WASHINGTON (AP) — Congress has failed to slow imports of milk products used in cheese, protein bars and baby food, so American dairy farmers are turning elsewhere in the government for help in making their case.
Milk protein concentrates are dried, processed protein powders created from the ultra-filtration of skim milk. Unlike most dairy imports, they face few import barriers. Farmers complain that the foreign product is displacing domestic nonfat dry milk in lots of foods.
Pete Kappelman, a dairy farmer from Two Rivers, Wis., said the United States has become “a dumping ground for foreign dairy surpluses.” At a hearing last week before the U.S. International Trade Commission, he said, “It’s driven down my milk price and my ability to reinvest in my business.”
The independent, quasi-judicial federal agency is conducting an investigation but will issue no recommendations. Dairy industry officials hope the commission’s final report, due next May, will provide enough evidence for Congress to impose tariffs on the concentrates.
Bills to do that, pushed by members of the Minnesota congressional delegation, have languished in Congress the past three years. Minnesota is fifth in the nation in dairy products, according to U.S. Department of Agriculture figures.
Opposing the tariffs are New Zealand and Australia, the source of most of the imports, and many U.S. food manufactures.
New Zealand accounts for about 70 percent of the imports and Australia about 10 percent, according to Ed Jesse, a dairy economist at the University of Wisconsin-Madison.
New Zealand’s ambassador to the United States, John Wood, told the commission that trade penalties against the product would backfire.
“Other countries would see such U.S. action as an endorsement of tariff renegotiation and be tempted to follow suit,” he said.
Just recently, the European Union forced the United States to abandon steel tariffs after the EU threatened to impose $2.2 billion in retaliatory penalties on U.S. exports.
The Coalition for Nutritional Ingredients, which includes companies such as Kraft and Nestle, is working to head off any tariffs.
“New tariffs on imported milk proteins would raise consumer prices on a wide variety of popular food and snack items,” the group said in a statement.
The National Milk Producers Federation estimates that the imports have cost the dairy industry $2.25 billion in lost income since 2001. That represents the reduction in prices the government has paid for surplus nonfat dried milk under the U.S. price support system.
Peter Vitaliano, a federation executive vice president, told the commission that U.S. dairy producers are competing against a subsidized product.
“The very reason these products are so financially attractive to processors and manufacturers in the U.S. is because other countries have orchestrated their dairy programs to make them artificially affordable,” he said.
In a telephone interview, dairy economist Jesse said that while Europe subsidizes production, New Zealand and Australia do not.
Jesse also said the federation’s estimate of $2.25 billion in lost income assumes that lower government prices can be all blamed on the imports.
“But that’s speculative,” he said. “Even without imports, there would have been lowered prices.”
Still, Jesse supports legislation to impose tariffs, but cautions that the dairy industry has to be ready to give up something in return or risk retaliation.
