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Sheltered Canadian dairy sector skimming global exports, says US

June 14, 2018 00:00:00

Cows eating hay at a dairy farm in Upton, Quebec, Canada — Reuters

WINNIPEG, Manitoba/CHICAGO, June 13 (Reuters): Canada's sheltered dairy sector has drawn the ire of US President Donald Trump for its high tariffs.

But US farmers say it is just as galling that exports have spiked from a country largely closed to importing dairy from other nations.

Canada controls dairy supplies, prices and imports, and the system has recently become the main target of Trump's verbal attacks amid talks toward a new trade agreement.

Even as Canadian politicians have defended the need to protect the industry from outside supplies, Canadian exports of skim milk powder more than tripled to 71,880 tonnes in 2017 from a year earlier, worth C$173 million ($133 million), according to Statistics Canada data.

Still, Canada accounts for less than 3.0 per cent of global trade, according to research firm Agri-Food Economic Systems.

Canada cannot expect to have both a protected system and compete globally, US Dairy Export Council Chief Executive Tom Vilsack said in an interview.

"They have decided to go significantly into the export market by undercutting the world price for milk powder," said Vilsack, who was US agriculture secretary under former President Barack Obama.

Dairy farmers have an outsized influence in Canadian politics, as they are concentrated in the vote-rich provinces of Ontario and Quebec.

Their main lobby group, Dairy Farmers of Canada (DFC), met privately with Prime Minister Justin Trudeau on Tuesday and left feeling comforted.

"He clearly understands our concerns. He stated that not only does he support supply management, he is also committed to our dairy farmers, and a robust dairy sector," said DFC President Pierre Lampron.

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