The U.S. Dairy Exporter Blog: Market Analysis, Research & News

  • (Video) What Darigold CEO told Congress Today About NAFTA

    By Mark O'Keefe July 18, 2017

    Stan Ryan describes the level playing field a modernized NAFTA should create and explains why thriving dairy exports to Mexico and Canada are vital to U.S. economic prosperity. 

    Editor's note: Darigold President and CEO Stan Ryan testified today to a House Ways and Means subcommittee hearing on modernization of the North American Free Trade Agreement. That testimony is presented below in three ways: A 5-minute video, prepared text of the testimony and video of congressional Q&A with Ryan.

    View Stan Ryan's live congressional testimony.

    I’m Stan Ryan, the president and CEO of Darigold, based out of Seattle, Washington. Prior to Darigold, I spent 25 years with Cargill, living in six different countries, and working in agribusiness and global trade throughout my career.  

    Darigold is a subsidiary of the Northwest Dairy Association, which is a farmer-cooperative spanning 486 dairy farms across the Pacific Northwest.

    Darigold has annual sales ranging between $2 billion to $3 billion, depending on prevailing milk prices and the year. We produce over 800 high quality dairy products and sell over 40 percent of those internationally, or approximately $1 billion.

    Just like the rest of U.S. agriculture, consistent market access and a level playing field are vital to our prosperity. 

    Withdrawing from NAFTA would unwind significant progress. Even a status quo posture risks a setback, too, as our global competitors are emboldened and aggressively advancing their own trade agendas, as recently seen by the alarming EU-Japan FTA. We must lean forward into trade.

    Mexico and Canada are natural trading partners

    Over 95 percent of the world’s consumers live outside the U.S., often where it does not make sense to grow many crops. The United States is one of the most competitive and sustainable agricultural systems in the world. Trade links these two together. Global consumers get quality products at better prices in support of improved global food security. The United States gets economic prosperity and good jobs. Trade and U.S. agriculture are a perfect fit. 

    Our most natural trading partners are our neighbors. In over 20 years, U.S. agricultural exports to Mexico and Canada have more than quadrupled from $8.9 billion to $38.6 billion. Roughly 1 out of every 10 acres of U.S. crop production goes to Mexico and Canada.

    Looking at dairy, we globally export 15 percent of the U.S. milk production today or approximately $5 billion, and it is estimated to support 100,000 American jobs. It’s a job multiplier. 

    The U.S. dairy industry is a global low cost producer with sustainable resources and practices. We have incredibly efficient dairy farms, immensely capable farmers, and an overall agribusiness eco-system that sustains our competitiveness.

    In question-and-answer session, Darigold's Stan Ryan identifies additional trade opportunities as well as threats from global dairy competitors.

    Keep Mexico open 

    Mexico, in specific, is a $1.2 billion dollar export market for U.S. dairy, and it is working well. We have a 73 percent share of Mexican imports. For Darigold, it is our single largest export destination out of 20 countries. Mexico is also the largest skim milk powder importer in the world, and export competitors, like New Zealand and Europe, would love to grow there. 

    We need to remove any ambiguity or uncertainty of our commitment to Mexico, reinforce our relationship, and cement our trade flows.

    Help needed on Canadian situation 

    Canada, on the other hand, is more complex and challenging for dairy. NAFTA did not open up Canada the way it did with Mexico, and they maintain tariff rate quotas of 200 percent to 300 percent. 

    Of primary importance is Canada’s new Class 7 Pricing Strategy. It matches the lowest prices in the world for milk protein finished products, despite having one of the world’s highest raw milk farmgate prices, operating under a state controlled and protected system. Common sense economics would say, if it looks and feels like subsidized dumping, it probably is. This just started, and it will damage U.S. dairy export shares around the globe. We request that Congress work with the Administration to repeal it.

    Of long-term importance with Canada, we urge you to ensure that the Administration seek dairy access that is duty-free, just like in Mexico, and pursue the same type of benefits.

    NAFTA-2.jpg

    Promote trade beyond NAFTA

    In summary, our number one priority should be to preserve at a minimum NAFTA, while fixing the Canadian dairy situation. 

    However, we also believe it is imperative to have a strong agricultural trade policy agenda. We see every day that our competitors are expanding their markets while we stand still. Besides NAFTA, we encourage you to engage countries, such as Japan and Vietnam, and establish free-trade agreements there as well.

    (To download Ryan's longer written testimony, click here for a PDF. See a news release here.)

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    The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff. How to republish this post.  

    Trade Policy Mexico Canada Free trade agreements
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