No Whey Out: National Tariffs Affect VT Dairy Industry

MIDDLEBURY — New Chinese tariffs on American goods have created challenges for the local dairy industry. On Tuesday, Sept. 18, China announced tariffs on $60 billion worth of goods, including dairy products. This dairy tariff amounts to 25 percent of the cost of the product itself. 

The tariffs on American dairy products come as a direct response to tariffs placed on Chinese goods by the Trump administration. These fees form part of an ongoing trade war, which began when President Trump enacted tariffs on steel in March 2018. The Chinese government reacted by placing taxes on $60 billion worth of U.S. goods. The trade relations between the U.S. and China have followed a similar tit-for-tat pattern throughout the summer, with each country increasing tariffs response to the other’s actions. 

Agri-Mark is a cooperative that owns one-third of the farms in the New England region, including Cabot Creamery. The cooperative operates  four plants, one of which is located in Middlebury. Agri-Mark is currently one of the largest suppliers of dairy products in the Northeast.  

The increased tariffs have mostly affected the sale of dry whey products, the only products Agri-Mark sells internationally. Producing cheese and milk creates whey runoff, which is then dried into two different products, whey permeate and whey protein concentrate. According to Doug DiMento, Director of Agri-Mark’s Corporate Communications, the latter is sold nationally and internationally to create the well-known whey protein powder, a staple in many supermarkets and health food stores. Whey permeate is mostly sold internationally as a component of processed foods or as animal feed. Agri-Mark currently sells most of its whey permeate to China to use as animal feed. 

“The tariffs have impacted our dry whey product business, and we’ve worked for many years to build those relationships with China,” DiMento said. 

The fees have already begun to affect Cabot. DiMento estimates that the tariffs will cost Agri-Mark at least several hundred thousand dollars and could easily soar into the millions by the end of 2018. “It seems like we’re in it for the long-haul with the tariffs,” DiMento said. 

Agri-Mark currently shares some of the costs of the tariffs with China. However, in order to remain profitable in the long-term, Agri-Mark will need to focus on finding new markets and marketing their whey products in new ways.

The Cabot plant in Middlebury will be hit especially hard. The waste processing plant located in Middlebury is one of Agri-Mark’s largest and produces much of the whey products sold internationally. 

Students need not worry about their beloved Cabot products disappearing from the dining halls, however. Cabot cheese products are only sold domestically, so the tariffs have not affected the sales of these products. 

“Because we age our products nationally, we already have a premium-priced product, there’s little room. Because the nature of the cheese business is so competitive, it’s very difficult to raise prices across the board without affecting the sales,” DiMento explained. 

The trade war looks like it will not be ending anytime soon. According to Associate Professor of Political Science Jessica Teets, domestic political concerns on both the American and Chinese sides will most likely prevent a swift end to this situation. 

“President Trump has made pushing China into making concessions a key part of his presidential agenda, and I do not think he will back down unless the pain felt by consumers and manufacturers gets so intense that they organize and vote against him in the next election,” Teets said. 

“[In China] there is a national pride in ‘standing up’ to Western aggressors, and this is the narrative under which the trade war fits, which gives President Xi a mandate to not give in to U.S. demands,” she added.

Despite the myriad obstacles, Cabot and Agri-Mark remain optimistic for the future. “What helps us every year is that Cabot products keep winning awards for quality, so we’re going to keep focusing on the quality of our products,” DiMento said.