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USMCA Doesn’t Help U.S. Dairy Farmers, Fed Reserve Districts Say

Two Midwest Fed Districts see the trade agreement offering little help.

DES MOINES, Iowa -- A few Midwestern districts of the Federal Reserve see the new United States-Mexico-Canada Agreement (USMCA) not helping U.S. dairy farmers.

In a periodical report, labeled the Beige Book, reporting on the economic conditions of its 12 districts, the Federal Reserve Districts of Chicago and Minneapolis Wednesday noted the USMCA trade agreement is too little, too late.

Earlier this month, in an announcement of the new agreement replacing the North American Free Trade Agreement, President Trump emphasized the importance of the USMCA for dairy farmers.

“It’s a very, very big deal for our farmers. The pact should aid the flow of wheat, poultry, eggs, and dairy exports. For U.S. negotiators, dairy was a deal-breaker,” President Trump said.

In today’s report, the Fed District of Chicago reported that its contacts say the damage has already been done to the U.S. dairy operators.

“Even so, dairy farmers continued to struggle. In addition, contacts viewed gains from the new U.S.-Mexico-Canada Agreement as too small and too far in the future to help dairy farmers. Moreover, Canada and Mexico maintained their tariffs on agricultural goods (including pork and dairy) that they imposed in response to U.S. steel and aluminum tariffs,” the Fed stated.

The Minneapolis Fed reported that “a substantial number of dairy operations have exited the business since the beginning of the year.”

In the Deal

Canada and Mexico remain the two largest customers for U.S. agricultural exports.

For President Trump, he touted that the USMCA will get rid of Canada’s Class 6 and Class 7 milk prices. U.S. dairy farmers say that the Class 7 is a barrier to exports of milk that get ultrafiltered.

USMCA will allow U.S. farmers to export more wheat, poultry, eggs, and dairy products to these two countries.

In return, the U.S. will allow additional imports of Canadian products such as dairy, peanuts, processed peanut products, sugar, and sugar-containing products.

President Trump can sign the USMCA at the end of next month, but a Congressional vote is not expected until next year.

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