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Tom Vilsack: Exiting NAFTA would be a body blow to Wisconsin dairy

Tom Vilsack: Exiting NAFTA would be a body blow to Wisconsin dairy

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Dairy creates more than 215,000 jobs in Wisconsin and nearly 3 million across the country, according to a new economic impact study.

That’s a lot of jobs. But with global demand for products such as cheese and whey protein expected to increase in the future, it’s only the beginning.

U.S. dairy exports have more than quadrupled in 16 years, from less than $1 billion to nearly $5 billion last year. That’s a success story, but a fragile one. Seemingly small actions giving global competitors an edge can take away jobs in Wisconsin.

We saw that in April, when one of the nation’s largest makers of butter and milk ingredients, Grassland Dairy, shocked dozens of Wisconsin dairy farmers.

“Long-term sale of milk products into the Canadian market” has been “eliminated,” the Grassland letter said, due to Canada’s new “Class 7” pricing policy. The policy tilted the playing field north by pulling the rug out from under ultrafiltered milk from the United States. It also set up Canada to offload excess milk powder onto global markets at bargain-basement prices.

Modernizing the North American Free Trade Agreement has the potential to remedy this problem. On the other hand, walking away from NAFTA could deliver a body blow to a dairy industry that is 7.5 percent of Wisconsin’s GDP.

Those numbers come from that new economic impact study, “Dairy Delivers,” by the International Dairy Foods Association. It shows the Wisconsin dairy industry directly creates more than 41,000 full-time jobs. The study also factors in the ripple effect — counting nearly 174,000 additional jobs supported by dairy in related sectors such as transportation, retail and real estate. That lifts the total to 215,000.

To visualize 215,000 full-time Wisconsin jobs, imagine Lambeau Field, Camp Randall Stadium and Miller Park filled at the same time, thanks to dairy. Or, if you prefer, think what $2 billion in state and local tax revenues spread across Wisconsin looks like. That’s the amount dairy has brought to Wisconsin, according to the IDFA study.

It wasn’t long ago we kept almost all U.S. milk in this country. Today, nearly one out of seven gallons end up in products overseas. In the next three to five years, we want to increase that to one out of five.

How dependent is the Wisconsin dairy industry on growing exports? Consider Sartori Cheese Company of Plymouth, recently named exporter of the year by Dairy Foods magazine, for building a multi-channel global strategy and customer-first philosophy that sends SarVecchio Parmesan and other award-winning cheeses to dozens of countries. Sartori and other Wisconsin cheesemakers see enormous potential to expand their global reach, boosting the state’s economy in the process.

“Our global sales represent about 5 percent of total sales, and we would like that to reach about 15 percent of total sales in the next five years,” says Sartori global markets manager Sam Allison.

“Realistically what that means is that 25 (percent) to 50 percent of our overall growth is going to have to come from our global markets. We have a big task ahead of us, for sure, but we believe there is a tremendous amount of opportunity out there.”

To seize that opportunity, we need open markets to go head-to-head against the European Union and other aggressive competitors. That’s where free-trade agreements come into play, none more important than NAFTA, the deal that made Mexico our top customer, at $1.2 billion in sales.

U.S. dairy exports to Mexico have soared under NAFTA, increasing 885 percent. Exports to Canada have been less spectacular. A new NAFTA should end Canada’s protectionist dairy pricing policy and open the border for more Wisconsin dairy exports.

It’s not time to end NAFTA. It’s time to mend it. Wisconsin jobs are at stake.

Vilsack is a former Iowa governor and U.S. Agriculture secretary who now serves as CEO and president of the U.S. Dairy Export Council.


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