Free Dairy Trade—or Not

By Jim Dickrell

If recent press statements are taken at face value, the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) are in favor of free trade in dairy—except when they’re not.

Last Wednesday, the groups issued a joint press release extolling the virtues of House bill HR 4645, which would make trade with Cuba easier. The justification: “The Cuban market holds significant promise for U.S. dairy exports but has become increasingly difficult to supply within the past few years,” says Tom Suber, USDEC president.

Fair enough.

But in February, NMPF and USDEC issued another joint news release, this one opposing the Trans-Pacific Free Trade Agreement with Australia, Chile, Singapore, Peru, Brunei and New Zealand.

Suber’s reasoning: “It’s the inclusion of New Zealand and the exceptional anti-competitive structure of the New Zealand dairy industry and the entirely lop-sided nature of the dairy trading relationship between the U.S. and New Zealand that compels USDEC to call for the exclusion of U.S-New Zealand dairy trade from the TPP FTA….  Simply put, there is no way to create a balanced situation and level playing field for dairy products in a bilateral or regional trade agreement of this nature between the U.S. and New Zealand.”

Chris Galen, NMPF spokesperson, adds: “A Trans-Pacific Trade agreement that basically gives Fonterra more access to the U.S. market, without any reciprocal export opportunities for the U.S., is not a good opportunity. The world of trade policy isn’t a matter of black and white. Each agreement should be looked at individually.”

Well, okay. But the Canadians and the Europeans and every other protectionist market can make the same argument. Why should anybody let in U.S. dairy products when we sanctimoniously demand access to their markets?

I’m not naïve. I understand a certain segment of protectionist U.S. dairy producers would go ballistic if NMPF and USDEC supported freer trade with New Zealand. Politically, NMPF and USDEC probably have to oppose it. In the long run, though, a more consistent approach would be better. Demanding a 10-year phase-in period, similar to the transition in NAFTA, is reasonable and consistent, and would give the U.S. dairy industry time to adjust.

What’s really at stake here is the future direction of U.S. dairy policy. Are we going to be globally and export focused? Or, are we going to continue our tepid approach of focusing on our domestic market and taking only what the export markets might grudgingly give us?

Yes, each approach has its risks. The greater risks and the far greater rewards lie in global markets. With the Great Global Recession of 2009 slipping into 2010, some portion of the industry is hesitant, even fearful, of global competition. Dairy producer leaders need to step forward to show their reluctant followers why growth is the better way forward.

To its credit, NMPF is trying to position the U.S. to be more globally competitive with its 2012 Farm Bill proposal. That proposal, yet to be finalized, would do away with the dairy price support system, streamline Federal Orders and perhaps create a U.S. export marketing agency in common (patterned after the Kiwi model).

Granted, the Kiwis deregulated years ago, and have at least a decade’s more experience in meeting market demands. That doesn’t mean the U.S. can’t compete with them. It just means we need to get started. The sooner, the better.

Jim Dickrell is editor of Dairy Today. Contact him at jdickrell@farmjournal.com.

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