• Ag coalition seeks increase in U.S. food aid budget

• Making RUTF eligible for CCC international food assistance

• Increasing Food for Peace funding for RUTFs

• HPAI update

• U.S. CDE holds first ingredients workshop of 2024

• National Trade Estimate report highlights dairy trade barriers

• U.S. dairy export rebound in February

• Market Summary: GDT bounces back

• Loux talks market outlook on NZX podcast

• Partial Baltimore port reopening planned for April

• March updates to USDEC Export Guide

• Baladna to make milk powder in Algeria

• Chinese milk production firms see profit plunge in 2023

• New health and wellness dairy products in Asia

• Company briefs: Synlait, FrieslandCampina Ingredients 

 

Ag trade coalition seeks increase in food aid budget
A coalition of more than 120 U.S. agricultural associations and companies sent a joint letter to the leaders of the Senate and House ag appropriations subcommittees calling on Congress to increase funding for U.S. international food aid programs to at least $2.4 billion.

Programs like P.L. 480 Title II Food for Peace, Food for Progress and the McGovern-Dole International Food for Education help reach millions of vulnerable people around the world and have enjoyed significant bipartisan support for 70 years. Today, they are more critical than ever. The number of people facing food insecurity has grown to 333 million due to the pandemic's lingering effects, multiple ongoing armed conflicts and extreme climate-related weather events, the letter notes.

The coalition states, “With hunger on the rise, now is the time for America to continue its global leadership role by showing full support for U.S. international assistance programs.”

Not only do U.S. food aid programs benefit those in need, but they also serve U.S. economic and national security interests. By furthering stability in fragile countries and sparking hope, these kinds of foreign assistance programs help create a firm foundation for vulnerable communities to grow and prosper. Many former food aid recipient countries are now among the most important U.S. trading partners.

“U.S. food aid programs are among the world’s most critical foreign assistance programs, save countless lives, bolster our nation’s global security, and help millions in need around the world,” the letter says.

Congressional letter calls for USDA to make RUTF eligible for CCC international food assistance purchasing
Sens. Martin Heinrich (D-NM) and Lindsey Graham (R-SC) and Rep. Rosa DeLauro (D-CT) sent a letter to USDA Secretary Tom Vilsack urging the agency to reconsider its decision that ready-to-use therapeutic foods (RUTFs) do not qualify as an eligible commodity for purchase and donation under the Commodity Credit Corp (CCC) international food assistance program. USDEC and NMPF worked with the congressional offices to highlight the issue and contributed to shaping the letter.

RUTFs utilize a variety of U.S.-produced ingredients, including milk powder, peanuts, soybean oil/soy protein, sugar and a special vitamin mix. They are “the single most effective treatment for child malnutrition,” the letter says, particularly in addressing severe acute malnutrition, also known as “wasting.”

Increased investment in RUTF since 2022 allowed nearly 7.3 million more children suffering from wasting to receive lifesaving treatment last year.

“USDA, leveraging CCC funds and working with USAID (the U.S. Agency for International Development), is positioned to sustain this progress by including RUTFs in the CCC international food aid program,” the letter concludes. “We respectfully request that you use all available authorities to ensure this funding commitment is implemented in a way that most effectively addresses the global hunger and malnutrition crisis now.”

Ag group letter urges increase in RUTF funding
A dozen U.S. agricultural groups and companies, including USDEC and NMPF, sent a letter to the leaders of the congressional ag appropriations subcommittees requesting an additional $100 million for procurement of RUTF through the P.L. 480 Title II Food for Peace program. The letter outlines the positive impact RUTFs have made around the world in addressing severe malnutrition in children.

As noted in the story above, increased investment in RUTFs in 2022 broadened their reach—but only temporarily. Sustained funding is necessary to make a bigger impact.

“Historically, only 1 in 4 children suffering from wasting have had access to this lifesaving treatment and without sustained funding, RUTF coverage rates will drop back down to previous levels of 20-25%, leaving vulnerable communities in need,” the letter states. “An additional $100 million per year for RUTF procurement would ensure continuity in coverage and harness the power of American farmers to save lives.”

The U.S. is one of the world’s largest and most efficient producers of RUTF and the agricultural inputs needed to make it. American farmers have the capacity to expand production to meet the world’s growing need. In addition, the letter notes that the funding would not only address global malnutrition, it would simultaneously stimulate the domestic agricultural economy.

Proactively addressing international concerns about the HPAI virus
At press time, highly pathogenic avian influenza (HPAI) had been confirmed in dairy cattle Idaho, Kansas, Michigan, New Mexico, Ohio and Texas. Media is widely reporting the virus and USDEC is working with the U.S. government and others across the U.S. dairy industry to ensure that accurate information is being relayed.

USDA and FDA have created websites to provide the latest official news on the virus, its appearance in livestock and U.S. dairy product safety. Click here to go to the FDA website. Click here for the USDA Animal and Plant Health Inspection Service website. USDEC also emailed members with an update on Avian Flu Virus in Dairy Cattle on Wednesday.

USDEC is working on multiple fronts to ensure that trade is not disrupted by the virus and is prepared to respond to any overseas inquiries. USDEC and NMPF have met with USDA officials on a regular basis to discuss its scope and impact and ensure that there is clear communication with our trading partners about the safety of our dairy products. Furthermore, staff has urged the agency to arm FAS embassies staff around the world with science-based information to avoid an unnecessarily broad response from trading partners.

U.S. CDE holds first dairy ingredient workshop of 2024
Eighteen bakers from five Southeast Asian countries attended last week’s U.S. dairy ingredient workshop in Singapore. The two-day event—Redefining Bakery Innovation with U.S. Dairy Ingredients—sought to stimulate use of U.S. whey and milk protein, whey and milk permeate, and SMP in “better-for-you” bakery applications.

USDEC Southeast Asia staff guided participants through classroom and hands-on instruction at the U.S. Center for Dairy Excellence and the Food Innovation and Resource Centre’s (FIRC’s) Mix and Bake Lab.

On Day 1, USDEC Southeast Asia staff led attendees through a series of educational presentations, an innovation showcase and tasting, a guided sensory experience with protein cookies, and a new product brainstorming session (where participants were split into four teams). Martin Teo, technical director, food applications, outlined the U.S. dairy ingredient portfolio and delved into different functional and nutritional characteristics, versatility and application opportunities. Anoo Pothen, director, consumer insights, shared insights on regional bakery markets and consumer trends in Southeast Asia, reinforcing how U.S. dairy ingredients align with regional wants and needs. And Calista Foo, food technologist, highlighted bakery innovation trials conducted at the U.S. CDE, reinforcing innovation potential for Southeast Asia-friendly products.

Martin Teo led the U.S. bakery innovation showcase and tasting, featuring an array of freshly baked products (including spring and Easter-themed items) made with U.S. dairy ingredients.

The manufacturers from five Southeast Asian countries split into four breakout groups on the afternoon of Day 1 and brainstormed new bakery concepts featuring U.S. dairy ingredients.

Day 2 kicked off at the FIRC Mix and Bake Lab, where the four teams were tasked with making the products they brainstormed the day prior. They then presented their creations to the class with samples for all to taste. The winning formula was for peanut brownies made with U.S. whey protein.

During the second half of Day 2, the workshop returned to the U.S. CDE, where two USDEC members provided video presentations and seven members with representatives in the regions held face-to-face networking sessions.

USDEC will hold the next U.S. ingredients workshop at the U.S. CDE June 11-12. Focused on healthy snacking innovations, it will explore ways to use U.S. dairy ingredients to create better-for-you snacks catering to health-conscious consumers in Southeast Asia. Instructors will explore innovative ways to use U.S. dairy proteins to elevate the protein content of sweet and savory snacks and U.S. dairy permeate to reduce sodium. For more information on that and other upcoming marketing activities, click here to visit the USDEC Marketing Events webpage. Please contact Suzanna Stohr at sstohr@usdec.org for more information.

At the FIRC Mix and Bake Lab, USDEC Southeast Asia staff, FIRC personnel and the manufacturers who participated in the workshop give a thumbs up to U.S. dairy ingredients and the event as a whole.

USTR report highlights barriers to U.S. dairy trade
USTR Katherine Tai released the 39th annual 2024 National Trade Estimate (NTE) Report on Foreign Trade Barriers late last week, which provides a comprehensive review of significant foreign barriers to U.S. exports of goods and services (among other information).

USDEC and NMPF’s influence on the report is evident. The 362-page document covers 59 key U.S. export markets and regions, highlighting numerous impediments to dairy trade drawn from 36 pages of joint comments submitted last October by the two U.S. dairy organizations. Milk and dairy products are cited more than 150 times.

The report calls out Canada’s failure to fully meet its USMCA dairy trade obligations, the EU’s abuse of its geographical indications system to monopolize common names, numerous dairy import certification requirements not based on science, and several other dairy-specific trade barriers. The USTR’s office even cites Indonesia’s dairy plant registration delays as a priority agricultural trade barrier in the agency’s press release.

U.S. dairy exports rise for first time in 13 months
U.S. dairy suppliers broke a 12-month streak of year-over-year declines in February, as exports rose 3.7% in milk solids equivalent (MSE) terms (after a Leap Year adjustment—all numbers in this story have been adjusted to account for a 28-day month). The United States’ three primary products—milk powder, cheese and whey—all posted YOY gains.

U.S. cheese exports starred, with YOY volume rising 27% to 41,854 MT—only the seventh time in history that U.S. cheese topped 40,000 MT in a single month. On a daily basis, February was the strongest month ever for U.S. cheese exports. Latin America continued to drive sales, but U.S. suppliers saw optimistic developments in Japan and the Middle East and ongoing growth in China as well.

NFDM/SMP exports rose 3.4% to 65,214 MT. It was the biggest YOY gain since August 2023. A rebound in sales to Southeast Asia (39%, +6,512 MT) fueled the increase. U.S. shipments to Mexico fell short of the volume record set in February 2023 but were still a respectable 29,465 MT.

For deeper dives on cheese and NFDM/SMP, as well as whey coverage, read the U.S. Dairy Exporter Blog post, “U.S. dairy exports rebound in February.” Also, visit the U.S. Exports tab in the USDEC Data Hub at www.usdec.org and experiment with interactive charts.

 

GDT rebounds at April 2 auction
The Global Dairy Trade (GDT) Price Index rose 2.8% at the April 2 auction, the first significant increase since the Feb. 6 event. Continued solid demand from the Middle East and increased purchasing from North Asia (China) helped drive the gain. The Middle East increased WMP, SMP, AMF and butter volumes compared to the previous auction—and (with the exception of AMF) against the previous year as well. While China lagged previous-year purchase levels, it increased WMP, AMF, cheddar and lactose levels compared to the March 19 event.

The increase was broad-based, as prices rose across all contract periods for WMP, SMP, butter, AMF and cheddar.

The average winning WMP price increased 3.4% to US$3,246/MT (the first increase in the past four auctions). After falling nearly 10% over the previous two auctions, SMP inched up 1.4% to US$2,550/MT. Powder prices got some support from an unexpected Algerian tender for a combined 40,000-55,000 MT.

The cheddar rollercoaster continued, with prices rising 4.1% to US$4,340/MT. AMF rose for the 15^th consecutive auction (+2.3% to US$6,934/MT) and is nearing the record high set in 2022.

However, despite the positive price results, overall GDT volume was the lowest since May 2020. Offer volumes for powder were around 27% lower than the same auction the previous year, and butter and AMF lagged by 30% and 40%, respectively.

While global milk supply growth continues to underperform, buyers’ pipelines appear sufficiently full and too many demand-related questions remain unanswered to really propel prices at this point.

Loux talks global dairy outlook on NZX podcast
USDEC’s Will Loux, vice president, Global Economic Affairs, sat down with Fonterra Co-operative Group’s James Robertson, trade strategy manager-Asia, and NZX’s James Atkinson for a panel discussion on this week’s NZX Opening Bell podcast. Atkinson moderated the conversation, which was titled, “Unveiling the next decade in global dairy exports.” Loux and Robertson gave their takes on dairy market dynamics and expectations for the coming years, including global milk supply, Chinese demand, shifting consumer preferences and where opportunities lie for dairy suppliers.

Army sets ambitious schedule to reopen Port of Baltimore
After detailed studies and engineering assessments, the U.S. Army Corps of Engineers said it plans to reopen a channel to provide limited access to the Port of Baltimore by the end of April. The channel (280 feet wide by 35 feet deep) would allow one way traffic in and out of the port until the Corps is able to clear the full channel (700 feet wide by 50 feet deep), which it hopes to do by the end of May, restoring the port to normal capacity. However, the Corps admitted that “these are ambitious timelines,” that could be affected by adverse weather conditions or changes to the complexity of the wreckage.

USDEC has been in close contact with USDA, the U.S. Department of Transportation and our members regarding possible cargo disruptions out of Baltimore. Although data analysis shows that dairy exports are relatively small from the port of Baltimore, the current situation may affect other ports on the East Coast that are used more frequently by dairy exporters. USDEC continues to monitor the situation and closely engage with the U.S. government agencies addressing the situation. (USDEC staff; Army Corps of Engineers)

 

USDEC makes more than 100 Export Guide document updates in March
The MARA team updated or revised 106 documents in the USDEC Export Guide last month. Here are some highlights:

Volume 1: Tariffs and Classification

• Honduras: Added lower MFN rates for evaporated and condensed milk (0402.91.10 and 0402.99.10), products of natural milk constituents (0404.90), butter oil (0405.90.10), and blue-veined cheese (0406.40).
  
  
• Indonesia: Revised the classifications for whey products of HS 0404.10. The new code for whey in powder form for human consumption is 0404.10.11, and the code for whey in powder form not suitable for human consumption is 0404.10.19.
  
  
• Korea: Updated the MFN quota for whey for feed, which has decreased from 23,000 MT to 20,000 MT.

Volume 2: Import Requirements

• APHIS (Animal and Plant Health Inspection Service) and BIS redesigned their websites. Updated relevant links.
  
  
• Australia: Updated Manufacturer’s Declaration section to include new attestations to comply with Australia’s Biosecurity Act.
  
  
• Chile: Added a new AMS Sanitary Certificate (ATLAS) section. On April 1, AMS launched a new Chile certificate in ATLAS. Exporters should now apply for Chile certificates in ATLAS instead of eDocs.
  
  
• China: Revised the Certificate of Analysis section to include updated requirements for first-time and non-first-time shipments.
  
  
• Malaysia: Added updated forms for food and feed registration to the Dairy Plant Registration or Approval section.

Volume 3: Labeling and Product Standards

• Australia: Added list of approved starter cultures in the Cheese document and under the Other Regulations section.
  
  
• Brazil: Updated documents for Food Additives, Pasteurized Milk, Whey and Acid Whey. Added new standards for Condensed Milk and Food Supplements.
  
  
• China: Updated Milk Powder and Food Additives documents.
  
  
• Indonesia: Included details in the General Labeling document on Indonesia’s updated regulation on halal logos and halal labels on products that have obtained halal certification.

Every month, USDEC’s Market Access team emails a list of guide updates to interested members. If there is anyone at your company who should be included on the distribution list for that email in the future, please contact Jessica Smith at jsmith@usdec.org.

  

Algeria plans milk powder project in conjunction with Baladna
Qatar-based vertically integrated dairy firm Baladna and the Algerian government are reportedly set to sign a deal to bolster domestic Algerian milk powder capacity by 200,000 MT annually. Media reports indicate Baladna would build a farm 250,000-acre dairy farm in Adrar, Algeria, but details on construction of a facility to process the milk remain unknown at press time. (USDEC Middle East/North Africa office; Doha News, 4/3/24)

Profit plummets at two Chinese milk producers
While Chinese milk production growth continued to steam ahead in 2023, farmgate prices dropped precipitously (continuing a downward trend from record highs that began in late 2021). The latest numbers show Chinese raw milk below the cost of production, with anecdotal reports of farms culling herds, a situation that could presage a milk production slowdown ahead.

Those market dynamics show in the latest corporate reports of two of the country’s major milk producers.

• Modern Farming Group increased YOY raw milk sales by over 9% in 2023 to 2.55 million MT. The company’s revenue grew 9.5% to US$1.86 billion. However, net profit decreased by 68% YOY to US$26 million. Modern Farming blamed the decrease on lower raw milk and beef prices.
  
  
• China Shengmu saw 2023 revenue grow by 5.5% to US$486 million. Net profit, however, plummeted by 79% YOY to less than US$12 million. (USDEC staff; China office)

New health and wellness products continue to drive dairy growth
A growing consumer focus on maintaining personal health and an increasing awareness of the health benefits of certain foods are driving new dairy product innovation designed to improve factors ranging from gut health and sleep to energy and focus. A few recent examples include:

• Nestlé China launched a new milk powder for adults designed to support sleep quality. The powder is called Yiyang Wanning and is targeted at consumers aged 40-60. It contains tryptophan sourced from WPC, mulberry leaf extract, magnesium, zinc and protein, in a proprietary blend that the company says has shown to reduce the time to fall asleep by 15% in clinical studies. Nestlé officials linked the product launch to the Chinese government’s Healthy China 2030 initiative, a priority of which is to improve sleep quality and duration among Chinese adults.
  
  
• In Japan, Meiji introduced a new functional milk beverage that the company claims supports eye health and improves sleep quality. Meiji Eye and Sleep W Support contains crocetin, a carotenoid derived from gardenia fruit and saffron, that Meiji says is easily absorbed by the body and has been reported to alleviate the eye’s declining ability to focus due to excessive computer work, as well as improve sleep depth and relieve sleepiness upon waking. The company is targeting young to middle-aged Japanese consumers based on research that shows an increasing number of this age group say they are experiencing fatigue, sluggishness and eye strain. It is currently available via Meiji’s home delivery service.
  
  
• Japan’s Morinaga Milk plans to roll out several new Foods with Function Claims (FFC) targeting major health concerns of local consumers. The lineup include Bifidus Yogurt Bone Density Countermeasure, a dairy beverage that Morinaga bills as good for both bone and gut health.
  
  
• And in response to the expectations of Chinese consumers to move beyond fortification and offer products that include clean labels and high protein content, Yili Group launched Changqing premium protein artisan yogurt. The company says the yogurt has 1.6 times the protein of regular yogurts but is made using a natural fermentation process that eliminates the need for adding protein powders or other supplemental ingredients. Yili expects demand for clean labels to increase among Chinese consumers in the coming year. (Dairy Reporter, 3/21/24; Food Navigator Asia, 3/19/24, 3/13/24; Nutra Ingredients-Asia, 3/19/24)

Challenging half year for Synlait
As part of Synlait Milk Ltd.’s ongoing struggles, the company missed a NZ$130m (about US$77 million) debt repayment deadline on March 28. The company, which sought a letter of support from its largest shareholder (China’s Bright Dairy) was granted a repayment extension until July 15.

Synlait’s half-year 2024 report signaled additional challenges ahead. While revenues increased 3%, the company reported a net loss of NZ$96 million (about US$57 million) for the six months ended Jan. 31, 2024. It received a letter of support from Bright that included a commitment to participate in a future equity raise and to extend a loan at the request of Synlait (subject to approval). But it lowered its guidance. Synlait’s previously announced guidance stated that EBITDA performance was expected to be flat or down compared to FY23—it now expects the FY24 EBITDA result to be significantly down on FY23. The company cited softening demand and/or margins across business units; adverse foreign exchange and product mix; and increased operating expenses for the expected decline. (Company reports; Just Food, 3/28/24)

Company briefs
California biotech company, Triplebar Bio Inc., and Netherlands-based FrieslandCampina Ingredients announced they will produce lactoferrin through precision fermentation to meet increasing global demand. The collaboration is part of a multi-year, multi-country strategic partnership announced last year to develop and scale up the production of cell-based proteins using precision fermentation. (Food Navigator USA, 3/26/24)

• Newly released NTE report shows more work needs to be done to remove trade barriers
• Happy World Water Day!
• USDEC hosts Alexis Taylor for Women’s History Month Lunch and Learn Event  
• $9.6 trillion generated from food and ag, according to latest Feeding the Economy report
• Happy National Ag Day!