Dairy farmer intervention averted AFTA's “worst case” scenario, but DFA members still “disappointed”

February 10, 2004

Dairy Farmers of America, Inc. (DFA) leaders say that, even though there is a good news/bad news quality to the President's final decision to give dairy a limited role in the Australia Free Trade Agreement (AUSFTA), the cooperative and its dairy farmer members are “disappointed” with the outcome.

The bad news is that dairy is included in the AUSFTA. The good news is there were no changes (reductions) made to the tariff rate quotes.

“The details of the agreement have not been fully disclosed, so we don't yet know the real estimated affect on U.S. dairy farmers, but DFA and its members are concerned and, yes, disappointed,” says Gary Hanman, chief executive officer of DFA, a cooperative that markets milk for 24,124 U.S. dairy farmers. “The point of a two-way agreement is to provide balanced terms of trade. Even at its reduced level, the dairy provisions in the AUSFTA provide absolutely no economic benefit for U.S. dairy farmers. Australia is a country that produces more dairy products than it could ever possibly consume. It is not a market for U.S. dairy products. We support fair trade, but this is anything but fair to U.S. farmers.”

Last Sunday, the U.S. government reached an agreement hailed by the U.S. Trade Representatives as an “historic and comprehensive” free trade agreement. In the dairy provisions, U.S. officials stated that there are no changes in the U.S. high-tier tariffs tax on dairy products subject to quotas, but that Australian dairy industry will gain new additional access to the level of 0.17 percent of the annual value of U.S. dairy production. This represents about two percent (an estimated $41 million) of the value of U.S. dairy imports.

According to the U.S. Dairy Export Council, the actual quantities or products under the new additional access have not been disclosed, however, U.S. officials indicate that the additional imports are not expected to affect the operation of the Commodity Credit Corporation's dairy price support program.

“The increase in imports may not sound like much,” adds Hanman, “but, with the still unresolved issues surrounding the import tariff restriction on milk proteins and the mislabeling of casein blends, the affect on U.S. dairy farm families could be greater than they think.”

Tom Camerlo, DFA's chairman of the board and dairy farmer from Florence, Colo., says, if there is any “good news” to this story, it is that dairy farmer involvement in the political process had a positive influence and helped the Administration avert economic disaster for U.S. dairy farmers and the dairy food industry.

“That is very important news. We firmly believe that dairy farmers, who voiced their opinions to the White House and congressional leaders, prevented our government from dramatically changing the dairy tariff structure thus avoiding an unrestricted flow of Australian dairy imports into this country,” says Camerlo. “There is no question that the Administration now understands that such an action would have economically devastated U.S. dairy farm families, dairy food processors, and communities whose families are employed by the food industry. It just goes to show, your voice does matter.”

Over the past month, DFA members had joined dairy farmers, nationwide, in an effort to educate the President of the United States and elected Congressional leaders about how and why the AUSFTA would affect U.S. dairy farmers and food-related processing businesses.

DFA's Hanman and Camerlo say that the new U.S. and Australia pact raises yet another, more far-reaching question on the U.S.' position in world trade.

“DFA and its dairy farm families, along with the cooperative members of the National Milk Producers Federation, have supported the President's pursuit of fair trade,” says Hanman. “In fact, dairy industry representatives in Washington D.C. have worked closely with the U.S. Trade Representative's Office (USTR) to support World Trade Organization (WTO) discussions and other trade initiatives. So, why are we pursuing individual agreements like the AUSFTA that are outside of WTO? It doesn't make sense.”