USMCA Deal Unlikely to Alter Dairy Pricing

CBJ — Industry experts say the new U.S.-Mexico-Canada Agreement (USMCA), which allows the U.S. greater market to the domestic dairy market, won’t likely have much of an impact on dairy pricing in the grocery stores.

Prices won’t likely come down but it will provide consumers with more options.

The USMCA makes provisions that will grant an additional 3.6% market access to the domestic dairy market and eliminate two milk price classes, including the controversial Class 7.

U.S. President Donald Trump had long criticized Canada’s supply management system for undercutting American exports and hurting U.S. farmers.

Canada implemented supply management in the dairy industry in the 1970s, which sets quotas on production based on anticipated demand. The government decides how much farmers are paid for their production and blocks out foreign production with high tariffs.

In 2016, Canada created the Class 7 pricing agreement that has essentially restricted U.S. exports of the product, which is what annoyed Trump. That Class 7 protection measure has now been eliminated.