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Canada Continues to Undercut World Powder Prices

As trade relations between the United States and Canada and Mexico fester, Canada continues to undercut world competitors with its lower export price for skim milk powder. As of yet, only Mexico has ratified the U.S.-Mexico-Canada Agreement (USMCA), and while USMCA remains in limbo, Canada continues to export large volumes of skim milk solids under its Class 7 pricing scheme.
 
As part of USMCA, Canada has agreed to end its Class 7 pricing system, an export class for milk that covers skim milk components, including milk protein concentrates, skim and whole milk powders, edible casein, and rennet casein.
Sarina Sharp, analyst for the Daily Dairy Report, note that Canada’s “Class 7 will be phased out slowly and only after USMCA passes in all three nations. In the meantime, Canada is likely to continue exporting SMP with impunity.”
 
Despite having  a rigid supply management system, Sharp says Canada increased milk production quotas several years ago to meet soaring demand for butterfat. “The decision allowed Canada to displace imported cream and butter—mostly from the United States—with homegrown butterfat,” she says.
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