Financial Tribune

Canada uses high tariffs to restrict dairy imports from the United States and other countries. While the system benefits Canadian dairy farmers, industry leaders say it costs the American dairy industry dearly, UPI reported.

“Canada is essentially walled off from the rest of the world,” said Chris Galen, a spokesman for the National Milk Producers Federation. “We want the opportunity to sell our dairy products in the Canadian market. Canada is trying to prevent that from happening.”

The issue has the two countries in a standoff, with both sides trying to act in the best interest of their farmers.

By keeping foreign milk out of its market, Canada is able to control the supply and maintain consistent dairy prices, said Al Mussell, lead researcher for Agri-Food Economic Systems, an independent research firm based in Canada.

This system protects Canada’s small dairy farms from the volatile international market, he said.

Such a system does not exist in the United States, where dairy prices have dropped to historic lows and dairy farms across are struggling to stay in business.

“In parts of the northeastern US and Wisconsin, the situation is so bad the industry is at risk of collapsing,” Mussell said. “It strikes me as a surplus issue more than anything else. There’s a lot of milk in the US and it’s driven the price down. Of course they want to be able to export it to Canada.”

But opening the Canadian market for US milk means Canadian farmers would have to relinquish some of their market access. And since Canada’s system protects small farms, the cost of milk production there is much higher than in the United States. Canadian farmers would have a hard time competing with their southern neighbors, Mussell said.

Trade negotiations between the two countries resumed Thursday, with no sign of a resolution over dairy market access.

If a trade deal is not reached soon, Canada could be left out, as President Donald Trump has reached an agreement with Mexico, the third party to the 1994 North American Free Trade Agreement.