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Uncertainty for dairy in the year ahead

A dairy economist says redrafting NAFTA could have adverse effects on U.S. dairy exports and dairy workers.

Tom Bailey with Rabobank tells Brownfield if the North American Free Trade Agreement is reshaped, there’s an opportunity for increased U.S. dairy exports to Canada, but potential loses in Mexico.  “Mexico accounts for about 30 percent of dairy exports and if we lost access to that market, which isn’t outside of the realm of possibilities at this time, we’d have to consider where we’re going to clear that product.”

Bailey says poor relations with Mexico could also affect farmers’ cost of production and access to labor.  “We’ve already seen dairy farmers see prices increase as a result of fewer migrant workers, but there’s more challenge ahead as we now see Mexico respond to some aggressive sentiment towards our Mexico trade relationships.”

He says recent dairy prices have recovered somewhat mostly because of international factors, but the current political climate leaves a lot of uncertainty in the year ahead.  “The two biggest factors that we’re watching are Europe and Trump to put it very simply.”

Bailey spoke to Brownfield during the Great Lakes Regional Dairy Conference in Frankenmuth, Michigan.

AUDIO: Interview with Tom Bailey