Canada's dairy industry urged to tackle dairy export caps in trade negotiations

Thursday, June 11, 2015

by SUSAN MANN

When it comes to trade in dairy products, Canada is stuck between a rock and a hard place.

On the one hand, the Canadian dairy industry is facing ever increasing duty-free imports of milk protein isolates from the United States. Furthermore, Canada doesn’t have a method that complies with World Trade Organization rules to control the imports, according to a policy note released Thursday by independent research firm, Agri-Food Economic Systems. The company is based in Guelph.

The note’s authors are Al Mussell, research lead, Kamal Karunagoda, research associate, and Douglas Hedley, associate.

Processors use the milk protein isolates as ingredients in cheese, yogurt, protein bars, meal replacement powders and sports nutrition products. Use of imported product is displacing protein from Canadian-produced milk.
 
Imports of milk protein substances from the United States grew to 14,000 tonnes in 2014 from just under 4,000 tonnes in 2010, according to a chart in the note.

The duty-free imports into Canada have the potential to further increase once the Canada-European Union Comprehensive Economic and Trade Agreement commences in three to four years and also under a Trans-Pacific Partnership Trade agreement.

One way the industry can deal with the imports is to use the Trans-Pacific Partnership trade talks going on now to explore loosening the caps on dairy exports imposed on Canada after it lost a challenge at the World Trade Organization in 2003.

“I worry about a future hard landing for the Canadian dairy industry with increasing imports and without increased export access,” Mussell says in the note.

In an interview, Mussell says the dairy industry’s efforts through its ingredients strategy to deal with increasing milk proteins imports “is a pretty bold shift in dairy policy. It’s still to be negotiated with the processors so the outcome of that process isn’t yet known.”

The dairy industry is “well aware” of the problem and is undertaking measures to address it, he adds. “I hope we can change fast enough.”

Mussell says Agri-Food Economic Systems policy notes are non-commissioned and are on matters of importance to the agricultural industry. The firm tries to release one each month. BF