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ITC Finds that Dairy Protein Imports Didn't Affect 1998-2002 Farm Prices Imports of specialized proteins, such as milk protein concentrates (MPC), casein and caseinates, had no effect on farm milk prices, according to a long-awaited report on the 1998-2002 U.S. dairy market by the U.S. International Trade Commission (ITC) that was released on May 18. The ITC also concluded that the federal Dairy Price Support Program, which guarantees a market for nonfat dry milk, creates a major disincentive for the domestic production of such proteins.The U.S. Coalition for Nutritional Ingredients — an IDFA-led group of more than 50 associations, food companies, and taxpayer and consumer organizations — urged Congress to "weigh the facts" presented in the government report before taking any further action on legislation (H.R. 1160/S. 560) that would impose tariffs on these dairy protein imports. The coalition strongly opposes the legislation. "Misguided attempts to restrict access to imported dairy proteins only serve to undermine new product innovation and the future vitality of the entire U.S. dairy industry," said the U.S. Coalition for Nutritional Ingredients in a statement after the ITC report release. "The facts outlined in the ITC report do not support new limits on imports of MPC, casein and caseinates." Specialized milk proteins are meeting rising consumer demand for a wide variety of convenience and specialty foods, infant feeding formulas and medical nutrition, health and wellness products. The ITC found that a major reason there is virtually no domestic production of these specialized proteins is the artificial, financial incentive provided by the government's Dairy Price Support Program for U.S. farmers to convert milk into nonfat dry milk rather than MPC, casein and caseinates. The United States now has a surplus of nonfat dry milk, but virtually no production of MPC, casein and caseinates, which are often more valuable to U.S. manufacturers. Given this lack of domestic sources, companies have been utilizing imports to create new consumer products. The coalition contends that if further tariffs are imposed on these imports, the higher costs may prompt manufacturers to reformulate their products using non-dairy proteins, a shift that would harm the entire dairy industry. The ITC report also concluded that the major exporters of these proteins, such as Australia and New Zealand, do not significantly subsidize the products' production and that the European Union no longer heavily subsidizes MPC exports — a finding that refutes a pro-tariff argument. As reported previously in News Update, the ITC study was initiated at the request of Senate Finance Committee Chair Charles Grassley (R-IA) under Section 332 of the Tariff Act of 1930, which authorizes the ITC to investigate trade and tariff matters. To read the coalition's full statement, click here. For the ITC press release regarding the 400+ page report, click here.
Posted May 24, 2004
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