Trade pact offers stability, opportunity to dairy industry

By Sen. Chuck Grassley of Iowa


President Ronald Reagan designated the third Sunday of July as National Ice Cream Day as a way to celebrate America’s dairy industry. Since then, Americans — including me — have happily fulfilled their civic duty by indulging in one of the nation’s favorite treats. This is particularly true here in Iowa, which is home to the Ice Cream Capital of the World.

Iowa’s dairy industry is important to the state’s economy. It is a top milk-producing state, and our dairy farms generate approximately $837 million in milk sales each year. Iowa dairy exports support approximately 1,400 jobs and in 2016 had an economic impact of $258 million.

It’s no secret that U.S. agricultural producers are currently facing a number of economic challenges. The dairy industry is no exception. Our existing markets are saturated, and unfair trade barriers prevent access to new ones, leaving our dairy farmers in a difficult financial situation. That’s why it’s critical we pass the United States-Mexico-Canada Agreement (USMCA).

North American trade is vital to the success of the dairy industry in Iowa and nationally. Canada and Mexico are two of the largest markets for American dairy exports. According to the U.S. trade representative, U.S. dairy exports to Mexico were valued at $1.4 billion and to Canada at $731 million last year. Mexico was the top consumer of U.S. cheese and nonfat dry milk, and Canada was the top consumer of butter and processed dairy products, such as ice cream and infant formula. However, unfair provisions in Canada’s dairy programs have handicapped our dairy exports into the Canadian market.

For years, American dairy has been boxed out of the Canadian market due to its supply management system, which utilizes price-fixing and domestic quotas set by the Canadian government. A Wall Street Journal article noted last year that Canada’s supply management system “limits dairy imports and imposes steep tariffs of more than 200% on products that exceed those limits.” Regulations like these are hurting our dairy farmers, who are increasingly relying on global market opportunities due to a steady decline of milk consumption in the United States as well as technological production advancements.

USMCA would correct some of the problems caused by Canada’s supply management system. Under the new deal, Canada would reduce certain barriers for U.S. dairy exports and expand tariff-rate quotas for U.S. dairy products, including milk, cheese and yogurt. USMCA would also increase transparency by requiring advance notice of changes to tariff-rate quotas as well as the public release of quota utilization rates. According to the U.S. Department of Agriculture, USMCA would create new market opportunities in Canada, eliminate a milk-pricing program that allowed Canadian dairy farmers to undersell U.S. producers and impose export surcharges on Canadian dairy products that exceed certain thresholds. Regarding U.S. dairy exports to Mexico, USMCA would preserve duty-free access to the Mexican market.

I recently met with House Speaker Nancy Pelosi, House Ways and Means Committee Chairman Richard Neal and Ranking Member Kevin Brady to discuss trade policy. We specifically talked about how to move forward on USMCA. Passage of USMCA would help the agriculture community nationwide, but the U.S. dairy sector in particular will be among the greatest beneficiaries of the new trade deal.

National Ice Cream Day is a fun way to celebrate the contributions of our dairy industry, but recognizing this important sector of our economy shouldn’t be limited to a single day.

Dairy farmers in Iowa and throughout the country need stability and long-term opportunity. USMCA would provide both. Congress must move quickly to approve this deal and give a much-needed hand up to our nation’s dairy industry.