Digest highlights

Natzke dave
Dave Natzke
Editor / Progressive Dairy

USTR to press for Canadian USMCA dairy compliance

The relationship between the U.S. and Canadian governments over dairy trade is ending the year the way it began. On Dec. 20, U.S. Trade Representative (USTR) Katherine Tai requested new dispute settlement consultations with Canada over compliance of dairy obligations under the U.S.-Mexico-Canada Agreement (USMCA).

The new request expands the U.S. challenge of Canada’s tariff-rate quota (TRQ) allocation measures, contending those measures impose conditions that deny U.S. dairy producers and exporters Canadian market access agreed to under the USMCA.

Implemented on July 1, 2020, the USMCA (called CUSMA in Canada) gave Canada the right to maintain 14 TRQs on a variety of dairy products. In notices to importers published in June and October 2020 and May 2021, Canada set aside and reserved a percentage of the quota for processors and for so-called “further processors,” which U.S. dairy exporters said violated terms negotiated under the trade agreement. The USTR filed the first USMCA dispute settlement panel request in May 2021.

In December 2021, the dispute panel agreed with the U.S., giving Canada 45 days to comply with new TRQ allocation measures. Global Affairs Canada initiated public consultations regarding proposed changes in March 2022 and published changes in May. Those changes were quickly rejected by the National Milk Producers Federation (NMPF) and U.S. Dairy Export Council (USDEC), and the USTR requested a second dispute settlement consultation with Canada in late May.

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The latest consultation request adds other aspects of Canada’s TRQ allocation measures that the U.S. considers inconsistent with the USMCA. A copy of the consultation request can be found here. A joint statement from NMPF and USDEC is available here.

Canadian dairy farmers to receive fourth DDPP payment

While the U.S.-Canadian dairy dispute simmers, Canada’s Ministry of Agriculture and Agri-Food (AAFC) announced that the fourth payment under the Dairy Direct Payment Program (DDPP) is now available to dairy producers. The compensation for the final round of payments totals up to $468 million (dollars Canadian).

Dairy farmers will receive compensation payments based on their milk quota. The payment to an owner of an 80-cow dairy is estimated at $38,000 (dollars Canadian). AAFC has mailed letters to all eligible dairy producers with instructions on the application process. To get their payment, producers must register through the Canadian Dairy Commission before March 31, 2023.

This fourth payment completes compensation to dairy producers for the impact of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

AAFC recently announced compensation of up to $1.2 billion over six years under the DDPP to account for the impacts of CUSMA. Find a summary here.

According to AAFC, once all trade agreements are fully implemented, Canada's combined dairy market access (under the World Trade Organization, CETA, CPTPP and CUSMA TRQs) is estimated to be equivalent to approximately 10% of Canada's milk production.

Fed raises interest rates

Meeting on Dec.13-14, the Federal Reserve Board raised interest rates by 0.5%, boosting the federal funds rate to 4.5%. The increase was the seventh of the year. The next meeting of the Federal Reserve Open Market Committee is scheduled for Jan. 31-Feb. 1, 2023.

GDT index falls

The latest Global Dairy Trade (GDT) auction, held Dec. 20, saw the overall price index decline 3.8%. Price movement in individual product categories was also lower:

  • Skim milk powder was down 4.8% to $2,965 per metric ton (MT, or about 2,205 pounds).
  • Whole milk powder was down 4% to $3,246 per MT.
  • Anhydrous milkfat was down 2.2% to $5,675 per MT.
  • Butter was down 2.6% to $4,602 per MT.
  • Cheddar cheese was down 0.7% to $4,801 per MT.

The GDT platform offers dairy products from six global companies: Fonterra (New Zealand), Dairy America (U.S.), Amul (India), Arla (Denmark), Arla Foods Ingredients (Denmark) and Polish Dairy (Poland). The next GDT auction is Jan. 3.

2022 Census of Agriculture response deadline is Feb. 6

The USDA has mailed the 2022 Census of Agriculture paper questionnaires to all known agriculture producers in the U.S. and Puerto Rico.

Last month, producers received survey codes with an invitation to respond online. Any producer who did not respond now has the option to complete the ag census online or by mail. The deadline for response is Feb. 6, 2023.

Responding to the Census of Agriculture is required by law under Title 7 USC 2204(g) Public Law 105-113. The same law requires the USDA's National Ag Statistics Service (NASS) to keep all information confidential, to use the data only for statistical purposes and only publish in aggregate form to prevent disclosing the identity of any individual producer or farm operation. NASS will release the results of the ag census in 2024.

Other news, briefly

  • New York organic dairy grants: The Northeast Organic Farming Association of New York Inc. (NOFA-NY) is administering a Northeast Dairy Business Innovation Center (DBIC) non-competitive grant program for New York organic dairy producers who have recently had their hauling/processing contracts terminated. Eligible farms can receive up to $5,000 in reimbursements for infrastructure and equipment purchases or upgrades needed to make the farm shipment-ready or to improve milk quality.
  • Animal drug approval: On Dec. 16, the FDA released a draft update to a guidance document (CVM GFI 152) concerning approval of new antimicrobial animal drug applications. The FDA must determine the drug is safe and effective for its intended use in the animal and also determine the antimicrobial intended for use in food-producing animals is safe with regard to human health. The scope and purpose of updated GFI 152 remains the same as the initial version of the guidance issued in 2003. The FDA will accepting public comments on the draft guidance until March 20, 2023.
  • FDA and animal feed ingredients: The FDA also announced it will hold a virtual meeting, Feb. 9, 2023, to take input on the agency’s oversight of feed ingredients used in animal food and feed. Specifically, the FDA is seeking comments on how to improve the FDA’s role in the Association of American Feed Control Officials (AAFCO) animal feed ingredient definition process. In addition to holding the public meeting, the FDA is accepting electronic or written comments through March 9, 2023.