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Report pegs U.S. dairy support levels

U.S. gradually moving toward risk management-based system

Peter Clark
Trade lawyer Peter Clark has studied the level of subsidies available to U.S. dairy farmers. (John Greig photo)

U.S. dairy farmers continue to benefit from broad agriculture supports, a study shows.

Dairy Farmers of Canada has had Grey, Clark, Shih and Associates regularly study the effect of U.S. government policy on dairy farms in that country.

The latest version of the project was released at the Dairy Farmers of Canada policy conference held last week in Ottawa.

It showed U.S. dairy farmers benefit from the equivalent of US$12.06 per hundredweight or C$35.02 per hectolitre. That’s close to 70 per cent of what farmers are paid now for their milk.

Peter Clark, a long-time trade consultant and lawyer with the firm, said at the conference that the U.S. is gradually moving more of its programs toward risk management.

“The U.S. has become aware of the WTO inconsistency of many of their programs,” said Clark. “They’re shifting from direct and countercyclical payments and other issues to various types of insurance programs.”

Clark’s 500-page report is a detailed analysis of many programs, and notes a certain amount of the funds for those programs is allocated to the potential use of those programs by dairy farmers, not actual use.

The programs include: domestic support, export subsidies, conservation programs, crop and livestock gross margin, risk management programs, disaster relief assistance programs, loan programs, crop insurance, livestock support as well as renewable fuels incentives and subsidies and irrigation programs.

Nick Thurler, a Dairy Farmers of Ontario board member from eastern Ontario, said that he knows numerous dairy farmers across the border in New York.

“I know if I told them they got $12 per hundredweight subsidy, I know what the answer would be,” he said.

Clark said he’s heard from people who say they know U.S. farmers who get no direct subsidies, but he points out that the subsidies are mostly indirect and farmers in the western U.S. have much greater benefit due to irrigation.

Alfalfa and forages are the biggest users of irrigation water, mostly to feed dairy cattle — hence the massive amount of money that goes into irrigation systems, he said.

“We look at what is available” to dairy farmers, said Clark. That’s typical of trade evaluations done by other countries as well, he added.

Clark’s study also included the impact of nutrition programs in the U.S. on dairy products.

“Some argue it should be seen as welfare and we shouldn’t be allocating it in this analysis,” he said, but he includes it as the original program was created as a way to deal with excess agriculture production.

U.S. Trade Representative Robert Lighthizer’s lawyers, Clark noted, have reports that list 160 subsidies on Canadian steel.

“When it comes to trade, you have to be precise.”

— John Greig is a field editor for Glacier FarmMedia based at Ailsa Craig, Ont. Follow him at @jgreig on Twitter.

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