Negotiations between the United States and Canada went down to the wire and a trade agreement was finalized just before the self-imposed deadline of Sept. 30. This deal also includes Mexico, which came to terms with the United States earlier this summer. U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland issued a joint statement, saying the new deal will be good for workers, farmers, ranchers and businesses resulting in freer markets, fairer trade and robust economic growth.

Class 7 pricing eliminated, trade deal needs to be monitored
    With the new United States-Mexico-Canada Agreement, Canada’s controversial Class 7 dairy pricing system is eliminated. Canada will now have a new pricing system tied to the Class IV price in the United States. Former Agriculture Secretary Tom Vilsack said adjustments and allowances are allowed for Canada. “The problem is that it does not make reference to a specific amount in the allowance,” Vilsack said. “The text suggests there may be some flexibility and from time to time there could be an adjustment in the allowance which could potentially provide an opportunity for Canada to have an advantage similar to Class 7.” Vilsack, who is now the president and CEO of the U.S. Dairy Export Council, said the dairy industry will closely monitor the implementation process. As the attention shifts back to China, Vilsack is encouraging the Trump Administration to return to the negotiating table and resolve the current trade dispute.
 
Getting North American relations ‘back to normal’
    Minnesota Milk Producers Association Executive Director Lucas Sjostrom expects Canada’s Class 7 dairy pricing program to go away six months into the new United States-Mexico-Canada Agreement. “If we can get relations normal so all of North America agrees, it will boil down to the tariffs that were placed on steel and aluminum and the target tariffs on cars that haven’t gone into effect. That will repeal the dairy tariffs.”
 
FDA to consider labeling issue
    The Food and Drug Administration is seeking public comment about the labeling of plant-based foods. That is a victory for the dairy industry, which sees terms like soy milk or almond milk to be misleading. The National Milk Producers Federation welcomed the move, but said it is important to remain engaged on this critical issue.

EWG wants MFP info
    The Environmental Working Group has asked USDA to provide the names and addresses of the farmers receiving Market Facilitation Program payments. In addition, the activist group wants to know how much each farmer is receiving. A Freedom of Information Act request has been filed and an Environmental Working Group official said the government is required to release the payment details.

Record month for production-per-cow
    Compared to one year ago, milk production in the 23 major dairy states rose 1.4 percent in August. USDA reports new records were broken last month for production per cow. In Minnesota, milk output increased 1.4 percent. South Dakota production jumped 2.7 percent. The size of Minnesota’s dairy herd declined by 6,000 head over the past year and South Dakota’s cow numbers are up 3,000 head.

Western states responsible for most of the production increase
    In its quarterly report on agriculture, Farmer Mac said dairy farmers will continue to increase milk production in 2018. Western dairies are driving the increase with more than 80 percent of the growth in milk production coming from Texas, California, Colorado and Idaho. U.S. ending stocks of butter and cheese are at ten-year highs. The Farmer Mac report says dairy prices are likely to be heavily impacted by trade policy news and by the value of the U.S. dollar. The retaliatory tariffs are expected to restrict any upside to the dairy markets for the balance of this year.

Current farm economy differs from 1980s
    Farmers who rent the majority of their land are under the most financial stress. Purdue University Agricultural Economist Mike Boehlje said those farmers have higher cash costs and may be overextended on working capital. According to Boehlje, the current downturn in the farm economy does not compare to the farm crisis days of the 1980s. “At that time, we had land that went through the foreclosure process and we increased the supply in the market and that collapsed the land values, similar to the 2008 housing crisis.” Similar to the 1980s, Boehlje is seeing distressed loan lenders showing up in the agricultural market. “Sometimes they’re called bottom-feeders in the market; they typically aren’t local lenders, but put a lot of security requirements on it and don’t provide much flexibility in the structuring of it.” Boehlje cites payday loans in the consumer market as an analogy to the predatory loans in agriculture.

SD dairy plant expands
    Agropur plans to start processing milk in March of 2019 at its plant in Lake Norden, S.D. The former Davisco plant will soon have the capacity to process 9 million pounds of milk per day. That is up from the current production capacity of 3 million pounds per day.
 
Alfalfa checkoff distributes funding
    The U.S. Alfalfa Farmer Research Initiative has approved nine research projects in its latest round of funding. Projects range from University of California-Davis research on maximizing alfalfa’s yield potential to an evaluation of enzyme-assisted protein isolation from alfalfa leaves by the University of Wisconsin-River Falls. University of Minnesota professor Craig Sheaffer is receiving alfalfa checkoff dollars to update information on alfalfa, wildlife and the environment.
 
New MDA leadership
    With Minnesota Deputy Agriculture Commissioner Matt Wolman taking a job in the private sector, changes are happening at the State Agriculture Department. Andrea Vaubel transitions from the assistant commissioner job to deputy commissioner. Whitney Place, who has been the MDA’s government relations director, is the new assistant commissioner. Policy specialist Craig McDonnell has been promoted to serve as the government relations director for the few remaining months of the Dayton Administration.

Trivia challenge
    Kefir is the term for a fermented milk drink. That answers our last trivia question. For this week, what color were the famous colored shavings at this year’s World Dairy Expo? We’ll have the answer in the next edition of Dairy Star.
    Don Wick is owner/broadcaster for the Red River Farm Network, based in Grand Forks, North Dakota. Wick has been recognized as the National Farm Broadcaster of the Year and served as president of the National Association of Farm Broadcasting. Don and his wife, Kolleen, have two adult sons, Tony and Sam, and five grandchildren, Aiden, Piper, Adrienne, Aurora and Sterling.