Canada Trade Restrictions Threaten NY Dairy Exports

3/23/2013 7:00 AM
By Paul Post New York Correspondent

Proposed Canadian trade restrictions could hurt New York dairy farms by limiting exports that go north across the border, U.S. Sen. Charles Schumer says.

Schumer has called on U.S. Trade Representative Ron Kirk and U.S. Department of Agriculture Secretary Thomas Vilsack to negotiate agreements toward more free trade.

Specifically, Schumer said a proposed Canadian tariff would hurt O-AT-KA, whose Batavia production plant is undergoing a $16 million expansion.

“Fully opening the Canadian market to U.S. dairy products would secure meaningful new market opportunities for our U.S. dairy industry,” Schumer said in a letter to both federal officials. “To be truly effective, dairy discussions with Canada should include a focus not only on removing tariffs, but also on ensuring that various forms of non-tariff barriers are not employed to hinder U.S. dairy exports.”

New York farms shipped about 21 million pounds of fluid milk to Canada each of the past two years.

“We believe the federal government should do everything in its power to remove roadblocks to competitive trade for New York’s dairy industry,” said Joseph Morrissey, state Agriculture & Markets Department spokesman. “This is especially important as we share a border with Canada.”

New York Farm Bureau supports such efforts, too.

“As New York farmers look for new markets, it’s natural they would turn to Canada with whom we share a border,” spokesman Steve Ammerman said. “Milk is a worldwide commodity and we need a level playing field to be competitive.”

Schumer said similar trade issues exist with New Zealand.

“New Zealand has consistently expressed interest in greater access for its dairy products to enter the U.S. market,” Schumer told Kirk and Vilsack. “At the same time, it is our understanding that New Zealand has resisted considering significant reforms to its dairy sector policies, which permit the concentration of virtually 90 percent of its milk supply into the hands of one company. Dairy producers and processors in our states are deeply concerned that this market concentration policy provides New Zealand, the world’s largest dairy exporter, with a tremendous advantage in global markets and are insistent on seeing it effectively addressed as a necessary precursor to any expansion of U.S.-New Zealand dairy trade.”

U.S. dairy exports have increased dramatically during the past decade, from 2 to 3 percent to 13 to 15 percent, said Bruce Krupke, Northeast Dairy Foods Association executive vice president.

Much of the demand is from China and India, whose fast-growing economies have produced a middle class with the ability to obtain U.S. goods and services.

“They have buying power,” he said.

The U.S. is an attractive source because its ample year-round, high-quality supply is reasonably priced. In contrast, Canadian milk costs more because of strict government quotas that restrict the amount of milk farmers produce.

“We’d like to see more trade with Canada,” Krupke said. “Consumers on both sides would benefit from more openness.”

Consumers in Canada would also benefit if their country’s pricing was based more on supply and demand, like the American system, he said.

Gov. Andrew Cuomo is encouraging New York farmers to produce more milk to supply the state’s rapidly growing Greek yogurt industry. However, that’s just one possible destination for their milk.

“The federal government must focus on every opportunity for our dairy and Greek yogurt producers to grow and compete, and given that the dairy industry is becoming more and more reliant on the growing global market, a level playing field is essential,” Schumer said.

O-AT-KA’s majority owner is Upstate Niagara Cooperative, which includes more than 390 local dairy farm families as members. Products manufactured by O-AT-KA at its Batavia plant include nonfat dry milk powder, buttermilk powder, whey powder, canned evaporated milk, butter, fluid condensed milk, iced coffee and nutritional beverages.

The company’s new two-story addition would bring new “ultra-filtration” capabilities to the plant, allowing it to produce concentrated liquid milk protein, which is needed for high-protein items such as nutritional supplement drinks and some Greek-style yogurt.

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