“When I look across agriculture, I don’t know if there is another commodity that’s had it tougher than dairy,” stated Zippy Duvall, president of the American Farm Bureau Federation, at the annual gathering of the National Milk Producers Federation, National Dairy Promotion and Research Board, and the United Dairy Industry Association held in Phoenix, Ariz., late this fall.

Part of those recent milk price issues and subsequent cash flow concerns have been caused by turbulent trade matters.

“When China enacted retaliatory dairy-related trade sanctions, U.S. commodity dairy sales essentially stopped,” said former USDA Secretary Tom Vilsack, who now serves as CEO of the U.S. Dairy Export Council.

That’s a big deal for U.S. dairy farmers because China has the world’s largest population and is the world’s largest dairy product importer. When talking to some U.S. dairy exporters, those tariffs are as high as 25 percent on U.S. dairy products.

Just how much has trade been impacted?
Trade retaliation has caused these estimated losses for dairy farmers:

  • $1.5 billion, based on the downturn from CME futures contracts
  • Over $1.5 billion, based on USDA forecasts
  • $1.5 billion, based on Informa projections
  • $1.2 billion, based on Texas A&M estimates

“U.S. dairy farmers call upon President Trump to recognize the significant losses that the dairy producer community has incurred since trade retaliation ensued,” said Jaime Castaneda, senior vice president of strategic initiatives and trade policy with the National Milk Producers Federation (NMPF).

“We are committed to more, new, and better. Our staff knows we work for hardworking dairy farmers. We understand that dairy farmers are going through tough times,” added Vilsack.

As bad as it is for dairy, other commodities have it even tougher.

“However, consider yourself lucky, as for dairy farmers, there will always be demand for dairy products worldwide. That isn’t the case for other farm products due to retaliatory tariffs from China,” said Vilsack.

For U.S. cranberries, for example, tariffs from China are at 56 percent. According to some sources, Canada is now buying U.S. cranberries at a discount and repackaging them for shipment to China. That has been a revenue catastrophe for U.S. cranberry growers.

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(c) Hoard's Dairyman Intel 2018
December 17, 2018
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