• Potential House vote on shipping act

• Vietnam dairy protein webinar on tap

• Market Summary: China imports; NZ milk production

• USDEC's International Demand Analysis
• USDEC dairy data hub

• Colombian milk powder safeguards

• Egypt halal rules

• USDEC calls for WTO reforms

• Indian market access

• EU certificates available Dec. 6

• USDEC membership renewal

• Omicron impacts travel

• Danone converts facility to plant-based

• Company news: Pizza Pizza, FAGE, China F&B Group

 

Shipping Act could get House vote next week
Agri-Pulse is reporting that the Ocean Shipping Reform Act could get a House vote as early as next week. The Bill, introduced by Reps. John Garamendi (D-CA) and Dusty Johnson (R-SD), provides new oversight and enforcement authority to the Federal Maritime Commission (FMC), expands opportunities for shippers to seek redress from ocean carriers, and increases transparency and accountability among ocean carriers and other parties.

USDEC and NMPF collaborated closely with the Representatives’ offices during the development of the legislation, endorsed the bill and have been working to build bipartisan congressional support. (A briefing paper on the legislation can be found here and a “frequently-asked questions” document compiled by USDEC is available here.)

Senate hearing
In addition to a potential House vote on the Ocean Shipping Reform Act, the Senate Commerce Committee will hold a hearing on Dec. 7 on challenges posed by ocean shipping supply chains. Ahead of the hearing, USDEC is reaching out to Senate offices to highlight the port and shipping issues that continue to challenge U.S. dairy suppliers and threaten export business and encourage Senators to help raise these issues during the hearing.

Truckers’ hours
Separately, as part of its efforts to ease supply chain challenges, the Biden Administration extended a waiver for commercial truckers from the federal Hours of Service regulation. The original waiver was slated to expire on Nov. 30; it will now run through Feb. 28, 2022. The HOS rule limits truckers to 11 hours of driving time and 14 consecutive hours of on-duty time in any 24-hour period and requires prescribed rest periods.

Ports delay container fee plan again
For the second time, the Ports of Los Angeles and Long Beach delayed implementation of a new plan to charge fees for long-dwelling containers in a bid to reduce port congestion. While the ports report that the threat of fees helped reduce the number of boxes waiting for transport at terminals by almost one-third over the past few weeks, there is growing skepticism that the fees will ever be implemented.

The fees would be charged to ocean carriers, but media reports suggest those carriers would simply pass those fees along to importing customers.

Dockworkers contract
The International Longshore and Warehouse Union (ILWU) rejected a proposal from the Pacific Maritime Association to extend the union’s current labor contract to July 1, 2023. The ILWU contract (which was previously extended for three years) expires in July 2022.

In 2014, the last time the two sides negotiated a contract, talks devolved into a nine-month slowdown in West Coast port activity that significantly impacted U.S. exports, including dairy. The PMA and ILWU are set to begin talks on a new contract this spring. (USDEC staff; Agri-Pulse, 12/1/21; Progressive Farmer, 11/30/21; The Loadstar; 11/23/21; Bloomberg, 11/23/21)

Vietnam webinar to highlight innovation opportunities with U.S. dairy proteins
Sign up now to listen in on “U.S. Dairy Proteins: New Opportunities in the New Normal,” a USDEC webinar designed to provide Vietnamese food and beverage processors with information and insights on using U.S. dairy proteins in innovative new product designs. The webinar takes place Dec. 7 at 9:00 a.m. Vietnam time (Dec. 6, 9:00 p.m. ET).

Three speakers will look to spark formulation ideas with U.S. dairy proteins, as well as highlight how the United States stands out as a sustainable and committed dairy ingredient supplier, able and eager to service growing demand.

• Matthew Pikosky, Ph.D., RD, vice president of nutrition research at the National Dairy Council, will introduce the multifaceted nutritional advantages of U.S. dairy proteins.
  
  
• Donna Berry, owner of Dairy and Food Communications Inc., will outline how to capitalize on market and consumer trends with U.S. dairy proteins.

• Chef Norbert Ehrbar will demonstrate local-friendly product formulations made with U.S. whey protein. This demonstration segment will also include technical insights and tips for successful formulation.

To register for the webinar, click here. For more information, please contact Allison Guzman at aguzman@usdec.org.

China imports moderate; NZ milk output continues falling
Chinese dairy imports moderated in October, with only SMP, butter and lactose posting year-over-year increases. It’s too early to point to overall Chinese demand softening, since September and October are nation’s lowest volume months for dairy imports, but November and December will be more telling as the nation build to its January buying peak.

SMP imports for the month jumped 28% compared to October 2020, and China has already set an all-time high for annual SMP import volume, exceeding the 2019 record by more than 30,000 MT with two months of buying remaining.

The lactose increase (+2%, +201 MT) was the first in five months, with U.S. volume up 26% (+1,304 MT).

The U.S. outperformed in whey as well. Even though imports from the U.S. fell 2% (-519 MT), total Chinese whey imports for October declined 9% (-5,363 MT), influenced by a steady drop in pig prices that started in the spring and blunted feed demand.

Even though pig prices bottomed out in October and have been rising since, China is going up against a monster 2020 fourth quarter in which whey imports rose 45% over 2019 (+56,859 MT).

NZ milk output posts significant drop
October New Zealand milk production, coming on the heels of year-over-year declines for the United States in October and the EU in September, added more support to expectations for ongoing tight markets and elevated prices for the short term.

Year-over-year October output fell 3.3%, marking the smallest peak milk production month for New Zealand in five years. It was the third straight monthly decline. And weather continues to hamper pasture growth, making a November rebound appear less and less likely.

The trend in Australia is down as well. Year-over-year Australian milk production slipped 2.1% in October, the fifth straight month it fell short of the previous year.  

USDEC’s September International Demand Analysis ready for download
USDEC has published the September edition of its monthly International Demand Analysis. At over 60 pages, the members-only report covers global dairy trade data through September 2021, outlining the latest global dairy trade trends and data, providing members with an exclusive, forward-looking glimpse at global markets from a U.S. exporter viewpoint. It features USDEC’s own commentary, analyzing demand in the key markets for cheese, NFDM/SMP, whey (HS Code 0404.10) and WPC80+, as well as shorter summaries for lactose, butterfat and WMP. To read our monthly take on global dairy markets, download the USDEC International Demand Analysis. For questions, please contact William Loux at wloux@usdec.org.

Check out the USDEC Data Hub
USDEC’s Data Hub section at usdec.org collects dairy production, pricing, export and import numbers and organizes them into a series of meaningful, interactive tables and graphs for members to investigate trends, plan export strategy and seize global opportunities.

Each week in the newsletter, we will feature one or more of the Data Hub charts. This week’s featured charts below highlight China’s growing appetite for NFDM/SMP. You can find the graph at the Data Hub under the Key Importing Markets tab.

We encourage you to visit the Data Hub and experiment with interactive version of this and other charts, graphs and tables. If you have any questions regarding information, please contact William Loux at wloux@usdec.org.

China set a new annual record for NFDM/SMP imports in only 10 months, as January-October volume reached 374,765 MT, compared to the former record of 343,649 MT the country imported in the entire calendar year of 2019.

 

House letter to Colombian ambassador warns against milk powder safeguards
Reps. David Valadao (R-CA) and Angie Craig (D-MN) sent a bipartisan letter to Colombian Ambassador to the U.S. Juan Carlos Pinzón strongly urging Colombia to reconsider safeguard actions against U.S. milk powder imports. The letter, which USDEC helped to prepare, warns that milk powder safeguards would threaten a decade of mutually beneficial trade flows that have grown out of the U.S.-Colombia Trade Promotion Agreement (TPA) that went into effect in 2012.

Colombia initiated an investigation into U.S. milk powder imports in June to determine whether it should implement the safeguards (after a request by the Colombian Livestock Federation). The bipartisan letter is the latest in a series of USDEC-led actions to head-off such a move, including meetings with USDA and FAS, comments submitted to the Colombian government and testimony by USDEC Executive Vice President for Policy Development and Strategy Jaime Castaneda at a hearing held by Colombia’s Ministry of Commerce, Industry and Tourism (see Global Dairy eBrief, 8/13/21).

Full implementation of the U.S.-Colombia TPA deal is still underway—milk powder tariffs are dropping 2.2% per year until they reach zero in 2026. Colombia was the No. 6 market for U.S. milk powder in 2020, although shipments through the first nine months of this year were down 17%.

Global dairy groups call for changes to Egypt’s halal rules
USDEC, NMPF and other dairy organizations from the United States, Europe, New Zealand and Australia sent a joint letter to their trade representatives calling for united action in addressing Egypt’s new halal certification requirements (see the Sept. 30 USDEC Member Alert, “Egypt altering its halal requirements”).

The new halal requirement is a technical barrier to trade that will make dairy exports to Egypt more costly and cumbersome, the letter notes. It also states that Egypt created the requirements without prior notification to the WTO or other written guidance, which has created significant ambiguity regarding how the mandate will be enforced, the fee schedule and the nature of the process itself.

“We ask that your government officials continue to work together and that you engage with your counterparts in Egypt to seek a deferral of the planned implementation and a WTO-compliant approach to instituting halal certification,” the letter concludes. “In particular, we seek an outcome where Egypt allows for certification by multiple established halal certifying bodies and where there are clear, published guidelines regarding implementation procedures and reasonable dates in order to allow smooth trading conditions to resume.”

USDEC’s Trade Policy, MARA and Middle East office teams have been working with the U.S. government to press Egypt to clarify and revise its sole-source halal certifier mandate. USDEC staff will meet again with USTR and USDA staff on Monday regarding the issue.

Letter reiterates need for WTO reform, reduced ag protectionism in lead-up to MC12
The Aggies for WTO Reform coalition (of which USDEC and NMPF are active members) sent a letter to USTR Katherine Tai and USDA Secretary Tom Vilsack reiterating calls for WTO reform and reduced protectionism in agricultural trade when the 12^th Ministerial Conference (MC12) convenes. MC12 was set to take place this week, but the WTO postponed the meeting due to concerns over the COVID-19 Omicron variant. At press time, no new date had been set.

USDEC’s Jaime Castaneda will still travel to Geneva next week to meet with members of the WTO Secretariat, chairs of the WTO agriculture committees for negotiations and monitoring of current agreements, and delegations of other countries to discuss the future of WTO dispute settlement and global ag policy ahead of a resumption of more substantive work on those topics in 2022.

In addition to underscoring the importance of reforming and restoring the WTO’s binding dispute settlement system and dealing with urgent issues such as climate change and sustainability, the letter highlights the threat to open agricultural trade by legacy issues, including proposals related to public stockholding (PSH) and the special safeguard mechanism (SSM).

“The PSH proposal would significantly weaken disciplines on domestic subsidies, while the SSM proposal would seriously impair access to markets for U.S. exports in developing countries,” the letter says. “Adoption of either proposal would point the reform process in the wrong direction and doom future negotiations to failure.”

USDEC will continue to work with Aggies for WTO Reform to build support for the U.S. dairy platform and ensure that WTO agricultural talks are balanced and comprehensive and address the real issues affecting agricultural production and trade in today’s world.

House letter calls for removal of Indian market access barriers
A bipartisan letter led by Reps. Suzan DelBene (D-WA) and Brad Wenstrup (R-OH) and signed by 75 House members urges USTR Katherine Tai not to renew India’s Generalized System of Preferences (GSP) benefits until India commits to dismantling agricultural trade barriers and providing market access to U.S. products, including dairy. USDEC, which previously applauded the Trump Administration for rescinding India’s GSP status in 2019 over its unjustified dairy trade barriers, strongly supported the letter and worked to secure congressional signatures.

The letter was sent to Ambassador Tai prior to the U.S.-India Trade Policy Forum (TPF), which concluded Nov. 23. While India expressed interest in regaining GSP benefits at the TPF, no changes emerged from the discussions. GSP has currently lapsed and Congress has yet to renew the program.

In a joint statement issued at the conclusion of the TPF, the two countries agreed to work toward resolving “certain outstanding market access issues” through increased bilateral engagement, consented to continue working to expand bilateral trade in agricultural and food products through the TPF Working Group on Agricultural Goods, and committed to holding technical dialogues on animal health, plant health, food safety and other technical issues in 2022. The meeting did not yield breakthroughs on the U.S.-India trade issues that have been most challenging.

New EU dairy certificates available in Atlas Dec. 6
Dedicated work by USDEC’s Market Access and Trade Policy Teams helped ensure that the new EU dairy certificates will be available for U.S. dairy exporters in advance of their January implementation.

USDA’s Agriculture Marketing Service (AMS) plans to add the new EU dairy certificates, as well as the associated transit versions of each dairy certificate, to its ATLAS system on Dec. 6, 2021. AMS will also begin processing requests to issue the new EU dairy certificates in ATLAS on Dec. 6, 2021. In addition to the dairy certificates, AMS will also be adding composite related certificates to the ATLAS system sometime after Dec. 6, 2021. For more information see USDEC’s Member Alert, “New EU Dairy Certificates Available for Use in ATLAS Beginning Dec. 6, 2021.”

Quick recap
All manufacturers that are currently contributing or have the potential to contribute dairy ingredients to non-shelf-stable composite products or shelf-stable composite products containing meat and/or colostrum exported to the EU must now register with the U.S. Food and Drug Administration (FDA) to be added to the EU-approved plant list. Please note that there is no change to the plant registration requirements for non-composite products using one of the dairy product certificates; the EU will continue to require plants exporting dairy products to the EU to appear on the EU-approved list.

Ensuring registration
USDEC’s Market Access and Trade Policy teams have been working closely with the U.S. government to advocate for a smooth and timely transition to the new plant registration requirements. Given the close proximity of the FDA's Dec. 31, 2021, deadline for registering for the EU list before the new EU certificates' January implementation date, we strongly encourage members to register their facilities with FDA as soon as possible.

Membership renewal invoices on the way
USDEC is emailing annual membership renewal notifications today. Please check your inbox for the invoice and send in your renewal by March 15, 2022. If you have any questions, please contact Weston Abels at wabels@usdec.org.

Omicron throws wrench into international travel
The emergence of the Omicron variant of COVID-19 triggered a wave of new international travel restrictions just as countries were increasingly reopening borders and loosening quarantine regimes. The new rules vary significantly from country to country but are widespread, as authorities gather more information on Omicron’s transmissibility, severity, vaccine effectiveness and other data.

Among major U.S. dairy export markets, Japan banned new entry from all foreigners, tightened quarantines for returning citizens and foreign residents, and lowered the ceiling for the number of international arrivals. Those requirements vary depending on the nation travelers depart from. The new rules went into effect Nov. 30 and are expected to remain in place for at least a month.

The Philippines, Indonesia, Vietnam, South Korea and many others implemented new restrictions as well.

Early data from Asia and Europe are showing that the travel restrictions and Omicron unknowns are starting to erode hotel bookings. It is too soon to determine fallout on foodservice demand. (USDEC Japan office; USDEC Southeast Asia office)

Danone dairy factory conversion headlines plant-based dairy-alternative developments
Danone is converting a dairy processing plant in Villecomtal-sur-Arros, France, to produce plant-based products. Construction on the project, costing €43 million (about US$49 million), is slated to start in the fall of 2022 with production beginning in the second quarter of 2023. The company is making the change to “seize growth opportunities in plant products and meet new consumer expectations.”

The Danone announcement was one of many in the dairy-alternative space over the last couple weeks, including:

• FrieslandCampina entered the plant-based protein category with the launch of two powder products developed in collaboration with AGT Foods. The products are made from peas and fava beans.
  
  
• Sweden’s Oatly Group opened its first manufacturing facility in China. The plant can produce 150 million liters of oat-based products annually.
  
  
• California-based Perfect Day, which makes “animal-free milk proteins” using cow genes and fermentation technology, entered the sports nutrition market with ready-to-mix protein powder. The company is partnering on the project with Canada-based “wellness company” Natreve to market the line under the Mooless (USDEC Southeast Asia office; Company reports; MarketLine NewsWire, 11/18/21; Reuters 11/17/21)

Mergers, acquisitions and joint ventures
Netherlands-based margarine, spreads and plant-based foods specialist Upfield purchased Unilever’s processing plant in Cali, Colombia. The company plans to make Colombia the center of its South American operations. . . . Private-equity fund FountainVest Partners paid about $160-million to purchase China F&B Group from Swedish buyout firm EQT. China F&B is the franchisee for Papa John’s Pizza and Dairy Queen in China. . . . Mondelez International is reportedly considering buying the Snackworks snack business of South African consumer goods company AVI. (Acquisitions Daily, 11/24/21; Leaders League, 11/22/21; Bloomberg, 11/18/21)

Company news briefs
Canada-based pizza chain Pizza Pizza Ltd. signed a master franchise agreement with Guadalajara-based KSG/GrunCorp to develop and grow the restaurant’s business in Mexico. . . . Greek dairy company FAGE plans to build a new manufacturing plant in Hoogeveen, Netherlands. The €150-million (US$170-million) facility will be able to produce 40,000 MT of yogurt annually. FAGE expects the plant will begin production in the second half of 2024. . . . Danone Egypt is considering expanding production capacity at its manufacturing plant in Obour, Egypt, by 30-40% over the next two years. The Obour facility reportedly houses nine production lines. Danone also runs what it says is the third largest dairy farm in Egypt—a 5,000-cow operation in Nubaria. (USDEC Middle East/North Africa office; The Canadian Press, 12/1/21; Ekathimerini.com, 11/25/21)

• Record-setting U.S. dairy exports are like music to the ears of America's cows
• Article points out dramatic growth in U.S. cheese sales at large food retailer in Dubai
• Publication in the Middle East highlights visit by four U.S. dairy farmers
• Krysta Harden appears with NMPF leader at DMI/NMPF annual meeting (retweet)