It is one thing to be in favor of the free market, but what the Canadians are doing to artificially depress the price of milk is quite a different matter. The result is harmful to this nation’s farmers and, more specifically, Western New York.
This risks harming long-standing friendly relations with our Canadian neighbor. There should be some diplomatic approach to reaching an acceptable agreement that benefits both nations.
News Washington bureau chief Jerry Zremski reported on what has become a worldwide milk glut. Prices have plummeted and local farmers are finding themselves in financial straits, some facing the real possibility of going out of business.
Western New York has 935 dairy farms with 160,500 cows. The threat to these businesses is absolutely real and has placed Senate Minority Leader Charles E. Schumer and President Trump, two men who have not exactly been political allies of late, squarely on the same side. The battle has also pulled in House Speaker Paul Ryan, R-Wis., whose state benefits from the cheese industry, as well as Canadian Prime Minister Justin Trudeau.
More recently, Rep. Chris Collins, R-Clarence, sent a letter to Trump asking the president “to take swift action” against the Canadian dairy industry’s attempt to thwart U.S. dairy producers. The letter was signed by 67 House members from both parties, including Reps. Brian Higgins, D-Buffalo, and Tom Reed, R-Corning.
The situation has frustrated the president to the extent that he has called out Canada for changing rules and regulations and, in so doing, hurting this nation’s dairy farmers in Wisconsin and New York State. Trudeau did not offer any soothing words of comfort, except to point out the absence of a global free market when it comes to agriculture: “Every country protects, for good reason, its agricultural industries.”
Moreover, Canada has a milk management system and regulates its dairy market. The United States offers agricultural subsidies benefiting its dairy industry, Trudeau helpfully pointed out. Having said all that, there was no Canadian government decision affecting the current milk situation. There is another entity to consider: the Canadian dairy industry.
The Toronto Globe and Mail put it succinctly in an editorial last week by saying that the Canadian industry operates as a price-fixing cartel that “benefits dairy farmers at the expense of everyone else – Canadian consumers, in particular.”
The price-setting behind the industry-led provincial marketing boards is undercutting the Canadian market price for ultra-filtered milk, used in making yogurt and cheese. It wasn’t always that way but the board found a loophole and used it. This hits home for O-AT-KA Milk Products of Batavia, owned largely by Upstate Niagara Cooperative and its 360 farmers, some of whom could lose their businesses.
Various factors are driving down the price of milk. The end of the love affair with Greek yogurt is one, along with the current fascination with almond milk, and other new products.
And then there is the strong U.S. dollar that affects the milk and other industries selling overseas and, as Zremski’s article pointed out, international politics, particularly retaliation from Russia following sanctions. The expectation is that milk prices will fall even further as a consequence of the new Canadian policy that is reducing imports from New York.
This region has much riding on the push to persuade Canada to change its dairy policies. The countries should employ diplomacy that emphasizes both fairness and the free market.