Canada’s Demand for U.S. Dairy Soars
December 20, 2021
Strong demand has helped boost U.S. cream and butter exports to Canada even though the country’s milk supply is growing. A recent Global Agricultural Information Network (GAIN) report shows that following an initial pandemic bump in retail sales, overall dairy sales have largely returned to pre-pandemic levels.
Under its supply management plan, Canadian producers are required to match milk production growth to current demand. Through September, Canadian milk production was up 2.8% year over year, but growing demand in Canada is also being met by imports in accordance with several new trade agreements.
Canadian cheese imports have been rising due to increasing duty-free access and are expected to expand even more next year as tariff rate quotas (TRQs) increase to a combined 36,000 metric tons (MT) under several new trade agreements, including the United States-Mexico-Canada Agreement (USMCA). Canada will also import about 20,400 MT of mostly EU cheese under TRQs established in 1995, according to the report.
Sarina Sharp, analyst with the Daily Dairy Report, said “Canada remains hungry for dairy fats, and that’s great news for the U.S. dairy industry.”
Canada, the top market for U.S. butter and milkfat, accounted for more than 30% of U.S. exports of butter and milkfat in each of the past five years. Through October of this year, Sharp said 28% of U.S. exports of butter and milkfat have shipped to Canada.
“Canada is also the primary market for U.S. cream, and in the first 10 months of 2021, three out of every four loads of U.S. cream sent abroad went to Canada,” she said.
Sustained strong demand has depleted Canadian butter stocks to 26,000 MT, but increased butter production in Canada next year is expected to rebuild stocks to at least 35,000 MT.
Through October, Sharp noted that Canada imported a record-breaking 43 million pounds of butter, 30% more than in 2020, and Canada’s year-to-date cream imports were 56% greater than the previous high, set in 2015.They were also more than four times those of 2020, the year pandemic restrictions choked off foodservice demand.
“It’s possible Canada stepped up dairy imports even more in November and December, after heavy rains and flooding devastated parts of British Columbia, where about 9% of Canada’s milk is produced,” Sharp said. “Flooding killed hundreds of dairy cows and displaced thousands. It also disrupted transportation. Some inaccessible farms were even forced to dump milk.”
The BC Dairy Association has since noted that the province has been able to fill all fluid milk orders but that industrial dairy processing dropped 20% in the weeks following the floods.
“The floodwaters may have receded, but there is no sign that Canadian dairy imports will slow anytime soon,” Sharp noted.
Indeed, Dairy Market News noted recently that some stakeholders in the Pacific Northwest to send milk to Canada to help areas hit by flooding.