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Ag leaders call for elimination of Canada’s class 7 milk as part of NAFTA

Ag leaders say it would be in Canada’s best interest to do away with their Class 7 milk pricing program in order to complete the North American Free Trade Agreement.

U.S. Ag Secretary Sonny Perdue says the U.S. shouldn’t be dictating Canada to do away with their supply management system, but they need to manage their supply.  “We have a request that the supply be managed so that we do not over produce and depress milk solid prices.”  He says Canada’s Class 7 milk undercuts export prices and is a problem for the U.S. dairy industry.

Canada’s largest dairy processor Chief Executive Officer Lino Saputo Jr. of Saputo Inc also says eliminating the Class 7 would go a long way in finalizing NAFTA negotiations.

However, Dairy Farmers of Ontario chairman of Ralph Dietrick tells Brownfield the daily surplus of milk in Michigan, Wisconsin and New York is more than the what’s produced in the entire province of Ontario.  He believes the European Union doing away with their supply management system two years ago, which Canada’s is based on, has depressed milk prices globally.  “Instead of becoming just sufficient with dairy, they became exporters of dairy.  They provided competition for the United States and everywhere else.”  He says Canada produces about 11 billion pounds of milk annually, compared to about 215 billion by the U.S.

The U.S. Dairy Export Council and the National Milk Producers Federation are also calling for the elimination of Canada’s Class 7 program.

Perdue says he’s more optimistic in a Mexican agreement sooner than Canada but hopes both will be done by the end of this summer.