A trade dispute threatens to put dozens of dairy farms out of business next month.
(This post originally appeared on The Washington Post)
One of the products Grassland Diary Products, a century-old, family-owned business based in Greenwood, Wis. sells is ultra-filtered milk, a “protein concentrate used to make cheese” and it sells a lot of it to its customers in Canada. But, according to this report in the Milwaukee-Wisconsin Journal Sentinel…not for long.
Starting in May, the company’s products will no longer be allowed to enter Canada duty-free, thanks to complaints made by Canadian farmers who compete in the space. They are insisting that existing trade rules be enforced and Grassland’s milk get taxed. The governments in Ontario and other provinces have agreed.
As a result, Grassland announced its intention to withdraw from the Canadian market and told 75 of its smaller suppliers that it will no longer be purchasing their milk. This latest move adds to the headaches of dairy farmers, who have seen prices slump in the wake of a national glut of milk. Many of these small companies could go out of business because of the dispute.
“More broadly, tens of thousands of dairy farmers will be affected by the larger scope of what Canada is doing, which is using pricing policy to offload milk powder in global markets where it will be competing with U.S. exports,” said a representative from National Milk Producers Federation in the Journal Sentinel report. “This is truly a national concern.”
Local political representatives are saying that these exports are being unfairly blocked and are bringing the issue directly to President Trump with the hopes of influencing the looming North American Free Trade Agreement re-negotiations that he’s promised.
“Right now the imminent struggle is what do we do with 12,000 pounds of milk a day?” one Wisconsin dairy farmer complained. “We have less than 25 days to figure this out.”
People in the milk industry must deal with things that are out of their control–from weather to disease, over-supply, under-supply and governments that change their minds and cause markets to disappear almost overnight. There is certainly a lot of money to made in any similar commodities business–but as some of these business owners are discovering, sometimes the risks may outweigh the rewards.