Vilsack: U.S. dairy farmers still hoping for tariff-free deals with China

April 6, 2018 GMT

WASHINGTON — Chinese trade retaliation this week has targeted U.S. agriculture, but one farm sector that has avoided the tariff hit list, at least so far, is dairy.

That’s in part because China doesn’t have the same ability to shop elsewhere for dairy products as it does with, say, soybeans, said Tom Vilsack, head of the U.S. Dairy Export Council.

The Chinese are concerned about being overly reliant on their chief supplier, New Zealand.

“They see the need for greater diversification,” Vilsack said.

The former Iowa governor served as President Barack Obama’s secretary of agriculture. Now he’s traveling the world as he seeks to improve international markets for U.S. dairy producers, trying to increase U.S. dairy exports from 15 percent of total production to 20 percent over the next three to five years.

Vilsack was recently in China signing an agreement with Jiangnan University, paving the way for the organization’s members to work collaboratively on research there creating the kinds of dairy products the Chinese food industry needs.

“It’s an opportunity for us as well to send a message that we’re in this market and we’ll continue to be in this market for the long haul,” Vilsack said. “That’s important because we’re competing with New Zealand, with the EU, that have been in this market for a lot longer than we have.”

China is already the third leading market for U.S. dairy behind Mexico and Canada, Vilsack said, and it has a lot of potential future growth. The country has 18 million newborns a year who need infant formula and a growing middle class eating out more in restaurants.

From a broad perspective, a trade war would not help that growth.

Vilsack said the Trump administration is right to confront China about completely legitimate concerns with China’s treatment of intellectual property, but that unilateral action is dangerous.

He suggested that building a coalition of allies to go after China that includes Europe and Japan would make it more difficult for China to retaliate.

“If you go against the EU farmers and the U.S. farmers and the Japanese farmers, there’s not a whole heck of a lot left,” he said.

As for the other two top international markets for dairy, producers are hoping the Trump administration’s renegotiations on NAFTA preserve a good working relationship with Mexico and address increasingly protectionist dairy policies by Canada, Vilsack said.

“If they reach a deal with NAFTA and dairy has not been dealt with, they’re not going to have any friends in agriculture,” Vilsack said.