NMPF’s Doud: Cross-border integration makes ‘real trade’ hard to define

EDITOR’S NOTE: This is Part One in a three part series exploring North American dairy and agricultural integration as some entities have pursued a more unified continental, even global, food system and what this means in the context of the July 1st U.S. decision not to renew USMCA ‘as-is.’

WASHINGTON — The United States-Mexico-Canada (USMCA) trade pact is entering a new round of negotiations that are heating up at a time when one of the principal ag negotiators behind the original agreement says U.S.-Canada cross-border integration makes “real trade” harder to define.

On July 1, the Trump Administration “did not agree to renew the USMCA in its current form” during its first mandatory 6-year joint review, triggering what could become a decade of annual negotiations while leaving the agreement fully in force.

The decision does not terminate the agreement nor does it immediately change anything. Existing provisions — including dairy trade, tariff-rate quotas (TRQs), rules of origin, and dispute settlement — remain in effect while the three countries begin annual reviews that could continue through 2036.

One week earlier, Gregg Doud, who helped negotiate USMCA’s ag provisions as U.S. chief ag negotiator during Trump’s first term and now serves as CEO of the National Milk Producers Federation, spoke during a June 24th keynote panel at the Center for Strategic and International Studies (CSIS) conference: Three Nations, One Table: North American Agriculture under USMCA.

The discussion turned to cross-border agricultural integration.

“One of the most fascinating conversations on integration is dairy between the U.S. and Canada. I mean, we have facilities on both sides of the border, very close to each other, and there’s stuff going back and forth all the time, which makes it really complicated to know what the real trade is,” Doud said.

For years, the U.S.-Canada dairy debate has centered on Canada’s supply management system, TRQs, and market access. Those issues remain central, but Doud’s insight here suggests an increasingly integrated North American dairy manufacturing system now exists alongside those disputes.

Milk, cream, cheese, butterfat, whey, milk protein concentrates, and other ingredients, for example, may cross the border multiple times during processing before reaching consumers, making exports and imports alone an incomplete measure of dairy trade.

Canadian-based processors have become major players in the U.S.

Saputo, a publicly-traded company headquartered in Montreal, Quebec, has a large U.S. footprint and plants in countries like Argentina, Australia and the UK too. According to its website, Saputo owns and operates 20 U.S. plants after closing six in 2025-26 and expanding others. It is among America’s largest cheese processors, making the U.S. a major part of its global business as a top-10 processor internationally.

Agropur is Canada’s largest dairy cooperative owned by nearly 2700 Canadian farmers. It owns 10 U.S. plants and one as a joint venture, specifically to process U.S. milk for U.S. and global business customers.

Canada’s supply management system largely precludes significant dairy exports. Agropur’s CEO has described Agropur-U.S. as primarily business-to-business manufacturing rather than business-to-consumer.

According to its ESG (Environmental Social Governance) report, the Canadian coop-owned company monitors the environmental progress of U.S. dairy farms supplying milk to its U.S. plants.

Neither company was identified by Doud, and their internal product movements should not be assumed. However, the cross-border footprints do illustrate the kind of manufacturing network Doud has described.

U.S. dairy interests argue Canada’s administration of TRQs limits the practical value of the market access negotiated under USMCA. Canada maintains its system complies with the agreement.

Yet even where market access is restricted, processing has evolved around cross-border facilities, customers and product flows. This, despite two very different milk marketing systems.

Canada protects its dairy farmers through supply management, fat-based milk production quotas, administered prices, and import controls. The U.S. relies on Federal Milk Marketing Orders, exports, and volatile commodity market pricing.

This raises practical questions for U.S. dairy farmers. Who benefits from integration? Where is value created? Which country’s statistics capture it? Which country’s policies govern it? And if ingredients cross the border more than once before becoming finished products, who captures the value at each stage across the two very different milk markets?

Integration can create market opportunities while making pricing power and accountability harder to see. A dairy ingredient may originate on one side of the border, be transformed on the other, return in a different form and be counted in trade data without revealing where value was added or how much flowed back to the farm souce of the milk.

The tone of the CSIS conference was that North American agricultural integration has delivered major benefits in food availability, efficiency and resilience.

Julio Berdegué, representing Mexico, described the region as “completely interlocked,” saying consumers now take for granted food availability that depends on the USMCA. He said imports of U.S. and Canadian grains and oilseeds helped increase Mexican consumption of milk, eggs and meat by 26% over 15 years.

Doud made a similar point for dairy. “Our objective is to make the pie bigger,” he said, noting Mexican dairy farmers hold essentially the same share of their growing domestic market today as before NAFTA. In his view, U.S. dairy exports to Mexico alongside Mexican dairy production have grown together because total consumption expanded.

Meanwhile many aspects remain structurally uneven.

The border is real for farmers dealing with pricing, quota systems, market access and trade disputes. It is blurred for processors managing ingredients, plants, and intermediary customers across a continental manufacturing network.

The USMCA review will likely return to familiar questions: How are Canada’s TRQs administered? Has the U.S. received the market access it negotiated? Are dispute settlement tools working?

Doud’s remarks suggest other questions belong beside them: Can agriculture preserve the benefits of integration while addressing the friction? What does “real trade” mean when dairy is no longer simply traded across the U.S.-Canada border, but increasingly manufactured in a cross-border network?

For dairy farmers, this evolution makes transparency more essential than ever. Trade numbers may show movement across a border, but not necessarily where value was created, where margin was captured or whether the rules still match the structure of the business.

In one of North America’s most trade-sensitive farm sectors, the dairy industry may already be more integrated than the policy debate suggests.

If “real trade” is more complicated and harder to define, farmers will want to know who is defining it, who is measuring it, who governs the data-collection, climate and sustainability reporting, and where the value goes when “there’s stuff going back and forth all the time.”