The farmer owners of Cayuga Milk ingredients, Inc. in Aurelius invested more than $104 million in a “state-of-the-art” milk-processing facility to market their dairy ingredients, including the production of ultra-filtered milk, worldwide.

That’s according to Kevin Ellis, CEO of Cayuga Milk Ingredients.

Ellis is concerned that Canada is contemplating a national ingredients strategy that specifically targets the importation of ultra-filtered milk.

Ultra-filtered milk is a protein-rich type of skim milk and is primarily used in the production of cheese and yogurt.

“This action taken by Canada seems to be incongruent with NAFTA and WTO rules. Cayuga stands to lose 25 percent of its sales through this action. This will have a devastating effect on Cayuga, and we are urging our U.S. trade representatives to investigate whether or not the Canadian National Ingredients Strategy is compliant with NAFTA and WTO rules,” said Ellis. NAFTA is short for the North American Free Trade Agreement and WTO is the abbreviation for the Geneva, Switzerland–based World Trade Organization.

Cuomo opposition
Ellis was quoted in an Oct. 31 news release from the office of Gov. Andrew Cuomo in which he announced his opposition to proposed regulations that would create a barrier for New York’s dairy farmers exporting ultra-filtered milk to Canada.

In a letter to Canadian Prime Minister Justin Trudeau, Cuomo called on the Canadian government to develop a national agreement that will “mutually benefit” trade across borders.

If proposed provincial standards are implemented across Canada, they could result in a $50 million market loss for New York’s dairy industry, Cuomo’s office contends.

Cuomo’s letter was issued in response to the Province of Ontario and the Canadian Milk Supply Management Committee’s regulatory plans.

They include the Ontario Class 6 regulation and the proposed establishment of a new national-ingredient strategy that could “effectively restrict” New York exports of ultra-filtered milk.

The letter calls on the Canadian government to confirm that Ontario’s Class 6 regulations and the Canadian National Ingredients Strategy are both consistent with existing WTO policies and NAFTA.

Cuomo’s letter coincided with the 25th Tri-National Agricultural Accord, held in late October in Niagara Falls, Ontario.

The Tri-National Agricultural Accord provides a forum for the U.S., Canada, and Mexico to work together toward “shared priorities” and discuss important topics, including climate change, trade, and the expansion of food-processing sectors.

“New York’s dairy sector is an essential part of our agricultural industry, and these regulations could have devastating effects on our dairy farmers and their families,” Cuomo said in the release. “I urge our Canadian neighbors to reconsider these potentially harmful regulations and to continue our courteous, mutually beneficial trade relations.”

Seeking agreement
Over the course of the last several months, New York says it has made “several attempts to find a solution agreeable” to both parties.

New York Lt. Gov. Kathy Hochul raised the state’s concerns with Canadian officials during a recent visit to Canada.

New York Agriculture Commissioner Richard Ball in August sent a letter to his counterpart in the Province of Ontario, outlining the “critical nature” of the proposal and its effects on New York State.

Commissioner Ball attended the Tri-National Agricultural Accord to raise New York’s concerns in person.

“New York’s dairy farmers rely heavily on the export of their products and we need to do what we can to ensure they continue to have a home for their milk. We are hopeful the Canadian government, as it weighs its options, will take into account its long and successful trade partnership with New York, and act to resolve this issue that would be detrimental to our agricultural industry,” Ball said in Cuomo’s news release.

New York exports more to Canada than to any other country in the world, Cuomo’s office said.

The bilateral trade relationship in 2015 totaled $32.93 billion in goods and supported more than 500,000 jobs regionally.

New York’s dairy industry is the state’s largest agricultural sector. With more than 5,000 farms, the dairy industry “supports the framework” of the agricultural economy.

The dairy industry brought in $2.5 billion in sales, and hired almost 20,000 people in New York in 2015.

New York’s dairy products account for at least 50 percent of all New York State agricultural commodities exported internationally.

Contact Reinhardt at ereinhardt@cnybj.com