Dairy Production Headlines

Over the last two to three weeks there have been a number of news articles and headlines about 75 farms being dropped by Grassland Dairy at Greenwood, Wisconsin.

Grassland Dairy, located in Greenwood, Wisconsin, processes 8 million pounds of milk per day, and is responsible for 90 percent of the butter produced in Wisconsin and 23.4 percent of the U.S. production.

Now, for the rest of the story. The news headlines concerning the letters mailed to dairy producers and those producers losing the market for their milk evoke a lot of emotion over the farmers losing the market for their milk. The reasons given have been that Canada has cut out the importation of Milk Protein Isolates (MPI), which is an ultra-filtered milk, a protein liquid concentrate, used to make cheese.

Canada has a very tightly controlled supply management system for the production of milk. Farmers have strict production quotas to limit production. This has kept their average price to farmers for their milk at substantially higher levels than in the United States.

In 2016, the WI All Milk price averaged $16.74 per hundredweight compared to the average in Canada of $23.48. The prices in Canada have been supported by very tightly controlled trade, high tariffs and import quotas negotiated in 1987 by the World Trade Organization. Milk Protein Isolates did not exist in 1987 and became possible later with new processing technology.

As a result this product has seen a dramatic rise in the amount imported into Canada from the U.S. In 2011 imports were only about $2 million and have increased up to around $100 million today. Due to the quota system in Canada Canadian cheese processors want more milk and as a result have been importing MPI for the production of cheese.

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