Senator Amy Klobuchar

Working for the People of Minnesota

Press Contact

Joel Gross
Press Secretary
(202) 224-3244

News Releases

Klobuchar Fights for Minnesota Dairy Farmers

March 11, 2010

Washington, D.C. – Today U.S. Senator Amy Klobuchar urged United States Trade Representative Ron Kirk to proceed with caution in dairy trade negotiations during the first meeting of the Trans-Pacific Partnership (TPP) Agreement.  Klobuchar joined 29 of her colleagues in sending a letter to Ambassador Kirk requesting that he focus on the dairy industry during the upcoming negotiations and warned that the U.S. dairy industry could lose $20 billion in the first decade if U.S. dairy restrictions on exports from New Zealand are fully phased out as part of any broader agreement.  

In the letter, the Senators urged Kirk to consider if genuine competition was possible in New Zealand, stating that: “because of the anti-competitive practices in New Zealand’s dairy industry and the extensive degree of control it wields over world dairy markets to the detriment of the U.S. dairy industry, we are deeply concerned that an expansion of U.S.-New Zealand dairy trade would further open the United States to these imports while providing little additional market for American farmers in New Zealand and the other Pacific countries. ”

Recently submitted testimony to the International Trade Commission states that New Zealand has previously taken advantage of its exporting position to the benefit of its domestic industry.  Most of New Zealand’s exports to the United States do not incur tariffs.  An expansion of products not subject to tariff-rate quota limitations could disadvantage U.S. dairy producers.

The letter also noted that American dairy exporters do not have the prospect of significant new opportunities under the agreement because most other TPP members have bilateral free-trade agreements with the United States or offer only small additional market opportunities.

As a member of the Senate Agriculture Committee, Senator Klobuchar has consistently worked to improve the competitive position of the U.S. dairy market.  Minnesota is the sixth largest dairy producing state and is home to nearly a half million dairy cows, which together produce nearly nine billion pounds of dairy products each year.  From January through September 2009, the all-milk price received by farmers was 36 percent below a year earlier.  


The full text of the letter is below:

March 11, 2010

The Honorable Ron Kirk
United States Trade Representative
600 17th Street NW
Washington, DC 20508

Dear Ambassador Kirk,

We understand that the first meeting of the Trans-Pacific Partnership (TPP) Agreement will be held later this month.  We write to urge very careful attention to dairy trade concerns in these negotiations.

As you prepare for these negotiations, we wanted to highlight the potential impact of such an agreement on dairy farmers and many processors in the U.S. if U.S.-New Zealand dairy trade is not addressed properly.  We have been informed that losses to U.S. dairy producers may total up to $20 billion over the first decade of the agreement if U.S. dairy restrictions on exports from New Zealand are fully phased out in the TPP.  Moreover, America’s dairy exporters do not have the prospect of focusing on other significant new opportunities that the agreement would open up given that most other TPP participants are already U.S. free trade agreement (FTA) partners or have relatively limited tariffs and offer only small additional market opportunities. 

Despite New Zealand’s small size, its dairy industry is a global power.  New Zealand’s dairy industry is dominated by one company that operates as a virtual monopoly in controlling more than 90 percent of the country’ milk production and approximately 40 percent of trade in key internationally traded dairy commodities.  In light of this market power, the Administration should consider whether genuine competition is possible as it proceeds with the TPP.

New Zealand has demonstrated its capacity to funnel product to the U.S. market as evidenced by the sizable quantities of milk protein concentrates (MPCs) and casein imported each year into the U.S. from New Zealand.  MPC and casein imports enter the U.S. virtually tariff-free and with no volume quotas unlike imported nonfat dry milk, butterfat or most cheeses.  The primacy that New Zealand assigns the U.S. market and its ability to devote considerable amounts of its production to exports to the U.S. are clear. 

According to testimony submitted recently to the International Trade Commission, imports of New Zealand dairy products facing tariff-rate quota limitations generally account for a relatively small proportion of New Zealand’s total exports of such products.  In contrast, New Zealand’s sales of MPC and casein imports to the U.S. market generally account for over fifty percent of its exports of these products to all destinations.  Clearly, New Zealand has taken full advantage of all favorable opportunities to grow its dairy exports to the high-value United States market and would likely do so with respect to any additional such opportunities for the even higher-valued, currently tariff rate quota (TRQ)-restricted products if trade in them is expanded under the TPP.

Because of the anti-competitive practices in New Zealand’s dairy industry and the extensive degree of control it wields over world dairy markets to the detriment of the U.S. dairy industry, we are deeply concerned that an expansion of U.S.-New Zealand dairy trade would further open the United States to these imports while providing little additional market for American farmers in New Zealand and the other Pacific countries.  This prospect is particularly troubling given the record low dairy prices American farmers have faced since late 2008 and the need for our dairy industry to rebuild export markets to help remedy the harm caused by these low prices.  As you proceed with negotiations, we ask that you carefully consider and discuss with us how best to address within the TPP this unique threat posing such great potential harm to the future viability of America’s dairy industry.

                                                                        Sincerely,

                                                                        Amy Klobuchar
                                                                        United States Senator

###
 

Senator Klobuchar’s Offices

302 Hart Senate Office Building
Washington, DC 20510
Main Line: 202-224-3244
Main Fax: 202-228-2186
Toll Free: 1-888-224-9043

1200 Washington Avenue South, Suite 250
Minneapolis, MN 55415
Main Line: 612-727-5220
Main Fax: 612-727-5223
Toll Free: 1-888-224-9043

1134 7th Street NW
Rochester, MN 55901
Main Line: 507-288-5321
Fax: 507-288-2922

121 4th Street South
Moorhead, MN 56560
Main Line: 218-287-2219
Fax: 218-287-2930

Olcott Plaza, Suite 105
820 9th Street North
Virginia, MN 55792
Main Line: 218-741-9690
Fax: 218-741-3692