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FOR IMMEDIATE RELEASE: February 19, 2013

SCHUMER: O-AT-KA DAIRY INVESTING $16 MILLION TO EXPAND FACTORY IN BATAVIA, BUT RESTRICTIVE CANADIAN TRADE RULES COULD THREATEN SUCCESSFUL EXPANSION & WNY DAIRY INDUSTRY— DEMANDS FEDS ENSURE FOREIGN COUNTRIES KEEP LEVEL PLAYING FIELD



Schumer Pushes USTR & USDA to Ensure Countries Like Canada Keep Dairy Trade Open & Accessible for US Manufacturers - Warned That Onerous Trade Restrictions Hinder Competition Just As New O-AT-KA Product Line Is Set to Open O-AT-KA, With Customers Like Alpina & Muller Quaker & Nearly 400 Dairies As Members, Has Plans for $16 M Expansion Based on Domestic & Foreign Demand for Milk Products -- But New Plan For Canadian Limitations on Milk Imports Puts Company at Risk

Schumer to Feds: Protect Upstate NY Dairy From Unfair Trade Barriers

 

Today, at O-AT-KA Milk Products Cooperative, Inc. in Batavia, U.S. Senator Charles E. Schumer demanded that the U.S. Trade Representative (USTR) and the U.S. Department of Agriculture (USDA) protect Western New York’s dairy sector and yogurt producers from newly discussed barriers to trade with foreign countries. Specifically, Canada and New Zealand have threatened to slow the progress of the booming Upstate New York dairy industry by imposing limitations on the import of milk products and by forcing producers like O-AT-KA to unfairly compete with a monopoly. A final decision on those restrictions could be imminent. Schumer highlighted that dairy farmers in Upstate New York and throughout the country are becoming more and more reliant on the growing global market for the goods they produce, and the success of O-AT-KA’s $16 million facility expansion is dependent on their business with Canada. Schumer is calling on the USTR and the USDA to work towards an agreement during closing talks with the Trans-Pacific Partnership (TPP) that would continue to grow U.S. dairy exports by ensuring that Canada and other foreign countries don’t impose new restrictive trade rules but rather honor their commitment to open their borders to New York farmers.

 

“Western New York’s dairy farmers continue to drive a booming industry, but unnecessary tariffs and barriers to trade with Canada and other countries threaten to curb their ability to compete and grow in the international market,” said Schumer. “In light of recently discussed limits on the amount of milk products that could be imported to Canada from companies like O-AT-KA, I am urging the USDA and the USTR to ensure that avoiding these restrictions is a top priority in ongoing trade discussions. The federal government must focus on every opportunity for our dairy and Greek yogurt producers to grow and compete, and given that the dairy industry is becoming more and more reliant on the growing global market, a level playing field is essential.”

 

Schumer was joined by O-AT-KA Vice President and President and Chairman of Upstate Niagara Cooperative Dan Wolf, O-AT-KA Chief Operating Officer Bill Schreiber, O-AT-KA employees and local dairy owners. He emphasized that discussions with Canadian partners should focus on removing tariffs and ensuring other new barriers, such as unscientific product standards, are not put in place. Schumer highlighted that if Canada were to impose new restrictive rules, it would have a devastating impact on O-AT-KA and for Western New York dairies, and trade negotiations should not close without avoiding such changes.

 

In Western New York, new export markets for American dairy farmers represent opportunities for increased employment and growth in dairy manufacturing. If the USTR and USDA continue to promote better trade relations between our Trans-Pacific partners, it would mean that tens of thousands of farming families throughout the United States can continue to grow their businesses and benefit their local communities in the years ahead. O-AT-KA’s majority owner is Upstate Niagara Cooperative which includes over 390 local dairy-farm families as members. Products manufactured by O-AT-KA at their Batavia plant include nonfat dry milk powder, buttermilk powder, whey powder, canned evaporated milk, butter, fluid condensed milk, iced coffee, nutritional beverages and other various ethnic drinks.

In response to market demand here and abroad, last year O-AT-KA made the business decision to invest $16 million to build a new two-story addition to the Batavia plant to add new “ultra-filtration” capabilities so that they can expand their product offerings and produce concentrated liquid milk protein, which is currently in high demand for products that rely on higher protein such as nutritional supplement drinks and some Greek style yogurt.  O-AT-KA plans to use this ingredient not only in their own current products, but also counts on the ability to sell to other producers here and abroad, particularly in Canada.  Once the new line opens, O-AT-KA will be one of the only facilities in the U.S. that has this capability. O-AT-KA’s new product line could be hampered if the TPP talks do not promote mutually expanded access to global dairy trade. Schumer pointed out that O-AT-KA expects to add as many as 14 new jobs as a result of this expansion, which will also support the plant’s over 300 current jobs.

 

In his letter to USTR and USDA, Schumer emphasized that in ongoing, and intensified Trans-Pacific Partnership negotiations, the federal government must prioritize opening up the global dairy market. In addition to expanding opportunities for the U.S. into the Canadian dairy market, and avoiding limits on certain milk imports, Schumer also listed other vital issues for the USTR and USDA to address during TPP negotiations, that would impact O-AT-KA, but also New York’s dairy and yogurt industry. For example, he noted that New Zealand’s has expressed interest in greater access for its dairy products to the U.S. market.  However, Schumer noted that New Zealand’s concentration of virtually 90 percent of its milk supply in the hands of one company gives that company a monopolistic advantage, and could prevent companies like O-AT-KA, from being able to compete with New Zealand.

 

Schumer also stressed an issue revolving around product standards that impact the wider U.S. agricultural sector as well – the sanitary and phytosanitary (SPS) chapter within TPP.  Specifically, Schumer pointed out that safe U.S. food products are too often burdened with unscientific barriers in foreign markets. Schumer wants this obstacle to global dairy competitiveness to be a top priority for USTR during TPP talks in order for science-based domestic standards for health and safety regulations are adopted worldwide.

 

A copy of Sen. Schumer’s letter appears below:

 

Dear Sec. Vilsack and U.S. Trade Rep. Ron Kirk:

 

We would like to express our appreciation for the dedication of USTR and USDA in helping grow U.S. exports, including areas of high importance to our states such as the dairy industry, particularly in rural areas.  The tens of thousands of dairy farm families in this country increasingly rely on global markets to help provide growing demand for the milk they produce.  In addition to the rural employment created directly by dairy farming, the U.S. is also home to a strong dairy manufacturing sector that helps provide good jobs throughout the states.

 

As USTR and USDA move forward this year with intensified efforts to bring Trans-Pacific Partnership (TPP) negotiations to a close, we wish to underscore the importance of pursuing a positive outcome for America’s dairy sector and the critical role that dairy-related discussions with Canada and New Zealand will play in achieving that goal.  In addition to future opportunities to grow through this negotiation, we are also concerned about the need to maintain current U.S. dairy exports to our TPP partners in the face of potential new barriers to trade.  Without open access to Canada and absent significant policy reform by New Zealand, dairy industry in our states strongly believes that the TPP promise of growth in export demand for U.S. dairy all but vanishes and that in its place they could see significant losses here at home.

 

Strong concerns remain in our states about the expansion of U.S.-New Zealand dairy trade and the impact it could have on this country’s dairy sector if major reforms are not undertaken by New Zealand.  New Zealand has consistently expressed interest in greater access for its dairy products to enter the U.S. market.  At the same time, it is our understanding that New Zealand has resisted considering significant reforms to its dairy sector policies, which permit the concentration of virtually 90% of its milk supply into the hands of one company.  Dairy producers and processors in our states are deeply concerned that this market concentration policy provides New Zealand, the world’s largest dairy exporter, with a tremendous advantage in global markets and are insistent on seeing it effectively addressed as a necessary precursor to any expansion of U.S.-New Zealand dairy trade in TPP.

 

We remain hopeful that the addition last year of Canada to the TPP will improve the prospects for achieving a result that will benefit this country’s dairy farmers and processors.  Fully opening the Canadian market to U.S. dairy products would secure meaningful new market opportunities for our U.S. dairy industry.  To be truly effective, dairy discussions with Canada should include a focus not only on removing tariffs but also on ensuring that various forms of nontariff barriers are not employed to hinder U.S. dairy exports.  In the past, U.S. exporters have secured tariff concessions from Canada only to see efforts develop that impeded access through other means.  We now face the prospect of yet another such obstacle to U.S. exports in the form of potential changes to Canada’s product standards that are not based on science. We appreciate USTR’s and USDA’s attention to this matter and urge your agencies to continue to actively impress upon Canada the importance of not impeding current U.S. exports of safe dairy products through new regulatory barriers.

 

           Finally, one of the other major areas of importance is an issue impacting the wider U.S. agricultural sector as well – the sanitary and phytosanitary (SPS) chapter within TPP.  This agreement is a key avenue for ensuring that we have binding SPS commitments that improve upon current obligations in this area. Too often, safe U.S. food products are confronted with sudden and unscientific barriers in foreign markets.  Using TPP to address that pervasive problem, while upholding high, science-based U.S. standards for protecting the health and safety of all Americans, could improve the export prospects for a wide range of American agriculture.

 

Thank you for your attention to these issues of concern to us and to America’s dairy economy.

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