Dairy Farmers will not Benefit Materially from USMCA


Despite hype and premature celebration over modifications to NAFTA incorporated into the USMCA, two Federal Reserve Banks reports that material benefits will not accrue to U.S. dairy farmers in the short term. The Chicago Federal Reserve reported that “gains will be too small and too far into the future to help dairy farmers.” The Minneapolis Federal Reserve reported on the “substantial number of dairy operations which have exited the business since the beginning of 2018.”

In terms of the USMCA, Canada will allow U.S. producers to supply up to 3.6 percent of the dairy market. This quantity is the same as the provision incorporated into the 2015 Trans Pacific Partnership from which the U.S. unilaterally withdrew at the inception of the current Administration.

According to Liz Moyer, Investment Editor who posted on the CNBC website on October 24th, “the insistence by the U.S. on concessions by Canada with respect to dairy products was intended as a political gesture to hard-pressed dairy farmers in Midwest and northern tier states”.