Local dairy farmers say industry needs exports, happy to see NAFTA update progress
The dairy industry needs exports to really thrive, according to an Elba dairy farmer who, like a lot of dairy farmers these days, is happy there is a potential new trade agreement between the United States and its largest agricultural trade partners, Canada and Mexico.
"The name of the game in dairy now is exports," Jeff Post said. "Years ago it was all about national consumption, but if we're going to survive as the dairy industry in this country, we need to export as much product as possible and we have to rely on our government to help us with trade deals."
During the 2016 presidential campaign, Donald Trump knocked the North America Free Trade Agreement (NAFTA) as "a really bad deal" and promised a better deal if elected. For the most part, local farmers think they got that with the new deal with a new acronym, USMCA.
The deal must be ratified by the legislative bodies of all three countries before going into effect.
For dairy farmers in New York, the big hang-up with NAFTA was its lack of provisions for Class 6 and Class 7 milk, also known as ultrafiltered milk, which has become a big part of cheese production. Those classes didn't exist when NAFTA was approved in 1994 and nearly two years ago, Canada blocked imports of those classes.
Once elected, Trump took up the cause of dairy farmers and used the increased difficulty in exporting U.S. dairy products to Canada to push for a new deal and threatened to withdraw from NAFTA.
Craig Yunker, CEO of CY Farms, approves of the new deal but thought the heated rhetoric from the president, such as accusing Canada of cheating the United States,was unneccessary.
"Generally, it's a positive for dairy and for wheat, specifically, but I'm not sure that it's going to completely undo the hard feelings north of the border," Yunker said. "That's going to take some time, but it's going in the right direction. I think it'll take some time to repair the hard feelings."
Le Roy dairy farmer Dale Stein sides a little more with the president on his view that the United States hasn't been treated well by its trading partners, and while he welcomes the new provisions related to dairy, he thinks overall the new deal will help out the country as a whole.
"Our trading partners have been abusing us and that's been a fact," Stein said. "All the previous presidents have allowed it. There are other things in this trade agreement that I think will help with everything and have nothing to do with farming."
In 2017, the United States had a $63.6 billion trade deficit with Mexico on a total of $615.9 billion in trade. While the United States imported more goods than it exported, it still exported $276.2 billion in goods to Mexico, up from $52 billion in 1993. The U.S. Chamber of Commerce estimates that some six million jobs in the United States depend on trade with Canada and Mexico.
Besides agriculture, much of what's new deals with auto production. New provisions require at least 45 percent of an automobile to be built by people earning at least $16 an hour, and that at least 75 percent of the auto's content be made in North America.
Whether these provisions will result in more car production jobs in the United States in unclear, according to economists, but it is likely to make cars more expensive.
Yunker thinks the new deal is much like the old deal with many provisions that had been part of the Trans Pacific Partnership agreement, which Trump scraped as soon as he took office.
"I don't see it as a major accomplishment," Yunker said. "We had NAFTA in place and while it needed some tweaking, this is a big improvement over it throwing Canada out of the deal altogether. Well, I don't see that as a major accomplishment of the Trump Administration. The major accomplishment is that it was negotiated after the rhetoric insulting Canada."
One of the big issues besetting the dairy industry is oversupply and Yunker noted that Cornell ag economist Andy Novakovic doesn't anticipate the new agreement doing much to increase milk prices anytime soon.
"He hasn't really changed his price projects for 2019 based on this," Yunker said. "It is good it opens up the market for ultrafilteration milk; that's a positive. But we still have an oversupply of milk, so I'm not sure that this cures the low price for producers but it's certainly the right direction."
Yunker remains dissapointed that TPP didn't go through.
"A lot of work went into (TPP)," Yunker said. "We lost the initiative to be the lead in Asia trade and then replaced by China taking the lead in that. I'm still disappointed over pulling out of the TPP but I'm a free-trade guy."
Post is less enthused about TPP but believes U.S. dairy farmers need Asian markets and hopes now that the NAFTA makeover is done there's a chance to open up Japan and other Asian nations.
"I look forward to hopefully getting some of these Asian markets opened up, too," Post said. "I wasn't a big fan of the TPP agreement -- only for what it did for ag. Hopefully, he government is negotiating with Japan and negotiationing to South Korea and we're going to get more more access to export to markets there."
Stein is also looking forward to getting past the trade conflicts and open up more export markets.
"We were looking at very high prices this fall or the end of the year until all this (trade conflict) started because of the exports and now we will get the exports back," Stein said. "We should be able to compete against against anybody. We haven't really sold a lot to China to begin with. We've exported dairy to Mexico primarily and a fair amount in Canada. By reopening them up again, hopefully, they will get back trading so we can use up some of our milk supply."
“The deal must be ratified by the legislative bodies of all three countries before going into effect.”
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