California Dairy CEO warns about US falling behind in trade

A recent testimony by Andrei Mikhalevsky, the president and CEO of California Dairies, the largest co-operative in California and the second largest in the US, given at the US House of Representatives underlined the issues facing the US dairy market.

“International trade is a critical component of the US dairy economy. 16% of US milk production is exported,” he said. “Thousands of jobs are dependent on US dairy exports.”

Recent trade spats with trading partners have caused issues for the American dairy industry, he stated. “Trade conflicts that limit our ability to sell products around the world are extremely damaging. It is a fact that a much-needed recovery in US milk prices was halted in 2018 due to trade retailiation tariffs with Mexico and China,” he observed. “In 2018 the US exported $5.58 billion (€4.96bn) of dairy products, from cheese to whey to ice cream to skim milk powder and everything in between. Free trade agreements that open markets and lower trade barriers are crucial to continuing this trend of growing US dairy exports.”

The fact that the US has not passed a new trade deal in well over a decade is causing further grief, he said, citing recent EU agreements with nine of the top ten dairy importing countries, versus the US, which currently has four. Another competitor, New Zealand, has trade agreements with most Asian countries “where demand is growing at a rapid pace,” he warned. “The US trade agreements that are in place today were negotiated before other agreements, and do not always place the US on a level playing field with our competitors.”

Mikhalevsky recommended approving the US-Mexico-Canada Agreement (USMCA), concluding negotiations with China and Japan, as well as other South Pacific countries, and expanding further opportunities in the EU. He also noted that in dealing with the EU, the US has a significant trade deficit in dairy, with imports amounting to $1.7 billion (€1.5bn) from the EU, while the US exports just $145 million (€129m). “The EU has the potential to be a significant export market for the US, but high tariffs and other non-tariff barriers such as burdensome import licensing and certification requirements stand in the way. We cannot afford to set a precedent of negotiating FTAs with any trading partner that sidelines agriculture,” he added.

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