Senator Charles Schumer (D-NY) introduced legislation on July 30 to impose trade restrictions on a number of imported dairy ingredients that are used in a variety of food products. If enacted, it would mean higher production costs for IDFA members and many other food manufacturers.
The legislation (S.1542) would impose tariff-rate quotas (TRQs) on imported milk protein concentrates (MPC), casein and caseinates. TRQs are a two-tiered tariff structure with a lower tariff for imports up to a certain quantity and a much higher tariff for import quantities above that level.
Schumer believes restricting imports of these products, which are derived from milk, would increase demand for U.S. milk and help dairy farmers who are struggling with low farm milk prices. Rather than restrict trade, IDFA recommends a more market-oriented approach that would that encourage domestic production of these ingredients.
Just last month, the U.S. Department of Agriculture Undersecretary Jim Miller said that MPCs "are not a significant cause of the economic distress of" dairy farmers. And at a July U.S. House subcommittee hearing on dairy policy, IDFA Chairman Paul Kruse cited domestic production of milk protein concentrates as an opportunity for growth for the U.S. dairy industry.
"Our current policies encourage plants to produce nonfat dry milk, even as few food processors want to use that product," Kruse said. "On the other hand, there is growing demand for products like milk protein concentrates, which many food processors now source from other countries because the United States does not produce near enough. This committee should consider the reasons why we see continued investment in plants to produce nonfat dry milk and not the specialized milk proteins demanded by today's marketplace."
Currently there are no quota restrictions on volume, and a tariff of 0.16 cents per pound is imposed for most imported MPCs and caseinates. Under the proposed legislation, however, the tariff rate would jump up to 71 cents to 98 cents per pound, depending on the product.
IDFA estimates that 60 percent of MPC-type imports used by U.S. dairy manufacturers would be affected by the higher-tier tariff. If the bill were to pass, products from Mexico would remain excluded from the new tariff-rate quotas under the North American Free Trade Agreement (NAFTA).
This is not the first time this legislation has been proposed. IDFA has consistently and effectively blocked this type of legislation for at least 10 years. Unfortunately, the current persistent low milk prices have caused this ill-considered concept to reemerge.
"The U.S. Coalition for Nutritional Ingredients will be reinvigorated to work against the reenactment of S.1542 into law," said Clay Hough, IDFA senior group vice president
For more information, members may contact Katie Sparrow, IDFA manager of international affairs, at email@example.com or (202) 220-3507.