International Dairy Dispute Intensifies: New Zealand, US and Australia Criticize Canada’s Subsidized Dairy Exports

In a concerted move to address concerns over market distortions caused by subsidized dairy exports, the Dairy Companies Association of New Zealand (DCANZ) has joined forces with similar organizations in the United States and Australia. This coalition recently penned a letter to their respective agriculture ministers, highlighting the adverse impact Canada’s actions are having on dairy farmers in other exporting nations, particularly in New Zealand.
New Zealand’s Agriculture Minister Todd McClay has echoed these concerns, noting previous objections raised with Canada. "We are actively exploring joint actions, especially with the new US administration, to counter Canada’s detrimental dairy trade practices," McClay informed Rural News. He has tasked trade officials to engage with counterparts in Australia and the USA to assess the extent of harm inflicted on international markets.
Kimberly Crewther, Executive Director of DCANZ, emphasizes that the current dispute diverges fr om longstanding issues New Zealand faces with Canada under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Despite multiple mediation victories favoring New Zealand’s market access, Canada remains resistant. Consequently, McClay confirms that New Zealand will continue legal pursuits under CPTPP and plans to leverage Canada's impending change in administration to address these ongoing challenges.
The crux of the contention lies in Canada’s favoring of its domestic dairy industry, marked by small-scale operations with an average herd size of just 89 cows. This has led to significant subsidization efforts, primarily targeted at international markets, wh ere Canada dumps subsidized milk powder to the detriment of unsubsidized competitors like New Zealand.
Crewther outlines how the Canadian Dairy Commission’s strategies enable processors to purchase milk at prices substantially lower than production costs, creating a competitive price advantage globally. This manipulation allows Canadian dairy products to undercut unsubsidized international exporters.
US President Donald Trump has intimated plans to impose tariffs on Canada, adding tension to the landscape. The looming renegotiation of the United States-Mexico-Canada Agreement (USMCA) could further complicate matters, as Canada’s previous recategorization of milk types in the agreement circumvented existing restrictions on such practices. Consequently, the current tension involving the US, Australia, and New Zealand could become integrated into USMCA discussions.