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American 'cheese glut' could impact Canada's dairy farmers

“Save your country, eat three more pounds of cheese!”

It’s a rallying cry every American needs to get behind if they want to consume the country’s surplus of the good stuff. 

With America’s dairy industry expected to produce a record 212.4 billion pounds of milk this year – the most, ever – that overflow is funneling towards cheese makers who have clinched their own record: 1.19 billion pounds of cheese in commercial cold storage.

Unfortunately, as attractive as guilt-free patriotic cheese munching sounds to our neighbours to the south, that surplus could spell trouble for Canada’s dairy farmers, says Sylvain Charlebois, dean of the faculty of management and professor in food distribution and policy at Dalhousie University.

The potential issues centre around something called diafiltered milk, a U.S. protein used as a stand-in for milk in cheese. On the one hand, the Canadian Border Services Agency classifies diafiltered milk as a protein ingredient, whereas the Canadian Food Inspection Agency considers diafiltered milk as milk.

“Canada has been importing a lot of diafiltered milk into [the country] – that could actually put some pressure on the dairy industry in Canada, enticing processors to import even more,” says Charlebois.

In late April, NDP agriculture critic Ruth Ellen Brosseau took to the Parliamentary steps with 200 Quebecois dairy farmers (the province is home to nearly half of the country’s dairy farms) to protest the importation of diafiltered milk, calling on the house to “recognize the magnitude of the economic losses to Canadian dairy producers from the importation of diafiltered milk, which totaled $220 million in 2015.”

[NDP MP Ruth Ellen Brosseau joins Quebec dairy farmers on Parliament Hill./Facebook]

But despite the debate surrounding diafiltered milk, Charlebois suspects a glut of cheese spilling over into Canada to be less of a concern than milk.

“They can’t sell (the cheese) to Canada unless they pay a huge tariff so that’s still not going to be a problem,” says Charlebois.

Of course, ratification of the Trans-Pacific Partnership, the Pacific Rim trade deal, which requires Canada to share 3.25 per cent of the country’s annual dairy production duty-free with partners including the U.S., New Zealand and Australia among other stipulations, could “change the story” says Charlebois.

“But we’re far from seeing the deal being ratified from anyone at this point,” he adds.

The Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU on the other hand, could be a bigger threat for Canadian cheese producers than the surplus from the south.

As a result of the trade deal, Canadian dairy producers will see European cheese imports double to 30,000 tonnes per year.

“The dairy sector around the world is going through a very interesting era… there’s some major re-calibration going on – from New Zealand to Europe to Asia to North America,” says Charlebois.

He points out that while Canadian dairy producers may be insulated they’re not completely immune with supply management – a series of policies that restrict restricts the supply of products like cheese and milk, tossing heavy tariffs at imports and controlling the price and amount produced domestically – being eroded by the importing loophole of inexpensive dairy proteins from outside Canada.

“That is forcing Canada to rethink this position around supply management,” he says. “Despite our highly protectionist system, dairy farmers are being affected and we’re seeing dairy farms close – concerns like animal welfare, sustainability, it just adds even more pressure on the dairy sector… people are walking away from cheese for all sorts of reasons.”