June 6, 2017

Perdue: Canada’s Class 7 Undercut U.S. Industry

 |  By: Mike Opperman

U.S. Secretary of Agriculture Sonny Perdue traveled this week to Toronto where he conducted a series of meetings with Canadian officials, including Canadian Minister of Agriculture and Agri-Food Lawrence MacAulay and current Premier of Ontario Kathleen Wynne, regarding bilateral trade issues of importance.  Among other issues, Perdue raised the topic of American ultra-filtered milk that has been a point of disagreement between the U.S. and Canada.

“We had very good, very candid discussions, very frank, like family members discussing some things that are not necessarily comfortable,” Perdue says. “We laid out a great framework to begin renegotiating NAFTA.”

Canada's dairy farmers last year struck a new pricing deal, known as Class 7, with processors including Saputo Inc and Parmalat Canada. Foreign industry groups said the deal priced domestic milk ingredients used to make cheese and yogurt below cost.

“It’s not our purpose to try to manage or try to get involved in their internal supply management regarding the dairy industry,” Perdue says.  “The ultra-filtered milk was not included in NAFTA.  And I made it very clear that the Class 7 designation we felt was an unfair undercutting of the U.S. industry that grew up south of the U.S.-Canada border.”

Perdue says that the actions of the Canadian government to create the additional class “cut these producers and this industry out of shipping the ultra-filtered milk into their cheese industry, which was in demand in Canada.”

Perduce also told the Canadian representatives that “if you want to manage your dairy supply with supply management, that’s fine.  You just need to manage it and not overproduce to create a glut of milk solids on the world market that’s being dumped at unfair prices.”

Perdue said that “While we didn’t try to negotiate back and forth, I think it was clearly understood that we consider all options on the table and we’ll pursue them in the best interests of U.S. producers.”