Ahh, Canada

I’m always amazed at how boxers can beat each other’s brains in for 15 rounds and then shake hands like old friends once the bout is over. Leading up to and during the fight there is a certain level of gamesmanship that has to go on in order to intimidate the other fighter. Once the fight is over the two combatants can put those harsh words and actions aside and show respect for the hard fight put up by their opponent.

Now that the U.S. and Canada have signed a dairy trade agreement, maybe we can all be friends again.

The fight between the U.S. and Canada has gone on for some time. The U.S. has never been a fan of the restrictive Canadian supply management program, and Canadians can’t understand how the U.S. can continue to grow production at an unbridled pace.

Things really hit the fan when Canada started with Class 7 pricing and about 100 U.S. producers had to scramble to find new homes for their milk. Canadians called it a business move to provide more opportunity and level the playing field for Canadian processors. The U.S. and most of the rest of the world said it was a low blow, especially when Canada started escalating exports of whole milk powder at rock bottom prices.

The mudslinging came at the highest of levels. President Trump was quick to bring dairy into the trade debate, elevating the industry overnight in places where dairy producers are rarely thought of. His comments at and about Canadian Prime Minister Trudeau just made the Canadian negotiators more resilient, right up until the last hour.

Even as the two world leaders barraged each other with nasty tweets, the fight never reached the producer level.  In fact it was suggested that the whole debate could have been settled in a border bar with a few producers from each side over a pitcher of cocktails. Too bad that never happened.

Now that it’s over, it’s hard to say who won. Certainly U.S. dairy producers were happy to hear good news after months of not so good news. But the new agreement will be phased in over time, so any real benefit won’t be seen for a while. You can read more about the agreement starting on page 14.

It’s safe to say producers north of the border feel like they got the shaft. A Canadian dairy producer friend of mine called me the day after the news of the agreement broke. Needless to say he wasn’t happy. “The Canadian dairy industry was on the trading block,” he said. He and other Canadian producers felt like their industry was thrown under the bus to save what negotiators saw as more important issues.

Whether or not the agreement will mend business relationships lost between processors and their Canadian counterparts remains to be seen. When asked if this deal will mean their company will start shipping ultra-filtered milk to Canada again, Trevor Wuethrich president of Grassland Dairy Products who cut the bulk of lost farmer contracts last May said, "It’s like your ex-wife calling back and wanting to reconcile. I don’t know if I want to take her back."

Regardless of who won or lost, now it’s time to move on and make amends. After all, even Rocky and Apollo Creed ended up best of friends. Let’s hope there’s not a rematch.

What do you think? Who won the U.S./Canada show down? Send me a note at [email protected]

Submitted by Jerry on Wed, 10/17/2018 - 09:25

With anything politics or the media, we're probably not getting the whole story. Who knew how much milk was actually moving across the border, and in what form? This was the first I had heard it involved whole milk powder. One can see what trades at the CME or GDT but you know there are deals made around those relatively small volumes traded in the open.
There's a problem for producers: If you're in a Co-op, who gets to make money, you or the company? If you sell to a processor, why would you think they don't want to pay the lowest price possible? Yes, they will pay a bit more for Quality. But not really. I asked the milk inspector what out state standards were for Raw & PI. His response was Our Coops standard! No, I said, the state levels are lower. (He had to look it up). Which means we're selling quality at the commodity price level.
The consumer doesn't know that when choosing between a producer handler that could just be meeting state, Our branded milk, or the store brand from our bottling line. Pretty sure we're not putting milk that doesn't meet the company higher standards into the store line jug.