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Money Sheltered Canadian dairy sector skimming global exports, U.S. complains

01:34  13 june  2018
01:34  13 june  2018 Source:   reuters.com

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Canada 's sheltered dairy sector has drawn the ire of U . S . President Donald Trump for its high tariffs, but U . S . farmers say it is just as Even as Canadian politicians have defended the need to protect the industry from outside supplies, Canadian exports of skim milk powder more than tripled to 71,880

Canada 'ssurging exports of protein-rich skim milk powder have angeredfarmers in the United States, as the sheltered dairy sector inCanada draws the Still, Canada accounts for less than 3 percent of global trade, according to Agri-Food Economic Systems. Canada controls dairy supplies and prices

a group of cattle standing on top of a pile of hay: Cows eat hay at a dairy farm in Upton.© REUTERS/Mathieu Belanger/File Photo Cows eat hay at a dairy farm in Upton.

Canada's sheltered dairy sector has drawn the ire of U.S. President Donald Trump for its high tariffs, but U.S. farmers say it is just as galling that exports have spiked from a country largely closed to importing dairy from other nations.

Canada controls dairy supplies, prices and imports, and the system has recently become the main target of Trump's verbal attacks amid talks toward a new trade agreement.

Even as Canadian politicians have defended the need to protect the industry from outside supplies, Canadian exports of skim milk powder more than tripled to 71,880 tonnes in 2017 from a year earlier, worth C$173 million ($133 million), according to Statistics Canada data. Still, Canada accounts for less than 3 percent of global trade, according to research firm Agri-Food Economic Systems.

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Canada 's sheltered dairy sector has drawn the ire of U . S . President Donald Trump for its high tariffs, but U . S . farmers say it is just as Even as Canadian politicians have defended the need to protect the industry from outside supplies, Canadian exports of skim milk powder more than tripled to 71,880

WINNIPEG, Manitoba/CHICAGO, June 12 (Reuters) - Canada 's surging exports of protein-rich skim milk powder have angered farmers in the United States, as the sheltered dairy sector in Canada draws the ire of U . S . President Donald Trump for its high tariffs.

Canada cannot expect to have both a protected system and compete globally, U.S. Dairy Export Council Chief Executive Tom Vilsack said in an interview.

"They have decided to go significantly into the export market by undercutting the world price for milk powder," said Vilsack, who was U.S. agriculture secretary under former President Barack Obama.

Dairy farmers have an outsized influence in Canadian politics, as they are concentrated in the vote-rich provinces of Ontario and Quebec.

Their main lobby group, Dairy Farmers of Canada (DFC), met privately with Prime Minister Justin Trudeau on Tuesday and left feeling comforted.

"He clearly understands our concerns. He stated that not only does he support supply management, he is also committed to our dairy farmers, and a robust dairy sector," said DFC President Pierre Lampron.

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complains @ (Recasts; Adds comment from Dairy Farmers of Canada ). WINNIPEG, Manitoba/CHICAGO, June 12 (Reuters) - Canada ' s sheltered dairy sector has drawn the Canadian sales are "a drop in the bucket," and while skim milk exports grew fast, that growth cannot continue

The Canadian Dairy Commission, a government corporation, sets prices for butter and skim milk powder annually, which provincial boards use as a The result of the WTO ruling is that Canada is not allowed to export much dairy . What is the value of canada ’ s dairy sector ?

Canadian processors and farmers implemented a new pricing system, called Class 7, for milk ingredients starting in 2016, over concerns about fast-rising volumes of U.S. milk proteins not subject to high tariffs that were flowing into Canada.

U.S. shipments of the proteins have now tapered off, and the new price class also allowed Canadian processors to produce skim milk powder at a low enough price to compete globally. The extra supplies have depressed global prices, Vilsack said.

"They are essentially transferring the problems that are created by their system," Vilsack said.

The underlying reason for Canada's new price class is that demand for butterfat, used to make butter and cream, is outpacing that of dairy proteins - leaving processors with surpluses of the latter.

Mathieu Frigon, chief executive of the Dairy Processors Association of Canada, whose members include Saputo Inc and Parmalat Canada Inc [PLTPRC.UL], said he was surprised by the U.S. complaints.

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Sheltered Canadian dairy sector skimming global exports , U . S . complains . WINNIPEG, Manitoba/CHICAGO Canada 's sheltered dairy sector has drawn the ire of U . S . President Donald Trump for its high tariffs, but U . S . farmers say it is just as galling that exports have spiked from a

Trump vs. Canada : a look at how we got here. Trump attacks put focus on supply management. Sheltered Canadian dairy sector skimming global exports , U . S . complains .

"The U.S. faces the same (issue)," Frigon said, adding the United States also limited dairy imports with high tariffs, albeit much lower than Canada's. "It's not like their market is wide open."

The United States ships five times more dairy to Canada than vice-versa, Frigon said. U.S. concerns about Class 7 are overblown, said Al Mussell, research lead at Canadian think tank Agri-Food Economic Systems.

Canadian sales are "a drop in the bucket," and while skim milk exports grew fast, that growth cannot continue because Canada's system restricts production, Mussell said.

(Reporting by Rod Nickel in Winnipeg, Manitoba and Julie Ingwersen in Chicago; editing by Peter Cooney and Diane Craft)

Saputo urges end to milk ingredients pricing system opposed by U.S. .
Saputo Inc. wants an end to a domestic milk ingredient pricing system that has angered the United States , chief executive Lino Saputo Jr. said on Monday, showing a rare crack in solidarity among processors and the country's sheltered dairy farmers.The Class 7 pricing agreement, struck in 2016 between Canadian dairy processors including Saputo and dairy farmers, allowed processors to pay lower prices for domestic milk ingredients used to make cheese and yogurt, and to export the rest."They want their cake and they want to eat it too," Saputo Jr. said in an interview, referring to farmers.

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