A round of NAFTA trade talks wrapped up this week between the U.S., Mexico and Canada. One topic of discussion among the trading partners was dairy commodities. With the President’s harsh words on the decades old trade deal, dairymen in the state are nervously keeping an eye on negotiations.
NAFTA, the North American Free Trade Agreement, may seem lofty, but the 1994 deal is crucial to the Gem State’s dairy industry. According to Rick Naerebout, the CEO of the Idaho Dairymen’s Association, Mexico is the country’s – and Idaho’s – number one trading partner for dairy products.
“Mexico ends up being that naturally larger trade partner because there’s that demand there that’s not in Canada,” he says. “We’re sending cheese to Mexico as well as protein powders and other manufactured products that are used as ingredients in other foods.”
While Mexico is the mainstay of Idaho’s dairy exports, the latest round of NAFTA discussions highlighted Canada. U.S. negotiators said they want 10 times more access to the tightly controlled Canadian dairy market. Naerebout says for Idaho, Canada is less of a focus.
“If we can gain some access to Canada, great,” says Naerebout. “But we would put more value in the relationship with Mexico than Canada.”
Given Naerebout’s emphasis on maintaining a good relationship with Mexico, he says the Trump Administration’s continued overtures about how bad NAFTA is and Trump’s tough rhetoric about the country could hurt the industry’s bottom line.
“We’re hearing reports from Mexico that they’re exploring other relationships with other dairy-exporting countries,” Naerebout says. “And so, it does start to create uncertainty within the dairy market. You don’t know that the sales that you had last year are necessarily going to be there this year when you’re looking at your Mexican customers.”
Naerebout says NAFTA in its current form has been good to the industry. As for renegotiations, he thinks a more nuanced approach would be better.
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