U.S. agriculture applauds NAFTA replacement

Cows lounge at VanderWoude Dairy near Merced, Calif. The new USMCA allows greater access to the Canadian dairy market for U.S. dairy ingredients.

The late-Sunday evening agreement between the U.S., Canada and Mexico is winning praise from U.S. agricultural groups, which had been concerned by an initial lack of progress with Canada.

The trilateral agreement barely came in under a midnight deadline imposed by the U.S., at which point the U.S. would have moved forward with the trade deal reached with Mexico a month earlier.

The renegotiated North American Free Trade Agreement will move ahead as the U.S.-Mexico-Canada Agreement, or USMCA.

A major sticking point with Canada was granting more access to U.S. dairy products and the elimination of Canada’s Class 7 milk-ingredient pricing program implemented last year.

That program artificially lowered prices for Canada’s domestic milk ingredients for domestic processors to discourage the purchase of U.S. ingredients. It also undercut competitors’ dairy product prices in the international market, according to the U.S. and other dairy-exporting countries.

U.S. dairy organizations were quick to respond to the news that Canada had agreed to the elimination of the program as well as additional market access for U.S. dairy products.

Canada has strictly controlled imports for decades to limit the supply of milk in the country. As its domestic milk production has grown, Canada recently created the Class 7 system to dump surplus milk proteins onto global markets in direct competition with the U.S. and other nations, National Milk Producers Federation, U.S. Dairy Export Council and International Dairy Foods Association, said in a joint statement on Monday.

While Canada will remain a largely self-contained, protected milk market “this agreement should give us additional market opportunities … which means we’ve made incremental progress,” Jim Mulhern, NMPF president and CEO, said.

The agreement also gives additional access to Canadian markets to U.S. poultry and eggs and addresses issues with Canada’s grain-grading system. For other commodities, it was a matter of safeguarding existing market access.

Several groups issued statements on the renegotiated agreement on Monday.

National Association of Wheat Growers and U.S. Wheat Associates said they welcome the updated trade deal. The two groups had called for a fix to Canada designating U.S. wheat as the lowest grade simply because it is foreign.

“We are pleased to see the (U.S. Trade Representative) has made progress resolving this issue, with Canada agreeing to grade imported wheat with the same requirements as Canadian wheat,” NAWG and USW said.

Trade under NAFTA has been tremendously successful for cattle and beef producers, Kevin Kester, president of National Cattlemen’s Beef Association, said.

“And we’re pleased that we’ll be able to maintain our existing markets while seeing other U.S. producers get a better deal than they’ve gotten in the past,” he said.

National Pork Producers Council praised the administration for preserving zero-tariff access for U.S. pork in the agreement.

“The three-way pact with Mexico and Canada, our largest and fourth-largest export markets, respectively, and the recently signed agreement with Korea represents welcome momentum during what has been a challenging year,” Jim Heimerl, NPPC president, said.

National Corn Growers Association applauded the administration for coming through on its promise to do no harm to agriculture.

“NAFTA has been an unequivocal success story for American agriculture, opening markets that since enactment have become vitally important to U.S. corn farmers and providing certainty to farmers and the rural economy,” Lynn Crisp, NCGA, president, said.

Farmers for Free Trade said U.S. farmers are relieved that a deal with their top trading partners has been achieved.

“The North American market is critical to the sustainability and prosperity of the U.S. agriculture industry as well as Main Street America,” Angela Hoffman, FFT deputy director, said.

However, the true measure of success will be when U.S. markets regain full trading status, and that is why FFT will continue to urge the immediate removal of tariffs, she said.

Americans for Farmers and Families said the significance of the agreement cannot be overstated.

NAFTA “has brought unprecedented economic success to the U.S. — not only through strong job growth, higher wages and low consumer prices — but also by allowing America’s food and agricultural industry to thrive,” Casey Guemsey, an AFF spokesman, said.

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