Canada weighs options as farmers spar over U.S. milk proteins

Tue Jun 7, 2016 11:51am EDT
 
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By Rod Nickel

WINNIPEG, Manitoba (Reuters) - Canada is working on a plan to shore up its sheltered dairy industry, including measures to counter fast-rising imports of milk proteins from the United States, according to the country's agriculture minister.

Any new support risks widening a trade dispute among North America's dairy farmers over $150 million worth of U.S. milk protein isolates used to make cheese and yogurt.

President Barack Obama and Prime Minister Justin Trudeau have become fast friends since the Canadian leader won an election late last year, but the milk spat is one of several commodity-related arguments to flare up, along with wheat and softwood lumber.

"The Americans are quite good at taking care of themselves and in the end we'll be taking care of ourselves too," Agriculture Minister Lawrence MacAulay, said in an interview.

The imports' value pales next to the $663-billion in total annual trade between the countries, but the proteins, sometimes called diafiltered or ultrafiltered milk, spurred protests by Canadian farmers last Thursday because they have reduced demand for domestic milk.

MacAulay plans to make recommendations to cabinet this month to deal with the imports and compensation for farmers for a free-trade deal with Europe.

"What we're trying to do is come to an end result to deal with the diafiltered milk," MacAulay said. "It is a problem, but hopefully we'll end up with as good or better results in the end."

Canadian imports of U.S. milk protein isolates have jumped 10 times by volume over five years to 2,700 tonnes in January 2016, according to Farm Credit Canada. The proteins are a cheap alternative to skim milk for Canadian processors such as Saputo Inc SAP.TO and Parmalat Canada Inc [PLTPRC.UL], who must meet federal standards for milk and protein content in cheese.   Continued...

 
Cows look on at a dairy farm in Upton, Quebec, October 3, 2015. REUTERS/Mathieu Belanger