By Anne Cote
Over the past decade the Canadian dairy industry has posted a significant trade imbalance, according to data from Agriculture Canada for 2020.
Despite this grim news, the data from Agriculture Canada also indicates Canada’s dairy exports went up to by 16.8%between 2019 and 2020. But the imbalance persists as import values rose by 6.68% over the same period with the result that import values remain at a level almost double the value of exports.
The last two trade agreements signed by the Canadian government won’t help narrow this gap, especially in the cheese market.
The Canada-European Union Comprehensive Economic and Trade Agreement (CETA), signed on October 30, 2016, in Belgium, allows Europe to export an additional 18,500 tonnes of cheese into Canada tariff free. This is an addition to the previously negotiated tariff free quantity of 13,471t which was already making its way into the Canadian market from the EU.
In October 2021 US dairy producers reported strong growth in dairy export markets with an 18% increase in cheese exports.
Most of this generous increase, 16,000t, falls into the “fine cheese” category causing Canadian fine cheese makers considerable concern as they vie for shelf space in supermarkets and boutique shops.
But Canadian cheesemakers have even more tariff-free competition to worry about.
On July 1, 2020 the Canada United-States, Mexico Agreement (CUSMA) came into effect and it gives United States cheesemakers the ability to ship 12,500 tonnes more by year six of the agreement and then grow by 1% for an additional 13 years.
In October. 2021 US dairy producers reported strong growth in dairy export markets with an 18% increase in cheese exports into the global marketplace led by strong demand by Mexico and Latin America; but it’s important to note that the US is one of Canada’s major competitors for cheese on its supermarket shelves.
USDEC notes “cheese markets tend to decline seasonally in the back half of the year” but this year the 12% decline in cheese exports the US usually experiences during this period hasn’t happened. And, because global demand for cheese has risen by 6% this year compared to historic gains of only 3%, the organisation expects US cheese will remain in high demand in global markets.
There are two reasons for the optimistic outlook the USDEC is reporting. The first is that US pricing is highly competitive making cheese more attractive to buyers around the globe. The second is the availability of products.
For example, over the past several years the state of Wisconsin, a major cheese producing region, has been pushing for better trade deals to help them sell excess cheese produced there. But at this year’s Dairy Expo in Madison, Wisconsin panelists were all smiles as they praised the ever-increasing demand for domestic dairy products as well as an expanding global market.
With world demand expanding, US cheesemakers are ready to meet the challenges of filling the global need for cheese whether it’s in Canada, the EU, New Zealand, Latin America or Mexico, countries where consumers are already familiar with their products.
