HIGHLIGHTS: FEBRUARY 23, 2024
• U.S. ag trade deficit spurs outcry
• USDEC stands up for dairy at UN environmental conferences
• Seeking member feedback on India plant list
• Europe proposes BPA ban
• Castaneda testifies on common names at Special 301 hearing
• Trade Policy staff headed to WTO Ministerial
• Sign up! CMAP, IAG and MAG meetings slated for April 17
• Member opportunity! USDEC-FAS fact-finding mission to China
• Market Summary: GDT takes a breather
• USDEC publishes annual “signposts” market outlook
• EU milk deliveries fall in December; NZ down in January
• Letter supports renomination of FMC commissioner
• NZ slams Canadian dairy import quotas under CPTPP
• Fonterra to merge NZ and Aussie business units
• Arla sees 2023 year-end uptick extending into 2024
• Company news: Valio, Yili, First Milk, Starbucks, RBI
Featured
Letter calls for government action to boost U.S. ag trade competitiveness
A coalition of 20 U.S. agricultural organizations, including USDEC and NMPF, sent a joint letter to members of Congress urging them to take steps to assess U.S. agricultural trade competitiveness in light of reports of a growing U.S. ag trade deficit. The U.S. ran a $16.6-billion agriculture trade deficit the last fiscal year, and USDA’s Economic Research Service recently projected that deficit would reach $30.5 billion for fiscal 2024.
While many factors influence agricultural trade, that deficit reflects “recent U.S. trade policy that has forfeited overseas markets to America’s economic competitors,” the letter states. “Failing to keep pace with opening new markets is impacting the economic profitability of food and agriculture, including jobs, U.S. competitiveness and, ultimately, our strategic advantage.”
The letter encourages Congress to collaborate with current and future administrations to prioritize specific steps the U.S. can take to open new markets and benefit farmers and workers in all sectors.
USDEC stands up for dairy at UN environmental conferences
Kelly Sheridan, USDEC vice president, Environmental Affairs, was in Kenya this week engaging in the Open-Ended Committee of Permanent Representatives (OECPR) on behalf of U.S. dairy. The conference is a preparatory meeting for next week’s UN Environmental Assembly (UNEA) of the UN Environment Programme (UNEP). Attendees pre-negotiate and deliberate the content and wording of proposed resolutions, declarations and decisions for endorsement by the Assembly. Since its founding in 2014, UNEA has been the world’s highest-level decision-making body on the environment.
USDEC received accreditation to the UNEA/UNEP in 2022 as part of the Farmers Major Group (FMG). USDEC’s accreditation provides an opportunity to participate directly in policy development related to the environment that has the potential to impact U.S. dairy exports. Sheridan was provided the opportunity to deliver an opening statement on behalf of FMG during the deliberations. She made several key points about farmers’ central role in ensuring a reliable food supply and emphasized the FMG’s desire to increase participation in UNEA/UNEP deliberations.
Sheridan emphasized that:
- The FMG is united in its shared goal to enhance the capacity of countries to design and implement environmental policies that foster all dimensions of sustainability and advance agricultural solutions to global challenges.
- Farmers must be at the center of all discussions and decision-making about the environmental pressures facing our food system.
- Science-based decision-making, in conjunction with farmer and indigenous innovation, must be the foundation for the adoption of accessible and locally appropriate technologies and practices for sustainable agricultural production.
The UNEA takes place Feb. 26-March 1 in Kenya. USDEC President and CEO Krysta Harden, Senior Vice President, Sustainability and Multilateral Affairs, Nick Gardner and Sheridan will attend. Watch for future issues of Global Dairy eBrief for more on the meeting.
Click here to listen to Kelly Sheridan’s comments during the plenary session of OECPR calling for farmers to be at the center of food systems policymaking and for science-based decision making and innovation to be the foundations for sustainable agricultural production.
USDEC seeks member feedback on India plant list
USDEC continues to work with the U.S. government (USG) on a path forward to register plants in line with India's 2023 implementation of its plant listing requirements. To support those USG efforts, the Market Access and Regulatory Affairs team is looking for member assistance to compile a full list of all companies that are currently exporting to India (or plan to export in the next few months) goods of the following categories:
- Milk and milk products
- Infant food
- Nutraceuticals
To date, the Food Safety and Standards Authority of India (FSSAI) has only published these broad categories as within the scope of registration but has not provided the HS codes for which they require plant registration.
Any members shipping these products to India or interested in exporting there should contact USDEC by Feb. 28 with manufacturer, product and other details (please see the Feb. 16, 2024, Member Alert for specific). Information should be sent to Sandra Benson at sbenson@usdec.org. USDEC will share this information with the USG to facilitate plant registration.
Note: This plant registration effort is separate from ongoing efforts to address the India certificate impasse. USDEC continues to work on both efforts in tandem. As noted in Volume 2 of the USDEC Export Guide, the Indian government will allow currently permitted exports to continue with the 2019 DAHD certificate through June 30, 2024, when the new integrated FSSAI and DAHD certificate will be required. The U.S. government will not endorse either certificate due to the problematic nature of the attestations.
EU proposes BPA ban
The European Commission (EC) published a draft regulation on its “Have your say” website banning the intentional use of bisphenol A and other bisphenols (BPA) in food-contact materials. The EC will accept comments through the site for four weeks, ending March 8. This ban comes in response to a 2023 European Food Safety Authority (EFSA) opinion that current dietary exposure to BPA is unsafe, lowering the tolerable daily intake (TDI) by a factor of 20,000.
The draft regulation prohibits the intentional use of BPA in food-contact materials (FCMs) placed on the market in the EU, including food-contact plastics, varnishes and coatings, as well as printing inks, adhesives, ion-exchange resins and rubbers that form part of finished food contact articles. The transition time for these FCMs is 18 months after the entry into force of this regulation so will likely apply from late 2025 or early 2026.
See USDEC’s Feb. 22 Member Alert for more information on the potential impact to trade, as well as details on commenting on this draft regulation.
Castaneda defends common food names at USTR Special 301 hearing
On Wednesday, USDEC’s Jaime Castaneda, executive vice president, Policy Development and Strategy, testified at a USTR hearing on this year’s Special 301 review. The annual Special 301 review aims to identify countries that are inadequately defending intellectual property (IP) rights and informs USTR’s engagement on IP issues for the following year.
Castaneda, who testified in his role as executive director of the Consortium for Common Food Names (CCFN), called for the U.S. government to proactively secure protections from trading partners that guarantee the right of producers to use common food and beverage names, such as “parmesan” or “feta.” (CCFN was founded by USDEC.)
He detailed how the EU misuses geographical indications (GIs) to monopolize common food names and why producers and exporters need the U.S. government to match the EU’s efforts in that area. A traditional IP systems approach to the EU’s GI scheme is insufficient because the EU’s unfair GI protections are established at the trade negotiating table with third countries.
“These are government-driven barriers to trade that require a government-driven response to counteract,” Castaneda said.
The public hearing complemented joint comments submitted earlier this year by USDEC and NMPF for the Special 301 review. Their comments referenced CCFN’s more extensive comments submitted at the same time.
Trade Policy staff heads to WTO Ministerial
USDEC’s Jaime Castaneda, executive vice president, Policy Development and Strategy, and Tony Rice, director, Trade Policy, will be in Abu Dhabi next week for the WTO’s 13th Ministerial Conference (MC13), which runs from Feb. 26-29. As noted in a joint agriculture coalition letter sent to USTR Katherine Tai and USDA Secretary Tom Vilsack, USDEC is urging the Biden-Harris Administration to take a more proactive role in modernizing global agricultural trade policies through MC13 (see Global Dairy eBrief, 11/10/23). Watch upcoming issues of Global Dairy eBrief for more on the conference.
Events
CMAP, IAG and MAG meetings set for day after Annual Membership Meeting
The Cheese Marketing Advisory Panel (CMAP), Ingredients Advisory Group (IAG) and Market Access Advisory Group (MAG) are meeting on April 17 at the Omni Hotel in Houston, the day after the general session of the USDEC Annual Membership Meeting.
The CMAP and IAG convene at least twice a year to give members a chance to help shape USDEC’s strategic priorities and ensure that those priorities effectively align with commercial business interests. The MAG meeting will provide regional updates on regulatory issues in key export markets, ongoing MARA projects, logistics challenges and other market access issues. Representatives from FDA and other government agencies are expected to speak during the MAG meeting and time will be given for Q&A with attendees.
The meetings run concurrently on the April 17. The CMAP event goes from 8:00 a.m.-5:00 p.m. CT; the IAG and MAG sessions take place from 8:00 a.m.-3:30 p.m. CT.
Please contact Nuhami Elemu (nelemu@usdec.org) to attend the CMAP meeting, Suzanna Stohr (sstohr@usdec.org) for the IAG meeting, or Jessica Smith (jsmith@usdec.org) for the MAG meeting. In addition, click here to register for the Membership Meeting and check the respective box for the CMAP, IAG or MAG group session to indicate your intention to attend.
To reserve a room at the Omni Hotel at a discounted rate, please click here. The deadline to reserve a room at the special rate is March 22, 2024. If you have issues booking a room, please contact Louise Kamali at lkamali@usdec.org. For information on all Annual Membership Meeting activities from April 15-17, download a preliminary agenda here.
Member opportunity! USDEC-FAS fact-finding mission to China set for June
USDEC, working in collaboration with USDA’s Foreign Agricultural Service (FAS), is organizing a Trade and Fact-Finding Dairy Mission to China June 23-28.
The purpose of the mission is to facilitate U.S. supplier engagement with Chinese buyers of cheese, ingredients and milk products and to deepen U.S.-China agricultural relations, reinforcing the importance of regulatory and policy factors with a commercial voice.
General agenda
The mission will consist of two stops: Beijing for a day and a half, followed by Shanghai for three days. The Beijing portion will include a reception organized by FAS, government and association meetings, and one-on-one meetings with key dairy buyers. The Shanghai portion will focus on one-on-one meetings with important buyers, engagement with the Shanghai FAS office, and a visit by USDEC partner Jiangnan University.
This is a valuable opportunity to participate in a unique USDA-U.S. dairy collaboration at a time when the industry will need to tap into a sizably larger share of global markets in light of the significant additional investments made in U.S. cheese and protein ingredient manufacturing capacity, which will come online over the 2024 – 2026 timeframe.
Costs and registration
There is no participation fee to attend this mission. Covered costs include meeting venues, tours and receptions, group ground transportation, group dinners and consolidated sample shipment. Suppliers will be responsible for their individual travel and lodging costs.
Members interested in participating in the mission can sign up by clicking here. Please RSVP by March 15. If you have questions, please email Angélique Hollister (ahollister@usdec.org), Vikki Nicholson-West (vnicholson-west@usdec.org) or Jaime Castaneda (jcastaneda@usdec.org).
Market Summary
GDT takes a breather
The Feb. 20 auction saw the Global Dairy Trade (GDT) Price Index rise for the sixth straight time but at a significantly slower pace than recent events. The 0.5% increase was marked by much lower activity by buyers from the Middle East compared to the previous auction. North Asia (China) regained to the top buying spot, leading all purchasers in WMP, SMP, butter and cheddar.
The largely flat overall result offered few indications of whether this was a pause before further gains or the first sign of a broader softening.
Product-by-product performance
Milk powders aligned directionally with NZX SGX futures expectations heading into the auction. WMP declined for only the second time in the last dozen auctions, falling 1.8% to US$3,388/MT (futures markets showed a 1.2% decline). SMP rose 1.2% to US$2,788/MT. It was the ninth straight auction where the average price settled between US$2,600/MT and US$2,800/MT.
Cheddar took another rollercoaster turn, dropping 7.6% to US$4,143/MT, but mozzarella gained for the first time since it began trading on the GDT platform in December 2023. The average winning price rose 5.3% to US$3,960/MT.
Butter rose for the sixth straight auction, but only by 0.1%. AMF soared 8.6% to US$6,552/MT. It has gained 12 consecutive auctions and is at its highest prices since April 2022.
USDEC publishes annual “signposts” market outlook for 2024
USDEC’s Economics team has posted its annual analysis of the major factors that will influence U.S. dairy exports in the year ahead. Read “USDEC’s 5 signposts to guide dairy exports in 2024” on the U.S. Dairy Exporter Blog to get their take on the factors that will propel and impede U.S. export performance in the months ahead.
EU milk production falls 0.3% in December; NZ drops in January
According to Eurostat data, year-over-year (YOY) EU27+UK milk deliveries declined 0.3% in December. It was the fourth straight monthly decline, capping a weak finish to what started as a rebound year for milk production. From September through December, EU milk production fell 1.6% compared to the same period the previous year.
Irish milk deliveries continue to plummet, with YOY December volume off 27.1%. Irish milk output for the year fell 4.1%. YOY French deliveries decreased for the 13th consecutive month in December and were off 2.6% for the year.
Italian milk production fell at least 1.9% for the year, but that number could worsen. Eurostat reports a December increase of +3.7%, which would be a significant turnaround for Italy after six consecutive months of declines. Other sources estimate Italian milk deliveries actually decreased in December.
Of the top producers, Poland, Germany and the Netherlands recorded the biggest calendar-year gains (+1.9%, +1.4% and +1.0%, respectively).
NZ down as well
YOY New Zealand output declined in both volume (-1.2%) and milk solids (-0.6%) terms in January. Volume fell for the seventh time in the last eight months, with December 2023 being the only exception.
What was different about January was the slip in milk solids. New Zealand milk solids had risen for four straight months before January, even as overall milk volume fell.
NZ milk output for the first eight months of the 2023/24 season (June-May) was down 0.5%, while milk solids output over the same period rose 0.8%.
For more on USDEC’s expectations for EU and New Zealand milk production this year, see “USDEC’s 5 signposts to guide dairy exports in 2024” on the U.S. Dairy Exporter Blog.
Supply Chain
USDEC signs letter in support of FMC Commissioner renomination
Last week, USDEC signed a letter to President Biden in “strong support” of Federal Maritime Commissioner (FMC) Carl Bentzel being renominated for another term at the Commission. The letter, signed by more than 100 other industry and shipping associations, cites the ongoing supply chain disruptions that have faced shippers and cargo owners over the past several years, and applauds Bentzel’s work in managing these challenges, calling him a “champion of Shipper interests.”
Trade Policy
New Zealand dairy industry losses increasing while Canada breaches trade obligations
Dairy Companies Association of New Zealand (DCANZ) said last week that financial losses are mounting due to Canada’s breach of its trade obligations. DCANZ is rejecting Canada’s recent proposal to allocate dairy import quotas under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) free trade agreement, and says Canada is manipulating quotas to obstruct exporter access to the market.
A DCANZ official said Canada’s new proposal includes a formula that continues to favor domestic processors, which minimizes quota access for distributors, importers and retailers from CPTPP countries. It’s estimated that New Zealand dairy exporters have lost NZ$120 million (about US$74 million) in trade opportunities due to Canada’s violation of its trade commitments. (New Zealand Herald, 2/15/24)
Company News
Fonterra to combine New Zealand and Australian businesses
New Zealand dairy cooperative Fonterra announced it will merge its Fonterra Brands New Zealand and Fonterra Australia business units. The new, single entity will be known as Fonterra Oceania and will be led by René Dedoncker, who has been Fonterra Australia’s managing director since 2017. Fonterra CEO Miles Hurrell said the merger is part of an effort to bolster the co-op’s competitive position in the trans-Tasman dairy market. (FoodBev.com, 2/21/24; Dairy News Global, 2/19/24)
Arla Foods expects late 2023 momentum to carry into 2024
In its 2023 annual results, Denmark-based Arla Foods said a cautious first-half consumer market gave way to growth for its brands in the second half of the year. The farmer-owned cooperative reported 2023 revenues of €13.7 billion (about US$14.75 billion)—down only slightly from the previous year’s total of €13.8 billion. Net profit was €380m (about US$410 million). In its 2024 outlook, the company said it expects second-half 2023 growth momentum to continue in the first half of this year, resulting in an expected “return to branded volume driven growth for 2024 as a whole of 1%-3%,” despite more market and growth outlook uncertainty in the second half of the year. (Company report, 2/20/24)
Valio announces innovation project in Finland
Finnish dairy company Valio announced the launch of a new research, development and innovation project designed to “create a Finnish nature-smart food system in which growth, profitability and added value are built on the basis of sustainable production.”
The five-year, €100 million (about US$108 million) initiative, known as “Food 2.0,” is set to start this year and aims to increase exports connected to the food system by more than €1 billion (about US$1.1 billion) once completed. The project will receive about €30 million (about US$32 million) in funding from Business Finland, a government organization that provides innovation funding and trade, travel and investment promotion. (Company reports)
Mergers, acquisitions and joint ventures
Scotland-based dairy cooperative First Milk completed its acquisition of Blackmore Vale Dairy, a UK-based manufacturer of chilled dairy products. … German ingredients giant Döhler entered a manufacturing partnership with Delaware-based fermentation company Superbrewed Food to help the startup scale production of its Postbiotic Protein ingredient. The companies claim the ingredient performs well in dairy and alternative dairy applications. Superbrewed and France-based cheesemaker Bel Group are reportedly making progress on their 2022 strategic collaboration to develop lines of cheese products that incorporate Postbiotic Protein. (Company reports)
Company news briefs
Yili Group’s new ice cream factory in Huanggang City, Hubei Province, started production. The new facility, Yili’s fourth in the province, mainly produces high-end ice cream and frozen dairy products, with a capacity of 100,000 MT per year. The company estimates the plant will drive US$277.84 million in revenue annually. … To mark the Lunar New Year, Starbucks released a new pork-flavored latte in China called the “Abundant Year Savory Latte.” The drink, which features pork-flavored sauce with espresso and steamed milk and is garnished with a slice of pork on a skewer, is available at Starbucks Reserve stores across China. … In its recently released five-year outlook, Toronto-based Restaurant Brands International (RBI) said it is confident in the long-term global growth outlook for its Tim Hortons, Burger King, Popeyes and Firehouse Subs operations. Company officials said RBI is envisioning opening at least 7,000 new restaurants in international markets over the five-year outlook period. … To meet growing consumer demand and create consistency with other company products, Arla Foods relaunched its plant-based JÖRĐ brand as Arla JÖRĐ. The relaunch, which debuted in Sweden last week, includes updating the package design to feature the Arla brand and an enhanced formula that includes vitamins D and B9 as well as fiber. (USDEC China office; Company reports; Vegconomist, 2/16/2024; CNN, 2/20/24)
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