USMCA Provides Hope, Certainty for US Dairy

After much anticipation, the U.S.-Mexico-Canada trade agreement is officially signed into law. The trade deal offers much reassurance for U.S. food and agricultural products exported to Mexico and Canada, which totaled nearly $40 billion in 2018.

The Holstein Association USA shares a look at what the USMCA means for the nation’s dairy farmers.

Negotiations surrounding the USMCA had the nation talking about dairy farmers — and the importance of dairy exports around the world. Mark Stephenson of the University of Wisconsin-Madison…

“The U.S.-Mexico-Canada Agreement is a complex document, as you could imagine between three contiguous countries. And we’ve had historically a lot of trade. Mexico has for a long period of time been our largest trading partner for dairy. Canada has been our largest trading partner for all goods, and they’ve usually been our second or third largest for dairy as well.”

Replacing the 25-year-old North American Free Trade Agreement, NAFTA, the U.S.-Mexico-Canada Agreement brings a steady hand to recent trade uncertainty…

“With Mexico, we’ve basically gotten back to free trade, and with Canada we have a small crack, an additional crack in the door to sell some more products up there. Those are all good things.”

“We’re happy to see some provisions included in that were going to be beneficial to the U.S. dairy industry. Taking a look at the Canada pricing system that’s caused some issues here in the United States, and then obviously Mexico being one of our strong markets for product.”

That’s Jeff Lyon, general manager of FarmFirst Dairy Cooperative.

He says the USMCA sends a positive message to the rest of the world — demonstrating that the U.S. can sign and pass a trade agreement that reflects modern trade rules. Securing access to international export markets is extremely important to U.S. dairy producers, Lyon explains…

“About 17% of the milk equivalent basis of domestic dairy production goes into the export market. So if you’ve got right now, one of every seven semis of milk going to the export markets every day, you know the importance of getting that done. Because if we don’t have those agreements and we need to consume that milk here domestically, then we have real tough issues that we have to look at for the entire dairy industry.”

Milk prices have started to recover in recent months; and farmers look forward to regaining financial footing in the year ahead. A preserved trade market with Mexico and Canada goes a long way in restoring the dairy economy…

“We’ve seen a tightening of the milk supply…so we have seen some improvement in prices. We’re seeing tremendous demand for dairy products, both domestically and obviously there’s people that want it worldwide, as well. So the demand is still strong. You’re seeing growth there, our consumption per capita of dairy products is very, very strong, and that continues.”

Visit Holsteinusa.com to learn more.