Industry Shift

November 1, 2007
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Industry Shift

Proposed policies at odds with growing U.S. dairy exports.
Washington, D.C.-based International Dairy Foods Association (IDFA) is urging members of Congress to pay heed to the changing global dynamics in the dairy industry and U.S. trade obligations, as Congress considers dairy tariffs and other programs in the new Farm Bill.
Last month in Dublin, Ireland, the International Dairy Federation forecast continued strong world dairy markets, driven by growing demand in various regions of the world for milk and dairy products, especially in Asia. In recent years, the United States has grown to be a major dairy exporting country. For the first seven months of this year, about 11 percent of U.S. milk production was exported in the form of dairy products — a more than two-fold increase from just five years ago.
Meanwhile, the U.S. Department of Agriculture reported to the World Trade Organization (WTO) that under the 2002 Farm Bill, the Milk Income Loss Contract (MILC) program and Dairy Price Support Program make up to 65 percent of total U.S. amber box trade-distorting subsidies. And members of Congress continue to propose dairy tariffs in the new Farm Bill that do not comply with WTO trade rules and invite retaliation from trading partners.
“The status quo of domestic dairy policy will not work as the United States takes a leadership position in dairy product trade,” says Connie Tipton, IDFA president and chief executive officer. “U.S. dairy exports are increasingly important to U.S. dairy farmers and processors; we can’t afford to jeopardize the opportunity to grow our share of the robust world dairy market. We continue to be concerned about the trade-distorting nature of the dairy farm safety net, which was put in place decades ago, when we were insulated from — and disinterested in — world markets. The landscape is completely different today, and our Farm Bill needs to reflect that change or risk harm to U.S. dairy farmers and dairy companies.”
While the House Farm Bill makes some incremental improvements in dairy programs, the underlying support programs are still trade-distorting, as demonstrated by the recent USDA report to the WTO, Tipton notes.
“Other countries are looking at our policies and the billions of dollars of U.S. trade-distorting dairy support reported to the WTO with skepticism. We hope the Senate takes the opportunity to reform our dairy programs so that the U.S. dairy industry can continue to take advantage of our emerging position as a global dairy exporter,” she says.
The Senate Finance Committee last month considered and rejected a proposed tariff on milk protein concentrate imports that would have jeopardized the U.S. position in global dairy trade. The Farm Bill that passed the House retains the Dairy Price Support Program and MILC, and also includes an import assessment on dairy products that violates the United States’ WTO obligations. “We hope that the Senate Agriculture Committee will consider the implications of current dairy programs in light of our growing dairy exports and ensure that our dairy farm safety net is trade compliant and does not invite retaliation by including such unnecessary programs as the dairy import assessment,” Tipton says.

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