Dairy industry wants more from trade aid package

The US dairy industry has seen “unprecedented” numbers of bankruptcies in some parts of the country. Remaining dairy farmers are looking closely at what sort of boost they may get from the Trump administration’s trade aid package.

Retaliatory tariffs have “robbed” dairies of around $2 billion, said Beth Ford, chief executive officer at Land O’Lakes Inc. Meanwhile, banks are de-risking their dairy portfolios, and operating loans have become harder to get, Ford said.

Following the difficult US-China trade war, dairy exports to China, once a fast-growing market, fell by more than 40% in the first quarter of 2019, according to the US Dairy Export Council. Meanwhile, dairy farmers only got about $250 million in the first round of government payouts, according to Ford.

“What do farmers want? They want trade. Nobody wants a payment,” Ford said. “If they have to have an interim payment, they would like something more reflecting the loss in the market that hit them.”

The Trump Administration’s latest package to help farmers is a $16 billion program that includes $14.5 billion in direct payments to producers. On Thursday, the US Department of Agriculture said dairy producers would receive payments determined by their production history. There were no other details on how much they’d receive.

“I don’t know the specifics of how that’s going to be allocated,” Ford said. “We certainly voiced to the administration our concern, especially around dairy farmers not having received a significant amount of that first round, and they are under tremendous pressure. We are going to see what the administration has allocated, what the math comes out with. The math last time wasn’t terrific.”

The industry cheered last week when the US agreed to end tariffs on steel and aluminum imports from its North American neighbours, expecting Mexico to drop the tariffs it had put on dairy products like cheese. Mexico is the US’s biggest dairy consumer, buying about $1.4 billion in 2018.

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