HIGHLIGHTS: JULY 19, 2024
• Fact-finding mission to Africa
• Input needed on Colombian milk powder investigation
• USDEC continues drumbeat of U.S. dairy environmental efforts on global stage
• USDEC passes B2B LinkedIn milestone
• Bakery events in China highlight U.S. dairy ingredients
• Market Summary: GDT inches up on mixed results
• UK report quantifies costs for UK dairy farmers to weather climate change
• Leprino inks partnership for non-animal casein
• PepsiCo highlights importance of localization in China
• Company briefs: Lactalis, Great Lakes Cheese, Royal A-ware, Nestlé, Synlait, Dairy Queen
Featured
USDEC conducts exploratory mission to Kenya
A cross-departmental USDEC delegation was in Kenya this week exploring opportunities for U.S. dairy in the country and in the broader Sub-Saharan region as well. The mission was made possible by the Regional Agricultural Promotion Program (RAPP) funding and is one of many RAPP projects in the works.
Sub-Saharan Africa holds intriguing potential for U.S. dairy, but policy, regulatory and commercial headwinds exist in many of the markets. The intention of this week’s trip was to help USDEC assess where the best opportunities lie and how best to target them. As in other key markets, USDEC is looking to work hand-in-hand with dairy cooperatives, dairy processors, importers, distributors, retailers, foodservice operators and policymakers to build partnerships to cultivate dairy demand and trade, nourishing consumers while simultaneously creating mutually beneficial growth for the dairy sectors on all sides.
This week in the Kenyan capital of Nairobi and the port city of Mombasa, USDEC’s Nick Gardner, Shawna Morris, Jonathan Gardner, Vikki Nicholson-West and Rick Ortman and USDEC Middle East/North Africa leader Nina Halal met with a cross-section of dairy and agricultural authorities, U.S. embassy officials, dairy companies, regulators and others. They visited two local cheese plants and several supermarkets to get a taste of the products available to Kenyan consumers. The delegation also toured Kenya’s primary port, spent time evaluating potential contractors, and consulted with legal and industry experts to gain actionable intelligence.
The USDEC delegation meeting with leadership from the Kenyan Directorate of Veterinary Services and the Kenya Dairy Board, organizations that provide regulatory oversight and impose licensing requirements on Kenyan dairy imports.
Kenya background
Kenya is a sizable market (54 million people) with a growing middle class, cultural connection to milk consumption, a modern supermarket ecosystem and an important geopolitical relationship with the U.S. Economically, it is one of the fastest-growing Sub-Saharan countries, averaging 5% GDP expansion per year from 2010-2019. The economy shrank only 0.3% during the initial COVID surge of 2020 and since then has bounced back strongly.
While Kenya has a sizable domestic dairy sector, it is still a deficit producer, importing mainly from neighboring Uganda and a bit from the EU to fill the gap.
USDEC coordinating with members to defend against Colombian milk powder investigation
USDEC is preparing a response to the Subsidies and Countervailing Measures investigation into U.S. exports of powdered milk products initiated by the Colombian government this month. The investigation alleges that—in violation of the Subsidies Agreement of the WTO—10 U.S. powdered milk HS Codes shipped to Colombia between 2020 and 2023 were subsidized by state and federal programs and damaged domestic Colombian raw milk producers. (Click here for the July 9 USDEC Member Alert for impacted HS Codes and further background.)
This is the second such investigation Colombia has undertaken. A broad, cross-organizational effort led by USDEC’s Trade Policy Team involving USDEC Arlington staff, the USDEC South America office and membership helped resolve that initial attempt to impose safeguards in 2021 in the United States’ favor.
It is imperative that those members who collaborated with USDEC in 2021 and who continue to export to Colombia work closely again this time to provide as strong a defense as possible, especially since the investigation appears to be politically motivated. If the investigation confirms the allegations, Colombia could apply a tariff or tariff-rate quota on U.S. milk powder products for up to five years.
The Spanish version of the Technical Report of Initiation contains a complete account of the data and reasoning behind the investigation. USDEC and companies who would like to be involved have 30 business days after the date of publication (or until Aug. 20, 2024) to return a milk powder export questionnaire prepared by the Ministry of Trade, Industry and Tourism.
Please contact Jaime Castaneda (jcastaneda@usdec.org), Shawna Morris (smorris@usdec.org) or Tony Rice (trice@usdec.org) to indicate your interest in contributing to the effort or to ask any questions.
USDEC highlights U.S. dairy soil health efforts, continues building global food policy credibility
USDEC Vice President, Sustainable Nutrition, Janice Giddens and DMI board member Mary Kraft were in Rome this week representing USDEC and the U.S. dairy sector at meetings for the FAO Committee on Agriculture’s Subcommittee on Livestock. The meetings, which took place July 16-18, focused on three areas of the subcommittee’s multi-year work program: sustainable livestock systems; animal, public and environmental health; and natural resource use, climate change and biodiversity.
Soil health side event
To highlight U.S. dairy’s extensive work on soil health and broader commitment to sustainable agricultural production systems, USDEC organized the July 17 side event, “Building a Healthier Food System: Animal Agriculture and Soil Health Working Together.” With introductory remarks by H.E. Jeffrey Prescott and H.E. Frederick Matwang’a, the U.S. and Kenyan Ambassadors, respectively, to the UN Agencies for Food and Agriculture, and Agung Suganda, director of Breeding and Livestock Production, Directorate General of Livestock and Animal Health Services, with Indonesia’s Ministry of Agriculture, the side event featured a lineup of global experts, including Kraft.
Kraft highlighted examples of U.S. dairy farmers’ commitment to soil health (through crop rotation, precise approaches to nutrient management, etc.) and how healthy soil contributes to overall U.S. dairy environmental stewardship goals, which aim to achieve greenhouse gas neutrality by 2050 while optimizing water use and improving water quality. Healthy soil is central to progressing toward these goals, Kraft said, providing benefits like carbon capture and storage, water storage, and water infiltration and filtration. But more research is needed. That’s why U.S. dairy is investing in multiple initiatives to make healthy soil solutions more accessible and affordable for farms of all sizes and across all geographies, she said.
Mary Kraft explains U.S. dairy efforts to improve soil health at the USDEC-organized Subcommittee on Livestock side event.
The expert panel also included global livestock and soil authorities such as Lifeng Li, director, Land and Water Division at FAO; Bob Lowe, president Global Roundtable on Sustainable Beef; and Sophie Bertrand, director, Communication and Environment, French Dairy Inter-Branch Organisation. The panel highlighted the important role livestock plays in cycling nutrients, feeding soil microorganisms and improving the aggregation and structure of soil to advance healthier ecosystems that in turn support healthier diets.
Earned credibility
USDEC’s attendance at the meeting and the strong support for the side event by multiple governments, academic institutions and producer organizations illustrate the food policy credibility the Export Council has built through investments in a global, multilateral strategy. Ongoing USDEC participation in UN and other international platforms is effectively positioning U.S. dairy farmers and the broader industry as leaders in global food systems—and, in doing so, defending policies that will help maximize U.S. export potential in the coming years.
The collaboration with government officials from Indonesia and Kenya in the side event also shows how USDEC is increasingly deploying our multilateral presence to build credibility with leadership in strategic or potential export markets.
Left to right: Kraft, Ambassador Jeffrey Prescott, and USDEC’s Janice Giddens at FAO headquarters in Rome.
U.S. dairy ingredients B2B LinkedIn followers exceed 15,000
This Monday, USDEC reached a social media milestone when the B2B-centric Think USA Dairy LinkedIn account surpassed 15,000 followers. The account, tailored for overseas customers, has grown 38% (from 10,896) since the start of the year.
USDEC maintains a strategic focus for the Think USA Dairy LinkedIn page by posting business-relevant content that inspires targeted buyer and end-user audiences to like, click and share. Both organic posts and advertising investments helped strengthen engagement and reach new targeted professionals in the food and beverage sector internationally.
“Building on prior-year successes, we served up visually appealing and factually inspiring posts in the first half of 2024 that succeeded in capturing LinkedIn users’ interest,” says Kara McDonald, vice president, marketing communication.
Initiatives included:
- A series of posts in Q1 on U.S. dairy ingredients’ role in supporting healthy living, as well as a 10-part Q2 feature (continuing in Q3) known as the “Ask Me Anything” series. “Ask Me Anything” provides Q&A style answers to technical questions on dairy functional and performance considerations.
- An April video series celebrating Earth Month. Five short videos were posted featuring U.S. dairy farmers sharing their own personal stories of how the U.S. dairy community embraces and is committed to U.S. dairy sustainability and stewardship and is best positioned to meet growing global demand for U.S. dairy.
- Several additional ongoing initiatives, including posts highlighting key take-aways and actionable insights from USDEC marketing activities around the world, as well as using celebratory occasions and holidays as an entryway to communicate the nutrition and innovation advantages of U.S. dairy.
The metrics confirm USDEC efforts are achieving strong results. Organic engagement—from people who already follow the Think USA Dairy page—judged in terms of reactions grew 46% in the first half of 2024 (compared to the second half of 2023). The number of meaningful engagements has also soared, in recent months averaging an impressive 1,500 people per month, compared with 900 in 2023. Moreover, sponsored impressions increased 5% (approximately 20,000 more impressions each month) in the first half of 2024 vs. 2023, despite the same monthly advertising spend as in 2023.
Moreover, the top three markets that followed the Think USA Dairy LinkedIn pages in the first half of 2024 were Egypt (29% of followers), Indonesia (11%) and Brazil (10%), reflecting that the Think USA Dairy page is directly reaching people in priority markets with growth potential for U.S. exports. In fact, it is this ability of LinkedIn to target advertising spending in specific targeted markets and in specific industry sectors and job roles that makes the platform an attractive communication tool to reach a wide audience with messages about the benefits of sourcing and using U.S.-origin dairy.
“By regularly posting engaging and actionable content that Think USA Dairy followers can easily share and use, we are cultivating an active online community in our targeted international markets in the Middle East, Latin America and Asia inspired to innovate with U.S. dairy,” said McDonald. “In the second half of the year, we plan to engage LinkedIn followers further by using the social media platform as a gateway to drive traffic to ThinkUSAdairy.org, where food and beverage professionals can discover the advantages, trends and resources the U.S. dairy industry has to offer.”
To further build this community, USDEC members can follow and engage by clicking here.
Events
USDEC highlights U.S. dairy ingredient potential in baked goods at two bakery events in China
USDEC participated in two Chinese bakery events organized by the U.S. Agricultural Trade Offices (ATO) in Guangzhou and Beijing to promote U.S. dairy permeate in bakery applications.
The 27th China Bakery Exhibition (CBE)
ATO Guangzhou organized the “U.S. Natural Ingredients Showcase” as part of the CBE, a well-known bakery show with an especially strong following in southern China. USDEC was one of the six cooperators participating in the showcase.
The CBE, held May 10-12, in Guangzhou, attracted more than 80,000 bakers and bakery company representatives.
Chef Heinz Fischer, bakery consultant, was one of the stars of the U.S. Natural Ingredients Showcase. Chef Fischer helped the audience better understand the benefits of several U.S. ingredients (including permeate) in baking applications. Chef Fischer presented eight bakery products he developed containing U.S. whey and/or milk permeate, including a bread, pie, tart and cake.
Assisted by teachers and students from the Sino-American Baking School (SABS), he provided a live demonstration on how to use U.S. dairy permeate in four of those products. Fischer emphasized the benefits of permeate, including even browning, good water retention and flavor enhancement. Attendees, as well as SABS students and teachers, then had the opportunity to sample the items and experience the difference firsthand.
USDEC also staffed a booth on the show floor, answering visitors’ questions on topics such as usage levels and cost- and sodium-reduction benefits. Six companies requested U.S. dairy permeate samples.
Chef Heinz Fischer (right, red apron), surrounded by students from the Sino American Baking School, demos a baked treat made with U.S. dairy ingredients for a crowd of onlookers at the 27th Annual China Bakery Exhibition.
Three of Chef Fischer’s creations (from top to bottom): meringue tart with whey permeate; pancetta sourdough bread with whey permeate; and vanilla kipferl with milk permeate.
“Discover U.S. Baking—Ingredients and Trends”
ATO Beijing organized “Discover U.S. Baking” in conjunction with the China Association of Bakery and Confectionary Industry (CABCI) to highlight U.S. ingredients, including permeate, to chain bakeries and bakery and pastry chefs.
The three-part program—a seminar, chef demonstrations and field visits to bakery stores—took place June 6-7 in Changsha. About 200 people from 65 companies attended in-person. The seminar and chef demonstration were also livestreamed through the Bakery China platform attracting 86,000 viewers.
The demo portion of the program featured U.S. whey permeate and milk permeate. Fiona Chen, USDEC China office representative, gave a presentation introducing dairy permeate and its many benefits in bakery applications. The event’s recipe book, along with USDEC’s permeate brochures, were distributed to all in-person attendees. Samples of whey and milk permeate were provided to four local bakery chains who enquired.
Fiona Chen highlights the benefits of U.S. dairy permeate to Chinese bakers at the “Discover U.S. Baking” event organized by the Beijing ATO.
About 200 bakery and pastry chefs and representatives from Chinese bakeries attended the “Discover U.S. Baking” event, which included live cooking demos.
Chris Frederick, director for ATO Beijing (back row, grey suit), leaders from the China Association of Bakery and Confectionary Industry (CABCI), chefs, speakers (including USDEC China representative Fiona Chen) and organizing staff pose for a picture during the event.
Market Summary
GDT ticks up on mixed results
The Global Dairy Trade (GDT) Price Index steadied itself at the July 16 auction, inching up 0.4%. It was a welcome development after the across-the-board declines posted on July 2, but it did little to alleviate the overall bearish sentiment.
WMP declined for the fourth consecutive auction, dropping 1.6% and falling below US$3,200/MT for the first time since mid-March. SMP dipped 1.1% to US$2,566/MT. Both recorded modest gains in Contract 3 but decreased across all other periods.
China’s appetite remains restrained. Although its domestic milk powder stocks have been declining in recent months and its domestic farmgate milk price average is at a multi-year low, its auction demand remains curtailed. The latest economic news from China does not paint a very bright picture of an impending turnaround. Its second-quarter GDP fell well short of 1Q growth and analyst expectations. Second-quarter retail sales also disappointed.
Southeast Asia again bought the most product at the July 16 auction. The Middle East increased purchasing of SMP, WMP, butter, AMF and cheddar compared to the previous auction and was the leading buyer of cheddar, helping lift the average winning cheddar price by 6.2% to US$4,217/MT.
Butterfat also helped mitigate the milk powder decline. Butter and AMF rose after each plummeted by more than 10% at the July 2 auction. AMF bounced back 4% to US$6,764/MT (but the price is still down 9% from the June record high), and butter inched up 0.8% to US$6,606/MT. Gains for both products were boosted by buyers looking to fill immediate needs: AMF Contract 1 jumped 9.6% and butter Contract 1 rose 10.7%, far outperforming Contracts 2-6.
Report warns UK dairy industry about the cost of climate resilience
A recent report from UK-based dairy consultancy Kite Consulting says that British dairy farmers will need to invest an estimated £3.9 billion (about US$5 billion) over the next 10 years to future-proof their farms against climate change and ensure the long-term production of milk in the UK. The report, which is based on data from more than 850 dairy farms throughout the country, says roughly £472,000 (about US$514,000) will be needed per farm to pay for capital infrastructure investments and additional land required to ensure environmental resilience. These costs include adding silage storage to protect against extreme weather such as drought, enhancing slurry storage, and complying with environmental regulations. (Company reports)
Company News
Leprino Foods and Fooditive partner to produce non-animal casein
Colorado-based Leprino Foods Co. and Netherlands-based precision fermentation startup Fooditive Group announced a licensing partnership that will enable Leprino to produce casein made via Fooditive’s precision fermentation platform. Under the terms of the deal, Leprino Foods will have exclusive worldwide rights to produce non-animal casein manufactured using Fooditive’s proprietary precision fermentation platform, as well as exclusive worldwide rights to market and distribute for use in cheese, and a non-exclusive worldwide license to market and distribute for all other food applications. (Company reports)
PepsiCo China shares localization strategies
China’s large size and diverse population make localization efforts a necessity for companies looking to engage and satisfy consumers throughout the country. At the recent Food and Beverage Innovation Forum in Shanghai, PepsiCo Greater China Foods CMO Nina Mu revealed some of the different types of localization strategies the company uses for its various products, from adapting ingredients to incorporating local food customs. Click here to read more about why formulating for local markets is important and how PepsiCo is doing it successfully. (FoodNavigator-Asia, 7/9/24)
Mergers, acquisitions and joint ventures
Netherlands-based Royal A-ware announced plans to acquire The Dairy Group, a Belgium-based manufacturer of dairy products for branded manufacturers and retailers under private labels. … Swiss food giant Nestlé sold its French baby food assets, including the NaturNes, Babicao and Babivanille brands and the P’tit franchises, to Paris-based investor FnB Private Equity. These assets will be combined into a new company called Azuré Holding. … In a move to expand its market presence in the premium desserts category, Swiss dairy manufacturer Emmi Group entered a put option agreement to acquire Mademoiselle Desserts Group, a French baking manufacturer that specializes in pastries, for roughly €900 million (US$974.2 million). (Company reports; FoodBev Media, 7/11/24; Just Food, 7/5/24)
Company briefs
French dairy giant Lactalis is investing €3 million (about US$3.3 million) to upgrade its Medellín, Colombia, manufacturing plant. The facility, one of three Lactalis operations in the country, makes UHT milk, cream and dairy desserts. … The board of directors of Great Lakes Cheese named Bob Sarver as the company’s new president and CEO effective Aug. 1, 2024. Sarver, currently Great Lakes’ executive vice president packaging operations and sales, replaces Dan Zagzebski, who has held the position since 2015. … China’s Feihe opened a new $16-million factory that can produce 10,000 MT of high-end milk powder products for both children and adults. The facility reportedly imports as much as 99% of the ingredients in the finished products. … As part of its mission to deliver sustainably sourced Welsh milk to consumers, Wales-based Pembrokeshire Creamery opened a new fluid milk processing facility that will be able to supply around 2 million liters of milk per week when it reaches full capacity. … Shareholders of New Zealand dairy producer Synlait Milk approved the proposed NZ$130 million (about US$80) loan from its biggest shareholder, China’s Bright Dairy, to pay a financial obligation that was due to its banks this week. Despite the loan, Synlait is still facing significant financial pressures: the company must come up with another NZ$180 million (about US$109 million) due this December. … Dairy Queen, through its Chinese franchise partner CFB Group, opened its first burger outlet in China. CFB plans to have 180 food-centric DQ Blizzard & Burger stores in China by 2034. … Aiming to appeal to the regional palate, Arla Foods launched a limited-edition za’atar-flavored cream cheese under the Puck label in the Middle East. Za’atar is a versatile spice blend (as well as a family of herbs) used extensively in the Middle East and Mediterranean. (USDEC China office; USDEC Middle East/North Africa office; Just Food, 7/18/24, 7/11/24; Farmers Weekly, 7/16/24; Dairy Processing, 7/16/24; FarmingUK, 7/3/24; FoodBev Media, 7/15/24)
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