HIGHLIGHTS: May 17, 2024
• Farm bill features dairy trade priorities
• USDEC’s HPAI FAQs
• Defending animal agriculture
• Fernandez touts U.S. dairy sustainability in Mexico
• Exports in focus at DMI board meeting
• Market Summary: EC Short-Term Outlook on dairy
• Port of Baltimore update
• Fonterra to exit retail consumer business
• Saputo leadership transition
• Company briefs: Arla Foods, Mengniu, Bel
Featured
House farm bill contains major dairy trade priorities
The new farm bill introduced to the U.S. House of Representatives this week is a potential win for U.S. dairy suppliers. The bill addresses three key U.S. dairy export priorities that USDEC has strongly supported.
- It includes the Safeguarding American Value-added Exports (SAVE) Act—a landmark bipartisan measure to protect American producers’ ability to use common names globally.
- It doubles funding for the Foreign Market Development (FMD) and Market Access Program (MAP) programs—two key sources of USDEC funding for in-market programming around the world.
- It rebalances international food aid authority between the U.S. Agency for International Development (USAID) and USDA, increasing USDA’s participation in the decision-making process regarding global food aid programs.
USDEC, the Consortium for Common Food Names (CCFN), NMPF and allied organizations helped shape the text of the SAVE Act. Reps. Dusty Johnson (R-SD), Jim Costa (D-CA), Michelle Fischbach (R-MN) and Jimmy Panetta (D-CA) authored the bill in the House and Sens. John Thune (R-SD), Tammy Baldwin (D-WI), Roger Marshall (R-KS) and Tina Smith (D-MN) led a companion bill in the Senate. The act would explicitly direct USDA to work with the USTR to include protection of commonly used terms like “parmesan,” “feta” and “asiago” as a priority in international trade negotiations.
USDEC and NMPF are longtime vocal proponents for raising FMD and MAP funding (see Global Dairy eBrief, 01/12/24), which hasn’t seen a budget increase in over 15 years. Both organizations also commended the inclusion of the language that enhances USDA’s role in international food aid.
HPAI FAQs for members; USDA, Health and Human Services allocate additional funds
With news about highly pathogenic avian influenza (HPAI), H5N1 continues to circulate, USDEC has prepared a list of frequently asked questions (FAQs) to empower members in conversations about the virus and its impact on exports and business.
The information can be found here. USDEC login credentials are required to access the document. If you need login assistance, please reach out to Weston Abels at wabels@usdec.org. If you have any further questions, please contact Jerry Brown at jbrown@usdec.org.
New support
Last Friday, USDA and the Department of Health and Human Services (HHS) announced new actions to reduce the impact and spread of HPAI. USDA is providing assistance for dairy farmers with affected premises to improve on-site biosecurity and is taking steps to make financial tools available for lost milk production due to infected herds. The agency allocated $98 million to fund a series of initiatives, including reimbursing producers for veterinary costs, paying to ship samples and compensating for lost milk production due to HPAI.
HHS announced $101 million in new investments through the CDC and FDA to mitigate the risk of H5N1 and continue its work to test, prevent and treat the virus. For more information on the USDA and HHS programs, click here.
Gardner highlights work to defend dairy at Animal Ag Alliance Stakeholders’ Summit
USDEC’s Nick Gardner, senior vice president, Sustainability and Multilateral Affairs (SAMA), shared USDEC’s work to defend dairy production, consumption and trade on the global stage at last week’s Animal Agriculture Alliance 2024 Stakeholders’ Summit in Kansas City, Missouri. The annual gathering of animal agriculture supporters explored the challenges and opportunities facing the industry and how animal agricultural sectors can move forward and grow in the face of intensified anti-animal rhetoric, climate change concerns and other hurdles.
Gardner spoke at a session titled, “Passing the Baton Around the World: Animal Ag on the Global Stage,” along with Eric Mittenthal, chief strategy officer at the Meat Institute. He outlined USDEC’s experiences at last year’s UN Climate Change Conference (COP28) and preparations for this year’s COP 29.
COP remains a challenging environment for dairy and livestock producers due to the prevalence of anti-livestock voices, participants with little or no knowledge of agriculture and food production, and overall skepticism to the sustainability of international trade in food and ag products, said Gardner. That’s what makes it so important for U.S. dairy to be there in person to defend dairy and trade and shine a spotlight on their contributions to sustainable food systems and their critical role in nourishing a growing global population.
Fernandez touts U.S. dairy sustainability at Mexican university climate conference
USDEC continued to communicate the positive story of U.S. dairy sustainability at this week’s innovation and climate seminar at USDEC partner Tec de Monterrey’s (TDM’s) main campus in Monterrey, Mexico. At the day-long event, which was titled, “Food: Innovation and Resilience in the Face of Climate Change,” the leader of the USDEC Mexico office, Rodrigo Fernandez, highlighted U.S. dairy sustainability leadership. About 100 staff and students from TDM attended the event.
Fernandez outlined U.S. farmers’ and processors’ continuous adoption of innovative practices to produce milk and dairy products in an especially efficient manner, using significantly less water, land and other resources than in the past. He also highlighted ongoing aggressive environmental stewardship goals to achieve GHG neutrality (including methane reduction), optimize water use and improve water quality by 2050. Lastly, Fernandez explained how U.S. dairy ingredients can play a key role in sustainably responsible formulation of innovative foods and beverages.
Exports in focus at this week’s DMI stakeholder meeting
Exports were the major topic of discussion at Wednesday’s Dairy Management Inc. (DMI) board meeting. Several USDEC department heads and leaders of DMI’s international partnerships addressed stakeholders, providing the latest dairy market outlook, results of recent export-oriented activities, and summaries of upcoming initiatives.
Comments and questions from farmers indicated a deep interest in U.S. Dairy export potential and backing for continued investment in the future. USDEC President and CEO Krysta Harden thanked the farmers for their ongoing support to strengthen U.S. export efforts, including by participating in USDEC activities and representing the U.S. dairy sector overseas.
“We really have no stronger, more effective voice than those of the farmers,” she said.
Referencing both farmer participation and USDEC’s multi-faceted global outreach through Trade Policy, Market Access and Regulatory Affairs, Sustainability and Multilateral Affairs, and Cheese and Ingredients Marketing, she noted: “If we’re not out there defining U.S. dairy, some else will and they’re not going to be doing it right.”
Market Summary
EC raises EU 2024 milk projection; reiterates cheese and whey export focus
The European Commission (EC) lifted its projection for EU milk deliveries for 2024 in its spring Short-Term Outlook report for the agriculture sector. Supported by favorable weather and improved feed availability (despite a very wet spring in some regions) and stabilizing input and output costs, the group projects a milk production gain of 0.4% for the year (including the additional day for Leap Year). The autumn 2023 Short-Term Outlook had forecast a 0.2% increase.
As in 2023, the growth will be driven by increases in milk yields instead of more cows. In 2023, the EU dairy herd contracted 1.7%, and the EC expects another 0.5% decline this year. Milk yields rose 1.8% in 2023 and the EC expects a 0.9% gain in 2024.
Through the first two months of 2024, even with the additional day, EU27+UK milk deliveries were down slightly (-0.1%) compared to the previous year.
In 2024, cheese and whey are likely to benefit the most from the additional milk (as well as the trend toward higher solids content). The EC expects EU cheese production to increase 0.7% this year and whey production to increase 0.9%, supporting export gains for both products. The report projects a 2.5% increase in EU cheese exports (about +25,000 MT) in 2024 and a 2.5% increase in EU whey exports (about +17,000 MT).
Supply Chain
Progress made in reopening Port of Baltimore
Plans remain on track to fully reopen the Port of Baltimore by the end of May. A controlled demolition removed part of the Francis Scott Key Bridge that was lying on the Dali containership this week. Refloating the ship and mooring it is the next step. The Fort McHenry Limited Access Channel officially reopened on Tuesday, joining three temporary channels that had been set up earlier. (WMAR ABC Baltimore, 5/14/24; CBS Baltimore, 5/14/24)
Company News
Fonterra to jettison consumer operations, sell 17 sites
New Zealand’s Fonterra Co-operative Group announced it was exploring divestment options for its global consumer business and its integrated businesses Fonterra Oceania and Fonterra Sri Lanka—operations that collectively accounted for NZ$7.2 billion (about US$4.7 billion) in revenues in 2023.
“We believe we can grow further value for the co-op by focusing on being a B2B dairy nutrition provider, working closely with customers through our high-performing Ingredients and Foodservice channels,” said CEO Miles Hurrell.
It would be a massive change for Fonterra that includes selling several domestic and global retail brands, such as Anchor, Mainland, Anlene, Anmum and Fernleaf. The Fonterra Oceania business also includes foodservice and ingredients segments, and Fonterra Sri Lanka sells to the foodservice sector. The business also includes 17 manufacturing sites (nine in Australia and others in New Zealand, Indonesia, Malaysia, Sri Lanka and Saudi Arabia). Together, all the operations on the chopping block accounted for 19% of Fonterra’s earnings in the first half of fiscal 2024.
“A divestment of these assets would help create a simpler, higher performing co-op with our focus on our core Ingredients and Foodservice business and doing what we do best,” said Hurrell.
Fonterra said it had previously received unsolicited interest in parts of the businesses. The company plans to appoint an advisor to assist with divestment options. The process should take 12-18 months and require shareholder approval.
In conjunction with the announcement, Fonterra Global Markets CEO Judith Swales is stepping down effective July 31, 2024. (Company reports)
Saputo announces leadership transition plan
Canada-based Saputo announced that President and CEO Lino Saputo will transition to the role of executive chair of the board later this year. The company said Carl Colizza, currently president and COO for North America, will step into the role as the new president and CEO. Colizza joined Saputo in 1998 as an engineer, and has held several senior management positions in the Dairy Division, including leading the Dairy Divisions in Canada and Argentina. He was named President and COO of North America in 2019. The transition is scheduled to take effect on Aug. 9, the day of the company’s annual general meeting. (Company reports)
Arla Foods commits £300m to boost U.K. dairy production and exports
The British arm of Denmark’s Arla Foods announced plans to invest more than £300 million (about US$324 million) across five of its UK sites in 2024. The investment will update and expand Arla’s dairies in an effort to create more opportunities for British milk and cheese production.
In a company statement, Arla said the investments will allow its Lockerbie Creamery to expand and grow over the coming years. In Stourton, the upgrades will expand Arla’s capabilities in ESL milk, as well as introduce a capability to supply milk in cardboard cartons. Aylesbury, which is the U.K.’s biggest fresh milk site, will get additional automated box packing capabilities, which will give customers greater flexibility with packaging formats. At Arla’s Taw Valley Creamery, the company will incorporate state-of-the-art technology and new jobs that will enable the business to export mozzarella around the world. Arla said it will explore further milk powder export opportunities related to investments at its Westbury facility. (Company reports)
Mengniu and Bel Group sign deal to promote sustainable development practices together
To promote sustainable development practices across the Sino-French dairy industry, China’s Mengniu Dairy Co. and France-based Bel Group signed a “Sustainable Development Cooperation Proposal.” Under the agreement, both companies will collaborate to address climate issues by sharing best sustainable development and food decarbonization practices, including low-carbon farming practices, nutritional awareness programs and the fight against food waste.
Joint initiatives outlined in the agreement include research and development to promote sustainable and regenerative agriculture practices; sharing expertise and applying it to their dairy production processes to optimize carbon emission management; and exchanging solutions for sustainable dairy product packaging and adopting more sustainable packaging processes and materials. The companies also said they will collaborate on public welfare initiatives including the “Nutrition for All” campaign for children and adolescents. (Company reports)
In Case You Missed It...
U.S. Dairy Exporter Blog
Market analysis, research and news subscribe hereUSDEC Twitter feed
Follow us here.