Canada: 73% of U.S. Milk Price Is Subsidized
For years the U.S. dairy industry has claimed that Canadian dairy producers are heavily subsidized through the country’s supply management program. This argument has been a key point in trade negotiations as the U.S. claims that the supply management system, and the Class & pricing system in place, creates an unfair playing field.
In a new report, Canadians have suggested that perhaps the U.S. dairy industry should examine its own subsidy programs before making accusations.
The 588-page report commissioned by Dairy Farmers of Canada examined the role subsidies play in the U.S. dairy market. According to the report, 73% of the returns received by U.S. dairy farmers in 2015 were a result of dairy farm subsidies, such as the Margin Protection Program (MPP), the Supplemental Nutrition Assistance Program (SNAP) and others. That amounts to about $12.06 per cwt.
While the report may be tilted to favor the Canadian industry, Sean Haney, founder of realagriculture.com, says at a high level there probably is some truth to it.
Haney and Jim Wiesemeyer, ProFarmer’s Washington policy analyst, talked with Chip Flory about the report and U.S. Canada relationships today on AgriTalk.
“One of the things we are seeing is that the way dairy industries are supported on both sides of the border are different,” Haney says. “Canada on the front end, is clearly supported through the quota system. In the U.S., it’s more through other means like MPP, SNAP and so forth.”
Haney says that because of the nature of the information it contains, the report won’t bring the U.S. and Canada closer together in trade talks. “Canada will say ‘I told you so’ and the U.S. will say ‘There’s no truth to it.”
“The Canadians should realize that the U.S. is not over subsidized, but has a tremendous safety net that will give larger producers confidence to expand production knowing they have revenue assurance and other industry backups,” Wiesemeyer says, especially with the update to programs recently announced in the newly approved spending package. “That will be the story over the next 3 to 5 years in the U.S. dairy market.”