HIGHLIGHTS: May 24, 2024
• USDEC receives $10 million in RAPP funds
• Dairy ingredient health and wellness seminar in Seoul
• Strengthening dairy ties at Eucolait
• News from AgTC Annual Meeting
• Defending common names at trademark meeting
• USDEC releases new Market Snapshot on Japan
• Hotel deadline today for MENA mission
• Member opportunity: cheese mission to Taiwan, Hong Kong
• Member opportunity: cheese seminar in Indonesia, Philippines
• USDA accepting applications for ag trade mission to Vietnam
• USDEC holds risk awareness training at U.S. CDE
• Market Summary: supply concerns boost GDT
• EU’s milk output rises, NZ’s falls
• Loux guests on AgriTalk podcast
• USDA releases Dairy and Products Semi-Annuals
• Ireland’s Dairygold reduces cheese output as milk production lags
• Company briefs: Yili, Froneri, Tropicale Foods
Featured
USDEC receives $10 million in RAPP funding
USDA Secretary Tom Vilsack announced allocations for the first $300 million in funding under the new Regional Agricultural Promotion Program (RAPP). Sixty-six organizations received a portion of the $300 million; USDEC, which submitted funding applications for 123 activities, was awarded $10 million.
“By enabling U.S. exporters to expand their footprint in diverse and dynamic new markets, RAPP will help make them more competitive and resilient in an increasingly volatile global trading environment,” said Vilsack. “We know the potential is out there, but it takes time and money to grow new markets.”
In a May 21 press release, USDEC President and CEO Krysta Harden thanked Secretary Vilsack, USDA, FAS, and congressional leaders for “their critical support and for the benefits this program will have in supporting U.S. dairy farmers and the U.S. agriculture industry overall … We will leverage those dollars to ensure we are shipping to those who need it.”
Background
The $1.2 billion RAPP was launched in October 2023. USDA began accepting applications for the first tranche of funds—$300 million—in December. The first tranche specifically focused on market diversification and, therefore, excluded certain established U.S. agricultural buyers, including China, Mexico, Canada and the EU. USDA identified three regions receiving special emphasis for the first tranche: Africa, Latin America/Caribbean and South/Southeast Asia.
While recognizing that the rules for the first tranche of RAPP funding were already established, USDEC issued comments to USDA’s Commodity Credit Corporation (CCC) in December urging the agency to refine the rules and allow greater flexibility as to how the funds may be used in future tranches (see Global Dairy eBrief, 12/22/23).
This was the first of a series of RAPP funding tranches. The next is expected to be announced in May 2025 and will fund activities commencing in 2026.
Seoul ingredient seminar highlights health and wellness benefits of U.S. dairy protein
On May 21, USDEC hosted a half-day U.S. Dairy Protein Innovation trade seminar in South Korea (the first major USDEC-organized B2B ingredients seminar in Korea since the pandemic). Titled “Unlocking Next-Level Nutrition and Protein Utilization” and taking place in Seoul, the event welcomed 50 R&D and management staff of health-and-wellness-centric food and beverage manufacturers, importers and distributors.
A lineup of expert speakers highlighted the advantages of dairy ingredients to create mainstream protein-boosted health and wellness and the benefits of sourcing those ingredients from the United States. Speakers included:
- Mark Dries, minister counselor, USDA Foreign Agricultural Service, kicked off the seminar by discussing the already close ties and bright future for U.S.-Korea agricultural trade and opportunities for continued win-win growth.
- Jing Hagert, chair of USDEC’s Ingredients Advisory Group and vice president of human nutrition, Milk Specialties Global, reinforced USDEC’s and U.S. dairy suppliers’ long-term interest in and commitment to partnership with Korea.
- Mary Wilcox, founder of Ohio-based dairy consultancy Significant Outcomes, highlighted the nutritional, functional and versatility advantages of U.S. dairy proteins as the complete package and ideal ingredient solution for sustainability-minded, health-and-wellness applications. She also touched on the extended range of U.S. dairy ingredient offerings for health and wellness beyond whey and milk protein concentrates and isolates, including micellar casein concentrate, milk-derived whey, lactoferrin and other protein fractions.
- Kara McDonald, USDEC vice president, Global Marketing Communications, moderated a panel discussion with three U.S. dairy ingredient suppliers. The panel outlined the benefits of sourcing from the U.S., including how the industry’s broad and growing portfolio of value-added ingredients can facilitate innovation and accelerate customers’ business success. The suppliers on the panel reinforced how the U.S. is best positioned (versus other major suppliers) to grow dairy production and exports to meet Korea’s evolving dairy needs. They also emphasized U.S. suppliers’ willingness to collaborate with customers in supporting local-friendly innovation.
- Kristi Saitama, USDEC vice president, Global Ingredients Marketing, highlighted innovative prototype products developed in Japan and Southeast Asia that feature U.S. dairy proteins as inspiration to spur expanded use and innovation in Korea. Starting next year, Korea is on track to become a “super-aged” society (defined as a society in which those 65 and older exceed 20% of the population). U.S. dairy ingredients can help create opportunities for healthy-aging innovation and convenience meals targeting single-person households (who now account for about a third of the population and—according to Korean data—have insufficient protein intake), Saitama said.
The day before the seminar, Lan Sohn, chief marketing officer of Sohn’s Market Makers and USDEC’s office head in Korea, reinforced the combined importance of health, convenience, fun and taste as integral ingredients to success in the Korean marketplace.
Left to right: Kara McDonald moderates a panel discussion with Amanda Kim, business development manager, Glanbia Nutritionals; Andrew Sullivan, vice president, international sales, Dairy America; and Jing Hagert, vice president of human nutrition, Milk Specialties Global. U.S. suppliers also participated in a market briefing session highlighting health and wellness market opportunities in Korea and how to seize them.
USDEC strengthens ties with Eucolait
This week, USDEC staff traveled to the Eucolait General Assembly in Bordeaux, France, to build on the Memorandum of Understanding signed by the two organizations in 2023. That document contained a series of objectives to share information, bolster the image of dairy and strengthen collaboration toward common goals, including improving trade.
Jaime Castaneda, USDEC executive vice president, Policy Development and Strategy; Will Loux, senior vice president, Global Economic Affairs; and Monica Ganley, senior director of Global Trade Analysis made the trip, engaging with attendees, sharing information and building connections during the program and on the sidelines. Independent of the MOU, the meeting serves as a key opportunity to network with European stakeholders and get a boots-on-the-ground view of global markets through a European lens.
Castaneda and Ganley also presented. Castaneda explored U.S. dairy export growth from a market and trade policy perspective in the presentation, “Will the U.S. Dairy Export Train Roll On?”
Ganley explored the role that South America could play in global exports and what it would take for some of the key players to realize their export ambitions as part of the group panel session, “Established or Emerging Actors: the Future of Dairy Trade.”
Rice gathers supply chain insights at AgTC Annual Meeting
USDEC’s Tony Rice, director, Trade Policy, was in Tacoma, Washington, this week for the Agriculture Transportation Coalition (AgTC) 36th Annual Meeting. Rice engaged with several port officials, ag shippers and other supply chain logistics providers about key issues affecting U.S. dairy suppliers in their efforts to timely and efficiently get U.S. products to overseas customers.
High on the list of topics was the ongoing problem of container break-ins. Rice gleaned best practices to mitigate the cargo pilferage for intermodal rail shipments out of the Midwest destined for West Coast ports. USDEC asks any members who have had break-ins to contact Tony Rice at trice@usdec.org to share their experiences.
Among other conversations were talks with officials from the Port of Los Angeles and Fabio Santucci, the president of the U.S. operations of Mediterranean Shipping Lines (MSC) about ongoing collaboration between the dairy industry and supply chain stakeholders to bolster smooth flows.
USDEC defends common names at trademark meeting
USDEC’s Shawna Morris, executive vice president, Trade Policy and Global Affairs, was in Atlanta, Georgia, this week for the International Trademark Association (INTA) Annual Meeting. Morris and Jaime Castaneda, USDEC executive vice president, Policy Development and Strategy, each sit on one of the subcommittees of INTA’s Geographical Indications (GI) Committee.
Involvement with INTA is part of USDEC’s and the Consortium for Common Food Names’ broader, ongoing efforts to defend the rights of companies to continue using common food and beverage names, including U.S. dairy processors’ ability to freely use common cheese names. The goal with INTA is to advocate for companies that use common names as the organization formulates its recommendations to governments on GI policies. Participation also creates opportunities to shape viewpoints on common names and GIs via speaking and writing engagements with INTA’s global membership.
New USDEC Market Snapshot highlights U.S. dairy opportunities in Japan
The latest Market Snapshot research report from USDEC’s Strategic Insights team focuses on Japan. The country’s developed economy, vibrant food sector and interest in dairy innovation, alongside trends like “food as medicine,” highlight why Japan remains a key market opportunity for high-value U.S. dairy products like WPC80+ and cheese, the report notes. Japanese buyers may be tough to earn, but companies who do will find “the most reliable and stable customers who will honor long-term relationships,” said Hisao Fukuda, Business Development Director, USDEC Japan. The Market Snapshot concludes with a series of recommendations U.S. dairy suppliers can follow to help them maximize the opportunity Japan presents. To download a copy of the report, click here.
Events
Don’t miss hotel room deadline for USDEC’s November cheese and ingredient mission to MENA
USDEC invites members to join a major supplier mission to the Middle East/North Africa (MENA) region taking place from Nov. 16-23. The trip will make stops in Riyadh, Saudi Arabia; Cairo, Egypt; and Casablanca, Morocco, where participants will have a chance to network with an expected 190 buyers from throughout the Middle East and across North Africa.
“We will provide an opportunity for suppliers to connect with pre-qualified purchasing decision makers from key dairy-buying companies and promote the U.S. dairy industry’s broad portfolio and reputation as trusted, progressive and innovative,” said Terri Rexroat, USDEC vice president, Global Ingredients Marketing.
The mission will focus on expanding sales of U.S. bulk dairy ingredients and bulk and foodservice cheeses to the region.
There is no participation fee to attend, and USDEC will cover costs such as meeting venues, tours, group ground transportation, group dinners and consolidated sample shipment. Suppliers will be responsible for individual travel and lodging costs.
Hotel deadline rapidly approaching
While the trip won’t take place until November, the deadline for a discounted hotel rate at one of the mission stops is May 31, so now is the time to sign up. Members interested in attending should click here and fill out the participation form. USDEC will provide an info package that includes links for hotel reservations to call before the reservation deadlines expire.
If you have any questions, please contact Suzanna Stohr (sstohr@usdec.org).
Sign up now for cheese buyers’ mission to Taiwan and Hong Kong
USDEC is hosting a cheese supplier mission to Taiwan and Hong Kong from Aug. 25-31. Taiwan was the fourth largest Asian buyer of U.S. cheese in 2023, behind Japan, China and South Korea. Hong Kong is an international business and trade hub and gateway to Asia—and it imports around 95% of its food needs due to limited land. And while U.S. cheese suppliers have made inroads in both countries, the U.S. presence still lags behind that of competitors in Oceania.
The mission aims to increase U.S. cheese penetration in the foodservice and retail sectors by connecting U.S. participants with pre-qualified purchasing decision makers from key cheese buying companies. U.S. suppliers will spend two full days in each country. On the first day, USDEC overseas office staff will provide market briefings and host retail tours for U.S. suppliers. On the second day, U.S. cheese seminars for the buyers in each region will highlight U.S. cheese heritage, quality and broad portfolio. U.S. suppliers will be able to engage directly with buyers through one-on-one meetings and receptions.
How to participate
There is no participation fee to attend, and USDEC will cover costs such as meeting venues, tours, group ground transportation, group dinners and consolidated sample shipment. Suppliers will be responsible for individual travel and lodging costs.
Click here to register for the mission. Please RSVP by May 31. If you have any questions, please contact Alex Parker at aparker@usdec.org.
Think USA Cheese seminars slated for Indonesia and the Philippines
The USA Cheese Guild will hold two Think USA Cheese seminars in Southeast Asia in September and invites USDEC members to participate. The two-day events will take place back-to-back from Sept. 22-28 in Indonesia and the Philippines.
Day 1 in each market consists of a market briefing and retail tours for U.S. supplier participants. Day 2 is a full-day cheese seminar for local importers/distributors, retailers, foodservice operators, food manufacturers and other end-users. The goal is to increase awareness of and interest in U.S. cheeses, highlighting the supply outlook as well as the opportunities and advantages of sourcing U.S. cheese. The second day will also include opportunities to connect with the local trade through networking sessions and a reception.
Background
The Philippines and Indonesia are the top two U.S. cheese markets in Southeast Asia, with comparable U.S. export volumes of 5,036 MT and 5,496 MT, respectively.
Cheese demand in the Philippines has risen faster than in Indonesia, with overall imports from all sources jumping 143% from 2013-2023. Dairy is ingrained in the culture and the country boasts a large quick-service restaurant sector with many American-style fast-food chains.
Indonesia is the fourth most populous country in the world, with a growing middle class and evolving food trends that align well with increased cheese demand. It also has its sights set on positioning itself as a key player in the global halal food and beverage export landscape, creating further opportunities to service regional cheese demands.
How to participate
There is no participation fee to attend, and USDEC will cover costs such as meeting venues, tours, group ground transportation, group dinners and consolidated sample shipment. Suppliers will be responsible for individual travel and lodging costs.
Click here to register for the mission. Please RSVP by May 31. If you have any questions, please contact Alex Parker at aparker@usdec.org.
USDA accepting applications for Vietnam ag trade mission
USDA’s Foreign Agricultural Service (FAS) is inviting U.S. ag exporters to participate in the agency’s upcoming trade mission to Vietnam, a top 10 U.S. dairy export market and a significant buyer of U.S. milk powder, whey and lactose. The mission takes place Sept. 9-13 and will provide opportunities to meet with buyers from Vietnam, Thailand, Cambodia and Burma (Myanmar).
FAS-sponsored international trade missions aim to connect U.S. agricultural suppliers with prospective customers in key markets, giving U.S. companies the opportunity to forge relationships, gather market intelligence and generate sales. Participants will begin the September trip in Ho Chi Minh City and end it in Hanoi, connecting with importers in one-on-one meetings and learning about local and regional market conditions through site visits and briefings by FAS staff, industry experts and government officials.
For more information on the trip and links to USDA materials on export opportunities in Vietnam and Southeast Asia, click here. The online application form is available here. The application deadline is Thursday, June 4.
Risk awareness training at the U.S. CDE
This week, USDEC hosted a risk awareness and threat preparedness training for the Southeast Asia office staff at the Center for Dairy Excellence. The group included the USDEC teams from Singapore, Thailand, Indonesia and the Philippines. During the two-day training, the group learned to identify operational, strategic, and external risks to USDEC, how to respond to those risks, and how to improve their risk-readiness communication skills. The USDEC-Arlington delegation included Martha Scott Poindexter, COO; Vikki Nicholson-West, senior vice president, Global Ingredients Marketing; Luke Waring, vice president, Membership Programs and Strategy; and Erica Louder, manager, Member Services.
USDEC Southeast Asia and Arlington staff at this week’s risk awareness training at the U.S. CDE in Singapore.
Market Summary
Supply concerns help lift GDT
The Global Dairy Trade (GDT) Price Index increased 3.3% at the May 21 auction, defying pre-auction expectations for the third consecutive event. Anticipated declines in butterfat and a flat result for WMP turned into gains once the bidding started. It was a solid result with gains across all products except cheddar, which held steady.
It was the final auction of the 2023/24 season and a reassuring finish to the year for New Zealand farmers and their farmgate milk prices. But the staying power of the current price levels is uncertain given that the primary driver appears to be supply tightness rather than a significant demand rebound.
China is the prime example. North Asia (China) stepped back into the WMP market, nearly doubling the volume purchased on May 7 and reclaiming the position of top buyer. But the big jump in WMP volume on May 21 must be looked at in context of China’s poor interest on May 7, when its WMP purchase volume hit a 13-year low. Despite the increase this week, Chinese WMP purchasing was still lower than the same auction the previous year. The improvement in WMP demand from China may have as much to do with slowing domestic milk production than a demand upturn.
Southeast Asia/Oceania’s milk powder appetite remained strong, as the region increased volume for WMP and SMP from the previous auction and the same auction the previous year. The average winning WMP price rose 2.9% to US$3,408/MT and is nearing a 12-month high. SMP increased 3.5% to US$2,629/MT.
More good news came in butterfat. Futures trading prior to the auction pointed to declines in both AMF and butter. But AMF defied the odds and rose 3.5% (GDT AMF prices haven’t declined since the Aug. 15, 2023 auction) and recorded its second consecutive record high in a row: US$7,365/MT. Butter rose 5.1% to US$6,931/MT—its highest price in more than a year.
Mozzarella jumped 9.8% to US$4,215/MT—a record high since the product began trading in late 2023.
EU27+UK milk deliveries rise in March; NZ April production falls
Year-over-year (YOY) EU27+UK milk deliveries increased for the first time in seven months in March, rising 0.6%. While gains were widespread (only a handful of countries—notably Ireland, -6.4%, and the Netherlands, -1.4%—reported significant year-over-year declines), growth was not robust, and the European Commission reported a decline in solids content for the month.
New Zealand continued to move in the opposite direction of the EU, as YOY milk production fell 4.1% in volume in April and milk solids dropped 2.6. That marks two straight months of YOY declines, as farmers reacting to weather and pasture conditions dried off cows early.
With one month remaining in the 2023/24 season, New Zealand milk production was down 0.5% in volume terms but milk solids output was running 0.8% higher than the previous year. May figures are expected to decline as well.
Loux talks dairy farming economics on AgriTalk podcast
USDEC’s Senior Vice President, Global Economic Affairs Will Loux, joined host Chip Flory and Farm Journal Dairy Editorial Director and dairy farmer Karen Bohnert on the May 21 AgriTalk podcast. The three discussed a recent state-of-the-dairy-industry study by Farm Journal’s Milk, touching on a range of issues that are impacting dairy farm health, including farm expansion dynamics, investing in sustainability and export prospects. To listen to the 12-minutes conversation, click here.
USDA releases dairy semi-annuals
USDA began releasing the 2024 Dairy and Products Semi-Annuals. At press time, the agency released three (click on the respective names to download): China, Mexico and New Zealand.
Company News
Dairygold to reduce cheese production amid falling milk volumes
In response to a drop in milk volumes, Irish dairy co-operative Dairygold said it will reduce cheese production over the coming summer months. The processor said the decision was made in response to a 9% decrease in milk output this year compared to the same period in 2023, and an anticipated decline of 7% for the full year. Irish dairy farmers have been struggling with extreme wet weather in 2024, and year-over-year milk deliveries throughout the country have been down significantly since the last quarter of 2023. A company spokesman said these challenges are making it “necessary for us to adapt and redistribute our milk volumes to other areas of our operations.” (The Dairy News, 5/21/24; Agriland, 5/20/24)
Yili sees significant profit increase in 2023
China’s Yili Industrial Group Co. reported a record-breaking operating income of 126.2 billion yuan (about US$17.6 billion) for 2023. The company said its liquid milk business posted an operating income of 85.5 billion yuan (about US$11.9 billion) and that revenue from its milk powder and dairy products increased 5% from the previous year. Yili also said its overseas business increased by 10% from the previous year, with products sold to more than 60 countries and regions, including notable growth in Southeast Asia and Africa. The company credited improvements in its global supply chain network and continuous adoption of new technologies for its performance, including the ongoing construction of the new lactoferrin factory of its Westland Dairy subsidiary and the development of a new “lactoferrin directional extraction and protection technology, which increased the lactoferrin retention rate in UHT milk from 10% to over 90%.” (Company reports)
Mergers, acquisitions and joint ventures
After announcing in January that it was assessing options for the release of its interest in its Froneri ice cream joint venture with Nestlé, Paris-based private equity firm PAI Partners is reportedly in talks with investors to maintain its 50% stake in the business. Reports indicate the company is exploring a continuation fund to house the investment. (Bloomberg, 5/10/24)
Company Briefs
Mexican ice cream brand Tropicale Foods said it will close its Modesto, California, plant and shift production to its existing facilities in Lubbock, Texas, and Ontario, California. The closure, which will affect nearly 300 employees, is expected to occur on July 19. … Norway-based Kavli introduced a new dairy brand in the UK with the launch of a line of whipped cheddar spreads. The new products are currently available in Tesco stores, with plans for further rollouts later this year. (The Dairy News, 5/21/24; The Modesto Bee,5/16/24)
In Case You Missed It...
U.S. Dairy Exporter Blog
Market analysis, research and news subscribe hereUSDEC Twitter feed
Follow us here.