Farmers Discuss State of the Dairy Economy in Washington

State of the Dairy Industry 050119
The United States capitol. ( Lindsey Benne )

During a two-hour public hearing on the state of the dairy economy, dairy farmers and industry leaders alike shared testimony on the dire straits of the dairy industry. Concerns over trade and labor dominated the conversation. 

“While it’s not this committee's jurisdiction, immigrant labor is absolutely critical to my operation,” said New York dairy farmer Mike McMahon. “Regardless of the unemployment rate in our county, local labor doesn't want to work on a dairy. A 2017 Texas A&M study found that 79% of the U.S. milk supply is harvested by Hispanic workers. Agriculture needs a way to secure American workforce that is willing, able and legal. I realize that immigration from top is a difficult topic, but agriculture’s need for immigrant labor is undeniable. America needs a safe, affordable and abundant food supply produced within its borders. Food security is part of Homeland Security.”

McMahon then outlined his ideas for a workable ag immigration program which includes offering a path to citizenship for illegal workers who have been working in the U.S. for a specific number of years, and an easier way for foreign workers to work on U.S. dairies for a period of time legally. 

“Free trade agreements that open markets and lower trade barriers are crucial to the dairy industry’s long-term economic health,” said Andrei Mikhalevsky, president and CEO of California Dairies Inc. “The U.S. has not completed and passed a new trade deal in well over a decade. We need more comprehensive free trade agreements.”

Because domestic milk prices are heavily influenced by global prices, U.S. milk price recovery relies on the global market, he said. 

“U.S. milk price recovery was halted in 2018 due to EU intervention stocks, and the retaliatory terrorists with Mexico and China,” he said, adding that the most valuable export markets for the U.S. dairy industry are Mexico, Canada, Japan, China, South America and Southeast Asia. “The EU has trade agreements completed or in process with nine of the top 10 dairy importing countries while the U.S. simply has four.” 

From the dairy industry perspective, there are just two criteria that must be met in any new trade agreement, according to Mikhalevsky. First, a level playing field, and second, robust access for all dairy products. 

Mikhalevsky also touched briefly on trade talks with Canada and Mexico. 

“Mexico is the top market for all U.S. dairy exports valued at $1.4 billion in 2018. Canada is second,” he said. “The USMCA deal as negotiated meets the dairy industry's top priorities. And that is why we urge swift congressional approval of this agreement.”

In relation to China, Mikhalevsky says the country that is traditionally the third largest export destination for U.S. dairy is buying less product because of imposed retaliatory tariffs. 

“The point remains that growth in U.S. dairy exports is vital. The implementation of new trade agreements like the current efforts with China and the ratification of the new USMCA agreement remain critical,” said Scott Brown, a University of Missouri Extension economist. 

All of the farmer witnesses, including Sadie Frericks of Minnesota, McMahon of New York and David Smith of Pennsylvania, agree. 

 
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