020, 16 percent of dairy solids were exported. Now, 2021 is likely to surpass 2020. To put the volume of exports in context, we actually exported more milk solids in July 2021 than our domestic fluid milk market used. We exported over $6.5 billion of dairy products with a $12 billion impact across the supply chain. This is evidence that exports affect more than just dairy producers, they benefit the entire supply chain.

Exports allow us to balance the domestic market. We use 97 percent of the milk fat we produce here at home in the U.S., but only 80 percent of the skim solids. Exports provide a home for the unused 20 percent.

Our leading trade partners are Mexico, China, Southeast Asia and Canada. Our leading export products are Non-Fat Dry Milk/Skim Milk Powder (NFDM/SMP), whey products, cheese and lactose.

So what are a few of the challenges to trade facing our teams at USDEC and NMPF today? While the new United States-Mexico-Canada Agreement (USMCA) is good for dairy, we need to urge the administration to enforce it. Canada has not complied with USMCA commitments and has discouraged full utilization of USMCA dairy market access allotments. We are encouraged by U.S. Trade Representative Tai’s dispute settlement case with Canada. Mexico is a little different though. They have tried to erect regulatory barriers affecting cheese and skim milk powder. USDEC continues to monitor this situation.

Another challenge to trade has been shipping, specifically from the COVID-19 pandemic. A surge in buying from Asia resulted in a severe shortage of shipping containers and congestion at ports. In several cases, ships returned to Asia with empty containers, while U.S. docks had export products just sitting there. The House has introduced legislation (The Ocean Reform Act of 2021) that could help this issue. We’ll keep you posted on how this moves forward.

Although the Phase One China Deal offered dairy some opportunities, we still face some retaliatory tariffs. We are seeking to eliminate these and allow the U.S. to gain more market share in China.

The European Union and New Zealand have outpaced the U.S. in trade agreements. We encourage the Administration to pursue new trade agreements with the United Kingdom, Southeast Asia, Japan and China.

I appreciate the opportunity to serve as a Dairy Trade Envoy. We have already had an Envoy participant testify before the U.S. Senate on the need for enforcement of the USMCA and I’ve been able to discuss our needs with legislators on a couple of issues. One thing I’ve learned is that trade is never finished. The need for new agreements and maintenance of existing agreements will never end.

This article was originally published in the September/October 2021 issue of the Milk MessengerSubscribe »