Uncertainty is nothing new for farmers.<\/p>\n\n\n
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<\/a>Freak weather changes and fluctuations in the market make planning for the future a gamble, never a sure thing. Dairy farmers have to deal with the additional issues of needing to keep their herds healthy and well-fed, as the price farmers receive in part depends on bacteria counts, and also the fat and protein content of the milk. If things weren\u2019t hard enough, milk is a highly perishable product, which, unlike grains, cannot be stored and then sold when prices improve.<\/p>\n\n\n\n
Giving farmers even more headaches these days is President Donald Trump\u2019s on-again, off-again trade war. Specifically, farmers have to endure even more uncertainty than normal as prices for inputs like seed or fertilizer may rise with tariffs, while their export markets abroad are endangered. In this mix of the president\u2019s ongoing trade spats, he’s ridiculing Canada<\/u><\/a> for protecting its dairy farmers with their supply management system<\/u><\/a>, alleging that it harms U.S. farmers.<\/p>\n\n\n\n The moral of the story is that exports don\u2019t keep farms in business, but instead allow larger operations to capture market share for themselves while driving out the smaller operations that have long defined U.S. dairy.<\/p>\n\n\n\n But here\u2019s the reality\u2014Trump\u2019s plans don\u2019t work for U.S. farmers. In fact, his intention to increase exports and enter the Canadian market fails both American farmers and our partner to the north.<\/p>\n\n\n\n Mexico has long been the main customer<\/u><\/a> for our dairy exports and is regularly the No. 1 importer of all U.S. goods. This is a mutually beneficial arrangement as Mexico is a milk deficit country and meeting their domestic consumption needs requires imports. That\u2019s how trade should work\u2014when one country has stuff to sell that another country wants to buy, everyone wins.<\/p>\n\n\n\n With our neighbors to the north, the story is much different.<\/p>\n\n\n\n Canadians do not want our products forced into their market. Actually, Canadians want their system to stay as it is<\/u><\/a>. It\u2019s not difficult to see why. The Canadian supply management system ensures dairy farmers a fair price for their milk by tying domestic dairy production to consumption. Prices are negotiated in periodic meetings between farmers and processors to assure a baseline cost of production for producers and an adequate supply for domestic needs. Unlike the U.S. system, in which price controls were lifted for dairy in the 1980s, Canadian dairy farmers have a semblance of certainty year after year. U.S. dairy producers must fend for themselves, adopting a \u201cget big or get out\u201d mentality and increasing production whenever they can to maintain some kind of financial security. This push to constantly increase production leads to chronic overproduction and price volatility. Also unlike the U.S. system, Canadian farmers do not rely on tax-payer financed bailouts<\/u><\/a>, or inadequate insurance payments<\/u><\/a> that keep American farmers hanging on by a thread.<\/p>\n\n\n\n Furthermore, the production treadmill promoted by U.S. government policy has caused the loss of small farms and the hollowing out of rural communities. Trump continued this \u201cget big or get out\u201d mantra the first time he was in office, targeting Canadian dairy much like he is doing now. During the renegotiation of North American Free Trade Agreement into the U.S.-Mexico-Canada Agreement (USMCA), the Canadian market was slightly opened<\/u><\/a> to U.S. dairy exports.<\/p>\n\n\n\n Despite the heralding of this change a \u201cwin\u201d for farmers, it has proved to be anything but.<\/p>\n\n\n\n Specifically, even though exports to Canada have nearly doubled since 2018, U.S. farmers continue to exit the industry at alarming rates. While U.S. dairy operations numbered at about 34,000 operations<\/a> in 2020, the year when the USMCA was officially passed, that number fell to just about 26,000 by 2023\u2014a 25% decrease.<\/p>\n\n\n\n The moral of the story is that exports don\u2019t keep farms in business, but instead allow larger operations to capture market share for themselves while driving out the smaller operations that have long defined U.S. dairy.<\/p>\n\n\n\n Particularly as we celebrate June Dairy Month, we should learn from the Canadian system instead of denouncing it. Granted, Canada\u2019s supply management is not perfect\u2014few government policies are. But their system provides for fair returns for farmers and certainty in a profession already marked by so many challenges. A similar production management system in the U.S. could ensure farmers a fair milk price thereby eliminating the need for taxpayer subsidies, while providing consumers with fairly priced, locally produced dairy. Let\u2019s stop championing an economic vision for agriculture that has already been shown to be a failure.<\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" Trump\u2019s plans don\u2019t work for U.S. farmers. In fact, his intention to increase exports and enter the Canadian market fails both American farmers and our partner to the north. By: Anthony Pahnke, FFD Vice President and Assoc. Prof. of International … Continue reading