Andrei Mikhalevsky, president and CEO of California Dairies, Inc. (CDI), testified Tuesday before members of the U.S. House Committee on Ways and Means Subcommittee on Trade. In his testimony, Mikhalevsky outlined the significant contributions the dairy industry makes to the U.S. economy, highlighted the potential for continued global growth and called for eliminating current trade barriers that impede the industry’s efforts to meet the burgeoning demand for U.S. dairy products around the world.
“The 47,000 dairy farms and more than 1,000 milk processing plants in the U.S. play a critical role in providing and supporting hundreds of thousands of jobs, a large portion of which require skilled labor and support this country’s manufacturing sector,” Mikhalevsky said. He noted that dairy farms contribute approximately $40 billion a year to the U.S. economy, while milk processing plants contribute more than $100 billion annually. His company, CDI, produces 47% of the milk in California and represents 12% of U.S. dairy exports.
The U.S. dairy industry is uniquely positioned to meet a voracious demand for dairy products that current global supply cannot fill, Mikhalevsky said. But farm owners and company executives need to know that the United States is seeking maximum market access for all dairy products before they will make the necessary investments to take advantage of the trade opportunities.
“Despite the promising outlook for international trade of dairy products, trade barriers in the form of government protectionism of dairy sectors are among the highest for any of the traded agricultural commodities,” he said. “It is critical that these inequities be rectified so that the U.S. dairy industry has a level playing field with its competitors to access those markets where dairy products are sought.”
Mikhalevsky said free trade agreements (FTAs) such as the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP) are comprehensive opportunities to break down obstacles that restrict market access. He noted that three of the world’s largest dairy consuming countries – Canada, Japan and the European Union – have high tariffs on imported dairy products, and said eliminating these dairy tariffs “across all dairy products without exception” is essential for increasing the flow of trade.
Non-tariff barriers also pose sizable challenges to U.S. dairy exports to fast-growing markets, he said. Some countries use sanitary and phytosanitary (SPS) measures “to erect unscientific, unduly burdensome and discriminatory barriers to trade that protect domestic or favored foreign products,” he said. Geographical indications (GIs), which aim to restrict commonly used product names such as parmesan and feta, also are used to impede imports of dairy products or to carve out market access for a country’s own producers.
Domestic barriers such as the federal milk marketing regulations exist as well, he said, adding that they should be reformed or eliminated to allow the U.S. to become a stronger force in dairy product exports.
In conclusion, Mikhalevsky said, “CDI supports the inclusion of the dairy category, the inclusion of all dairy products and the complete elimination of dairy tariffs in all FTAs. The TPP and T-TIP are likely the most important trade agreements in a generation, and, if properly negotiated for the dairy industry, they may individually and collectively accomplish all of these goals.”