Dairy Processors Pleased with New Trade Agreement, Concerned about Tariffs

Joel Hastings, DairyBusiness News

“We are grateful for what we got but more remains to be done,” says Stan Ryan, CEO of Darigold, the Seattle based cooperative, speaking about the new USMCA tri-lateral trade agreement announced earlier this week.  Representing 500 co-op member dairy farmers exporting 40% of their product, Ryan said eliminating the trade distorting Canadian class 7 dairy category along with slightly greater market access was difficult but important.  He made his comments today at a press conference organized by the International Dairy Foods Association  (IDFA), the organization representing dairy processors. Dr. Michael Dykes, head of IDFA, said 15% of U.S. dairy products are exported, with Mexico as the number one market accounting for 25% of the that total.

“We are not ready to take a victory lap,” said David Ahlem, CEO of Hilmar Cheese, headquartered in Hilmar, Calif.  He explained that the 25% tariff remaining in place in Mexico  in effect “keeps us out of the market.”  He said the new tariffs in China have the same impact. Hilmar Cheese has 1200 employees and works with 200 dairy farm suppliers for its plants in California and Texas, exporting its cheese and dairy ingredients to 50 countries, with Mexico and China being the largest markets.  Ahem said that 20% of Hilmar Cheese product that is exported has been going to Mexico and with the tariffs still in place, “We can’t enjoy the benefits of the new NAFTA because Mexico is essentially closed.”

Another cheese processor expressed concern not only about the tariffs but also about non-tariff barriers still in place.  Jim Sartori, head of Plymouth, Wis., based Sartori Cheese said his company exports its specialty cheeses to 40 countries. Sartori has 600 workers and buys milk from 145 farms.

The European Union’s new agreement with Mexico, already in place, imposes “geographic indicators” which limits the use of certain names to the original geography – champagne only from France, for example.  Sartori sells more asiago cheese to Mexico than Italy, but it may have to rename this cheese, after 20 years of market development.

The European Union has done a better job of negotiating, Sartori said.  “We need to be proactive, not reactive.”

Speaking about the tariffs placed by Mexico, Sartori said “We’re not clear on how or when [they] will be removed.”

All agreed that with the new “NAFTA 2.0” in place, it is critical that the U.S. move quickly to achieve new agreements with countries in all parts of the world to create new market opportunities.  They expressed confidence that U.S. farmers and processors can compete successfully if there is a level playing field, eliminating tariffs and non-tariff barriers.