Darigold CEO speaks to Congressional panel on NAFTA’s importance

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The leader of a Seattle-based dairy cooperative with a sizable processing facility in Sunnyside told a congressional panel Tuesday how important the North American Free Trade Agreement, or NAFTA, is to the U.S. dairy industry.

“NAFTA is indisputably the most important U.S. free trade agreement,” said Stan Ryan, CEO of Darigold Inc., the marketing and processing subsidiary of farmer-owner cooperative Northwest Dairy Association, in his testimony.

“An agreement that has done this much good and that supports tens of thousands of jobs in the dairy sector alone must be preserved,” Ryan said.

Ryan, however, also expressed support for renegotiating the agreement, especially to resolve ongoing issues such as barriers to exporting to Canada, that have negatively affected the dairy industry.

Renegotiation of the agreement could start as early as Aug. 16. On Monday, U.S. Trade Representative Robert E. Lighthizer released an 18-page document outlining key objectives for renegotiation.

Ryan was invited to testify before the House Ways and Means Trade subcommittee by chairman Rep. Dave Reichert, a Republican from Auburn.

Dairy is a crucial industry for Washington state: With 
a production value of 
$1.1 billion, according to figures from the U.S. Department of Agriculture, dairy was the second highest valued agricultural commodity in Washington state last year.

And NAFTA has played a crucial role in getting U.S. — and Washington — milk products to Mexico. Prior to NAFTA, which went into effect more than two decades ago, dairy exports to the country were limited to non-fat dry milk shipments for government feeding programs and a small number of breeding cattle.

About a quarter of the $4.9 billion dairy products exported from the U.S. — $1.2 billion — were shipped to Mexico in 2016, making the country the U.S. dairy industry’s largest market. The country accounted for 47 percent of U.S. exports of nonfat dry milk, 31 percent of cheese and 38 percent of butterfat.

In 2016, Mexico also 
was the top export market for Washington dairies at $72 million, or about47 percent of the $152 million in dairy products exported from the state, according to figures from the state Department of Agriculture.

About 40 percent of Darigold’s milk products are exported, Ryan said. Darigold’s sales to the country are three times the amount of those to China, its next largest export market.

Many of those milk exports come from Darigold’s plant in Sunnyside. The facility, which employs about 180 workers, processes milk into high-value milk powders used in products such as baby formula, cheese, whey protein and whey protein concentrate powder.

Along with preserving strong exports to Mexico, Ryan said he hopes there also is an opportunity to improve export conditions to Canada. The country continues to charge dairy tariffs that are in the 
200 percent to 300 percent range, he said.

In addition, Canada recently implemented a pricing system that Ryan said has not only kept out dairy exports from the U.S. and other countries, but resulted in a major dump of Canadian milk proteins at below-market prices.

Pacific Northwest dairy farmers who send milk to Darigold have been affected as they are the closest to Asian export markets where Canadian milk protein products end up.

In spite of trade barriers, Washington state still exports about $14 million in dairy products to Canada. However, Ryan said future exports to Canada are not a given.

“These latest actions are most concerning because they represent a shift by Canada from using policy tools to impede imports into Canada to now also disrupting export markets,” Ryan said in his testimony. “Canada has for years intentionally tried to shirk its dairy commitments, using one policy or regulatory tool after another to chip away at access granted.”