Region/Countries: Canada, North America Industry: Agriculture / Timber, Food and Beverage Date: March 2019

Why this is important to Wisconsin businesses: Wisconsin dairy producers can help bridge the gap.

The Canadian Dairy Information Centre reports that the dairy market as a whole currently ranks as the second-strongest market within the Canadian agriculture sector, leading to a strong potential market opportunity for Wisconsin dairy farmers.

Writing in the Globe and Mail, one economist observed that the market is inelastic, which has allowed farmers to produce a set amount of milk and sell it at a fixed price. However, entering this market as a supplier has become much more difficult, and because of this, the market size of Canadian farmers is roughly 9% of what it was in the 1960s, when the supply management system was set in place. An action plan to offset declining supply may include market growth through imports.

Statistics show that recent changes to the USMCA trade agreement have given U.S.-based dairy farmers tariff-free access to a further 3.6% of the industry—an opportunity for increased trade. According to the most recent figures from 2017, Canadian dairy imports from Wisconsin—which include milk, cream, yogurt, whey, butter, dairy spreads and fresh cheese—primarily end up in six Canadian provinces, with Ontario having the largest market size—nearly 74% of all Canadian dairy imports from Wisconsin.

Additional opportunity for market growth exists in the organic dairy market segment, an industry subset that has been steadily in consumer preference. This market segment has been experiencing increased market share as Canadian consumers slowly move towards healthier alternatives. Statistics Canada estimates that organic dairy now makes up 11% of all dairy product sales, or approximately $290 million. The data also noted that Canadian consumers are, on average, willing to pay 15% to 20% more for an organic product.

Market opportunities are apparent in the growth patterns found by Statistics Canada with regard to both general dairy consumption and rising consumer preferences for organic dairy. Inelastic demand coupled with the fact that Canadian supply options have decreased means this market offers a great growth opportunity for exporters in America's Dairyland.