US Dairy Industry Subsidies and Protectionism: A Global Phenomenon

US dairy farmers receive up to 20% of their revenue from direct subsidies and benefit from indirect subsidies for feed and irrigation. The US dairy lobby is complaining about Canada's practices under the US-Mexico-Canada Agreement, but US dairy farmers are also heavily subsidized and protected, similar to those in Canada and other countries.

US dairy farmers have been significantly impacted by the H5N1 bird flu, with federal aid playing a crucial role in mitigating losses. According to a recent report, the US Department of Agriculture (USDA) has disbursed over $230 million in relief payments to California dairy farms affected by the outbreak [1]. This aid, provided under the Emergency Assistance for Livestock, Honeybees and Farm-Raised Fish Program (ELAP), has been essential for farmers to recover from the steep declines in milk production caused by the virus.

The relief payments, which averaged around $645,000 per farm, have been criticized by advocacy groups like Farm Forward, which argues that these subsidies support industrial farming practices that contribute to the spread of bird flu [1]. However, industry leaders maintain that the payments are necessary to keep dairy communities and workers employed and healthy [1].

While the US dairy industry receives substantial direct and indirect subsidies, it is also embroiled in trade disputes with Canada. The US dairy lobby has expressed concerns about Canada's practices under the US-Mexico-Canada Agreement (CUSMA), particularly regarding the allocation of quotas for tariff-free imports and the dumping of cheap milk protein into the international market [2]. However, critics argue that the US dairy industry itself is heavily subsidized, with farmers receiving up to 20% of their revenue from direct subsidies and benefiting from indirect subsidies for feed and irrigation.

The US dairy industry's reliance on subsidies and the ongoing trade disputes with Canada highlight the complex dynamics of global dairy markets. As the industry continues to navigate these challenges, it remains to be seen how these factors will shape the future of the US dairy sector.

References:
[1] https://www.latimes.com/science/story/2025-07-28/ca-dairies-cash-in-on-usda-bird-flu-indemnity-payouts-220-million
[2] https://www.cbc.ca/news/world/trump-tariffs-trade-dairy-supply-management-1.7592135