The Canadian dairy industry is in the midst of change as fewer consumers are buying U.S. imports of ultrafiltered milk, The Globe and Mail reported.
Ultrafiltered milk is a product often used to speed up the cheese production process or in butter production. It’s essentially a milk concentrate, using equipment like sanitary shell and tube heat exchangers and membranes to reduce water content so the final product has a higher percentage of fat and protein.
Ultrafiltered milk’s effect on trade relations
The process that leads to ultrafiltered milk is a relatively new invention. So new, in fact, that there is no mention of it in the North American Free Trade Agreement. This means that, while other milk products cost U.S. dairy farmers a fee to sell their products to their northern neighbors, there was no such charge applied to ultrafiltered milk.
Until recently, there were few complaints about this practice. U.S. dairy farmers were producing ultrafiltered milk, and Canadian buyers were happily consuming it. However, beginning this year, the Canadian Dairy Commission made some changes to its dairy pricing strategy that affected Canadian consumers’ willingness to purchase U.S. imports.
To understand this new pricing strategy, one must understand the way the Canadian dairy market works. Essentially, the dairy sector in Canada adheres to a policy called supply management, according to the Commission.
— Ag More Than Ever (@AgMoreThanEver) July 19, 2017
Every year, there is a planned amount of milk produced, and each farmer is permitted to produce a fair share of it (or, if they want, they can sell some of their shares to other farmers).
Then, a group of industry experts agrees upon a fair price for each milk product. This ensures that the cost of production is covered and each farmer makes a profit (so long as that farmer operates accordingly – if a farmer produces more than his or her fair share, losses may ensue).
New pricing strategy affects dairy industry
Prior to this year, the milk pricing strategy didn’t apply to products like ultrafiltered milk. However, market changes created a need for the Commission to re-evaluate the pricing strategy.
Butter has been making a comeback, iPolitics reported, and the increased demand for the creamy ingredientcreated a greater need for high-fat and high-protein milk products like ultrafiltered milk. In response, Canada’s dairy industry created a new category of milk called Class 7. This class includes ultrafiltered milk as well as skim milk and whole milk powder.
Enerquip’s sanitary dairy shell and tube heat exchangers can be designed according to Canada’s CRN regulations.
Now, with greater need for ultrafiltered milk, Canadian dairy producers must ensure their operations are prepared for increased production. Operations need to have adequate equipment to safely and efficiently produce ultrafiltered milk. Many are finding a need to invest in new equipment like membranes and new sanitary shell and tube heat exchangers. These will allow producers to keep up with demand while maintaining the high-quality ingredients Canada’s dairy industry is known for.
The future of filtration
Seeing as the dairy industry is currently in a state of change, it’s unclear how U.S.-Canada trade relations will turn out, as well as where the majority of ultrafiltered milk will be produced in the years to come. Currently, American farmers are reacting how one might expect a producer whose market suddenly dried up: unhappily.
“Dairy producers of all nations stock must their operations with the best equipment to get the job done right.”
Dairy farmers in Wisconsin and New York, as well as overseas in New Zealand and Australia – two nations who also enjoyed Canadian milk customers in the past – argue that Canada’s supply management strategy is negatively impacting milk prices and unfairly compromising their own industries.
Meanwhile, Canadian industry advocates argue that an international oversupply of milk is at the core of U.S. and other nations’ farmer’s complaints. Increasing popularity in dairy-like products such as soy or almond milk, in addition to various nations’ changing demands and policies are also decreasing demand for dairy, iPolitics reported.
However, that’s not to say that America’s dairy market is going away anytime soon. In reality, the U.S. continues to export a significant amount of dairy to Canada and other nations. In May 2017, the U.S. exported $60.8 million worth of dairy to Canada alone, a year-over-year increase of 29 percent, according to the U.S. Dairy Export Council. The only nation that received more dairy from the U.S. was Mexico, which took in $151.6 million of dairy in May.
As the milk market continues to evolve, it’s important that dairy producers of all nations stock their operations with the best equipment to get the job done right. Sanitary shell and tube heat exchangers, as well as membranes, are imperative in dairy production. Enerquip is one of the few heat exchanger suppliers that provides equipment that meets the stringent 3-A dairy standard, and ASME (US) and CRN (Canada) code regulations. Reach out to the helpful engineers at Enerquip and have them design and build the best equipment for your operation.