Suffering dairy farmers pin hopes on new NAFTA agreement

American dairy farmers, especially small family operations, have been in increasingly dire straights over the past few years, and they're hoping a renegotiated North American Free Trade Agreement could help them out.

Part of the problem is that Canada exports skim milk powder on the world market at below the cost of production, and U.S. farmers can't compete with it. Another problem is that Canada has imposed tariffs of 200-300 percent on U.S. dairy exports for years. A bipartisan group of 68 members of Congress recently wrote a letter to U.S. trade representative Robert Lighthizer urging him to negotiate an end to the Canadian Class VII pricing program, implemented 14 months ago, that distorts the price of milk powder and ultrafiltered milk, which is used to make cheese, yogurt and ice cream. Things are so bad for U.S. dairy farmers that some in Michigan and the Northeast had to dump some of their milk to combat extremely low prices last fall, Jeff Daniels reports for CNBC.

Added to industry-wide woes, some small dairy farmers are suffering because they're too small for a big company to bother with: In March, Dean Foods notified 140 small family dairy farms in Michigan, Indiana and Ohio that it will no longer send trucks to pick up their milk after May 31. "Walmart, the largest buyer of Dean’s milk in the region, has vertically integrated and will now be processing their own milk," Whitney Belprez reports for MikeCallicrate.com. But not from those farms. Those farms are too small for Walmart to waste their time with. And now, Dean has no avenue to sell those farms’ milk. After years of low prices, it is, likely, the final nail in the coffin for those farms."