Trump attacks supply management for dairy

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President Donald Trump dove straight into a trade fight with Canada, promising US dairy farmers his administration would intervene to restore exports of American milk.

Several U.S. lawmakers from both parties have joined the call for action, including the entire Congressional delegation from Wisconsin and legislators from NY, two major dairy-producing states bordering Canada. The Ottawa-based Dairy Farmers of Canada, which represents 12,000 farms, is confident the Canadian government will "defend and protect" its dairy industry and the economy, a spokeswoman said by phone.

USA farmers have claimed they are losing up the US$150 million per year because of heavy import tariffs on ultra-filtered milk used to produce cheese.

"Wisconsin and NY dairy farmers are only the first victims of Canada's illicit dairy trade restrictions", Cuomo and Walker wrote.

Canada's dairy farmers and processors, including Saputo Inc (SAP.TO) and Parmalat Canada, struck an agreement in 2016 that industry groups elsewhere say would price domestic milk ingredients for cheese-making below cost, under-cutting their exports.

Trump said this week he would make "some very big changes" to the NAFTA treaty with Canada and Mexico or "we are going to get rid of NAFTA for once and for all".

Trump said during a speech Tuesday in Kenosha, Wisconsin, that Canada has been "very unfair" to dairy farmers and "we're going to start working on that". They could also affect the price and variety of dairy products on supermarket shelves.

"We're going to get together and we're going to call Canada and we're going to say what happened, and they might give us an answer - but we're going to get a solution, not just the answer".

"When it comes to wasteful destructive job killing regulations, we are going to use a tool you know very well - it's called the sledgehammer", he said.

Earlier in the month, Grassland Dairy Products announced it's reducing intake from local producers.

"Dairy trade between Canada and the USA massively favors the US, by a ratio of five to one", she said.

He did not address Trump's comments directly and avoided questions about whether they signal the onset of a cross-border trade war.

Canada has also fiercely protected its dairy industry in recent trade deals, from the Trans-Pacific Partnership to Ceta, the Canada-European Union deal.

US dairy trade groups said they were encouraged by Trump's statement.

"Canada is not to blame for the global situation that both Canadian and American dairy farmers face", David MacNaughton said in a letter to New York Governor Andrew Cuomo and Wisconsin Governor Scott Walker.

"For them to say it's unfair trade practices, I'd suggest they already have a half-billion surplus in the dairy sector", said Henderson, a former local Dairy Farmers of Ontario representative.

She says dismantling the current supply management system would be a boon to all concerned - even though there might be some short-term pain for some in the sector, who she says, could be compensated for any losses deemed a direct effect the new economic reality.

"We can't produce milk against the U.S. Treasury", he said.

But Canadian agriculture leaders say they have a right to enact domestic-minded policies, especially as USA farmers flood worldwide markets with excess milk.

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