As we have discovered, the law of unintended consequences strikes regularly with such measures. And it is always a bit alarming to see where one side sees help, the other side does not perceive it as such and instead calls it market distorting. It always just depends on what side of the fence one is on, I suppose.

I found this part from the letter the most poignant: “Farmers and dairy processors in our countries and many others around the globe are already in the fight of their lives. We are all dealing with great enough challenges already in our own markets. If the EU does not commit to avoid distorting global markets by dumping their excess intervention stocks onto the world market just as dairy sectors begin to recover, more farmers and processors outside the EU could be forced to close their doors.”

We have seen the issue of intervention causing imbalances in African markets in the past. Only a couple of years ago, African farmers came to Brussels to protest the EU stocks that were being offloaded into their markets.  “The European Union intervened in 2016-17 and held the equivalent of 16% of the global SMP market in government storage. It subsequently released the product on the world market over the next two years, unfairly undercutting international prices and harming the global dairy industry,” the letter notes.

The EU is such a large player in the dairy processing industry, but as such it means the bloc has to proceed with caution and find ways to make the current situation better for its members, to ensure their survival in these challenging times. I’m not sure the best way of doing this is by stepping on and diminishing the less-developed markets of others. These short-term actions can have long-term consequences.

The post The issue of intervention appeared first on Dairy Industries International.

A coalition of dairy organisations from Argentina, Brazil, Chile, Costa Rica, Ecuador, Guatemala, Mexico, Paraguay, Uruguay and the United States joined together in urging the EU not to repeat the inventory-building and extended market-price suppression it engaged in just a few short years ago.

Exporting large quantities of government-purchased SMP and butter at below-market rates onto the world market will prolong the deeply challenging environment under which dairy sectors are operating worldwide. The EU intervention programme would artificially distort prices for an extended period and displace commercial competition just as the world begins to recover from the immediate impacts of the Covid-19 pandemic. The groups instead urge the EU to adopt measures that further spur consumption within the EU and encourage its producers to implement appropriate production practices to survive during this difficult time.

A coalition representing dairy industries from around the Americas issued the following joint statement:
“The European Commission must avoid dumping government-purchased SMP and butter on the world market and implementing policies that undermine global dairy markets under the guise of protecting its farmers. The EU’s market-distorting practices are harmful enough during normal operations. If used in the wake of the Covid-19 pandemic, which has dramatically eroded dairy prices, they would be disastrous to the world dairy market by prolonging the current crushing economic conditions. Global buyers of SMP and butter will have little incentive to bid up prices as long as the EU government holds significant quantities in intervention.

“It’s critical that the EU act now to put a long-term plan into place regarding how to handle its government-incentivised stockpiling, given that the EU has a demonstrated history of dumping intervention purchases in a way that disrupts the world dairy market. The EU intervened in 2016-17 and held the equivalent of 16% of the global SMP market in government storage. It subsequently released the product on the world market over the next two years, unfairly undercutting international prices and harming the global dairy industry.

“Farmers and dairy processors in our countries and many others around the globe are already in the fight of their lives, working hard every day to help keep the world well-nourished through this crisis. We are all dealing with great enough challenges already in our own markets. If the EU does not commit to avoid distorting global markets by dumping their excess intervention stocks onto the world market just as dairy sectors begin to recover, more farmers and processors outside the EU could be forced to close their doors. We encourage the EU to implement policies that support greater utilisation of dairy products with the goal to increase consumption, particularly with the consumers impacted most by the Covid-19 outbreak.”

The groups issuing the statement include:

• Argentina, Sociedad Rural Argentina (SRA), Centro de la Industria Lechera Argentina (CIL)
• Brazil, Sindicato da Indústria de Laticínios e, Produtos Derivados no Estado São Paulo (SINDLEITE)
• Central America, Federación, Centroamericana de Productores Lácteos (FECALAC)
• Chile, Federación de Productores de Leche (FEDELECHE)
• Costa Rica, Cámara Nacional de Productores de Leche de Costa Rica (CNPL)
• Ecuador, Centro de la Industria Láctea del Ecuador (CIL) Asociación de Ganaderos (AGSO)
• Guatemala , Cámara de Productores de Leche (CPL)
• Mexico, Asociación Mexicana de Productores de Leche, A.C. (AMLAC), Cámara Nacional de Industriales de la Leche de México (CANILEC), Confederación Nacional de Organizaciones Ganaderas (CNOG)
• Paraguay, Cámara Paraguaya de Industriales Lácteos (CAPAINLAC)
• United States, International Dairy Foods Association (IDFA), National Milk Producers Federation (NMPF), US Dairy Export Council (USDEC)
• Uruguay, Cámara de la Industria Láctea del Uruguay (CILU)

The post Americas ask EU not to intervene in SMP, butter appeared first on Dairy Industries International.

The state association LV-NRW is in contact with milk producers, dairies and milk processing companies and has been reporting on the current situation to the German Ministry of Agriculture. The dairy companies of the area have taken far-reaching measures to protect their employees and to keep the operating facilities operational. The main measures include partitioning off the company premises, minimising personal contacts, using and expanding home office facilities and tightening general hygiene rules. In the foreseeable future, there may be bottlenecks in protective clothing, masks and disinfectants.

The changed situation on the market is causing concern. While there has been a massive increase in demand for durable products, there have been significant slumps in the export and catering sectors.

According to the Agrarmarkt Informations-Gesellschaft (AMI) there are hardly any price changes for milk and milk products. With small and medium-sized companies and the direct marketing of milk and cheese on farms, a survey of around 50 companies by Milch NRW showed a similar situation.

However, operators of milk filling stations and direct marketers are experiencing a large uptick in customers and in the quantity of goods sold. Wherever customer traffic prevails, most have created opportunities to wash or disinfect hands. Customer loyalty campaigns are increasingly being carried out in this area. There are also more new customers than usual.

But the prospect of an overall economic slowdown in the markets is to be feared, with the North Rhine Westphalian dairy industry also facing major challenges.

However, there are also positive aspects to note, according to Wilhelm Brüggemeier, chairman of Milch NRW. The importance of sustainable and regional production of basic food, including the entire chain from production to processing, is now coming back into focus with more appreciation, he says.

Milch NRW has compiled information and video clips for all relevant topics (nutrition, cooking, hygiene etc.) for consumers, milk producers, dairies and the press on the association’s homepage under ‘# STAY @ HOME’ and updates them regularly.

The post Upticks and downturns in Germany appeared first on Dairy Industries International.

“We are in a very difficult situation. Sales in the catering trade are practically zero and sales channels to Italy and Germany are becoming more difficult every day,” said managing director, Raimund Wachter.

In order to counter the seasonal increase in milk delivery, the co-operative first asked its 500 supplying farmers to voluntarily ‘significantly reduce’ the amount of milk. In addition, Vorarlberg consumers appealed to consumers to buy more regional milk products. But now the panic has gone and Vorarlberg Milch is not currently implementing its emergency plan. This means that the suppliers do not have to reduce their sales volume.

According to the company, the solidarity of the Vorarlberg population has led to higher sales. Raimund Wachter emphasises that production has not been shut down, but problems in the supply chain would have meant that the entire range was not always available everywhere.

The post Falling catering sales, rising demand in Austria appeared first on Dairy Industries International.

However, the negative effects of these exports on local production were felt by African farmers. Therefore, fellow dairy farmers from the EMB in Europe, along with non governmental organisations such as Oxfam and Veterinarians Without Borders, organised a protest in Brussels against this dumping and met with a number of policy-makers to call for a responsible EU export strategy.

One of the demands was for the Milk Market Observatory (MMO) to compile and publish information about exports from the EU of these milk powder blends. Without transparency on this front, the European Commission would continue to grope in the dark, resulting in disastrous consequences for local milk production in Africa.

The demand for appropriate data collection has now been addressed by policy-makers: As of 2020, an instrument will be implemented to monitor European Union exports of milk powder that has been re-fattened with vegetable fats/oils. With a dedicated customs code for fat-filled skimmed milk powder, it will now be possible to compile data on the exported volume and countries of destination on a monthly basis. The scope of the MMO will thus be expanded to include important additional data.

For the campaign participants, this new instrument is an important interim achievement on the way to an EU export strategy that does not threaten local markets in Africa in any way, she writes.

The post Data on milk powder will be published by the European Commission, says EMB appeared first on Dairy Industries International.

“Higher commodity prices are a welcome change for dairy producers,” said Ben Laine, RaboResearch dairy analyst. “However, as those prices work through to consumers, their willingness to pay higher prices at restaurants and grocery stores remains to be seen, with much of the world either recovering from, in the midst of, or on the verge of some degree of recession.

EU milk production is poised to grow in 2020, albeit modestly and from low year-ago levels. There are a number of hurdles to herd expansion, including environmental regulations.

Import demand from China is expected to continue to rise, although it will likely be weaker in the first half due to higher carry-over stocks and strong comparables. The potential for weaker domestic demand in the face of economic woes could further reduce the need for imports.

Combined milk production growth among the Big-7 milk-producing regions is expected to remain at, or slightly below, 1% through Q1 2021.

Cheese and SMP are taking the spotlight from butter in the latest price rally. Butter prices have mostly stabilised after varying degrees of decline around the world. Whey prices are gradually improving, but still face limitations due to the reduced demand for pig feed in China.

As market demand shifts towards protein and away from butterfat, processors will need to re-evaluate the product mix in order to capitalize on this reversal from the recent norms, which could lead to greater price volatility than experienced in the past few years.

Much more can be found in Rabobank’s Dairy Quarterly Q4 2019 report. Click here to download the report

The post Dairy Quarterly Q4 2019: Farmers Welcome Higher Prices – Will Consumers? appeared first on Dairy Industries International.

“Passing USMCA would be boon to America’s dairy farmers,” said Jim Mulhern, president and CEO of the National Milk Producers Federation. “USMCA will expand trade opportunities with our most valuable partners and secure immediate benefits for our rural communities, adding an estimated $548 million to dairy-farm revenues in its first six years after implementation.

“Newly announced improvements to USMCA will also ensure that if our trading partners flout their dairy obligations under the trade deal, the US has the tools it needs to vigorously enforce our rights. An already good deal for US dairy farmers is even better now, thanks to these changes.”

The US Dairy Export Council (USDEC) said it would specifically like to thank Ambassador Robert Lighthizer, who “provided enormous leadership” working with members of Congress to address their concerns, as well as the work of Speaker of the House Nancy Pelosi and other members of Congress who worked hard to find solutions that addressed concerns over the agreement.

“Washington has worked hard to make USMCA an even better deal for America’s dairy farmers and exporters; now we are counting on Congress to move expeditiously to pass USMCA and usher in its significant improvements to trade rules,” said Tom Vilsack, president and CEO of the US Dairy Export Council.

“Finalising USMCA will bolster international confidence in the US as a serious negotiating partner and build momentum for other trade agreements in key markets abroad. Without this crucial trade agreement, Made-in-America dairy and agriculture products could be left behind in the new year.”

USMCA makes important changes to Canada’s trade-distorting policies, reforms Canada’s controversial dairy pricing system and provides exclusive access to the Canadian market for US farmers and manufacturers. The trade deal also strengthens relationships with Mexico and establishes new protections for common cheese names, using a combination of approaches to protect the continued use of a number of generic cheese terms, such as parmesan and feta.

The post UDEC commends USMCA agreement appeared first on Dairy Industries International.

“At the time of the final WTO General Council meeting for 2019, we are calling on world leaders, through their representatives in Geneva, to intensify their efforts to progress discussions on WTO reform and agree a pathway forward to ensure that the global rules-based trade system is not put at risk with the potential discontinuation of the dispute settlement mechanism.

“The dairy industries of Argentina (Centro de la Industria Lechera); Australia (Australian Dairy Industry Council); the European Union (Eucolait and the European Dairy Association); and New Zealand (Dairy Companies Association of New Zealand), which represent the majority of global trade in dairy products, are speaking out in light of their growing concerns over lack of progress maintaining and reinvigorating the global trade rules system.

“The rules-based trade system has delivered benefits to the dairy industry across the globe. As industries closely engaged in international trade supply chains, we have operated in a relatively stable environment underwritten by rules governing border and beyond the border trade measures. Global dairy trade has gone from strength-to-strength under this framework.

“For the dairy producers, processors and traders our organisations represent, the international rules- based trading system is more important today than ever. In uncertain times, knowing that there are rules to be followed and a process for both transparency and enforcement underpins confidence in our industries and the global economy at large.

“It pays to remember that global trade has played a major role in lifting hundreds of millions of people out of poverty and that trade openness is strongly correlated to improvements in real income among the lowest earners in developing countries. Uncertainty has the potential to dampen global economic growth. It also risks our ability to achieve progress in other areas, such as in meeting the Sustainable Development Goals: global prosperity is much harder to achieve when adherence to accepted norms becomes optional.

“The system is not perfect, but the risks to our industries of a world without it are unimaginable. We urgently call on negotiators in Geneva and world leaders to find a pathway forward. There is no time to lose.”

The post International dairy supports the WTO appeared first on Dairy Industries International.

“We started with just five farmers selling liquid milk to three large customers in 1994. Twenty-five years on we have 250 members, producing over 50% of the country’s organic milk supply and are exporting added-value organic dairy products and specialist ingredients globally,” said Nicholas Saphir, Omsco’s chairman.

“It’s a complex business, balancing sales across these markets and products. Going forward into the next 25 years, our future success and returns to members will be determined by finding new markets for all of our milk constituents.”

Strategic supply chain partnerships were stated as key to this strategy, with Omsco partners, US co-operative Organic Valley and Australian dairy business Bellamy’s, both speaking about future markets for added value products made with Omsco milk at the event.

It was noted that the company’s joint membership with Organic Valley, the world’s largest organic milk pool, has opened a significant export market for butterfats, with initial orders establishing Omsco as the UK’s biggest exporter of butterfats to the US, and solid growth in organic demand offering long term growth prospects.

Also present were Wyke Farms, who partners with Omsco to make USDA certified, organic cheese. Together they supply 75% of the UK’s organic cheddar sales and 10% of the UK’s cheddar exports to the US.

“We’re dedicated to ensuring the best possible return for our members, and it is through forming meaningful, international partnerships that we’re able to achieve this,” added Saphir.

Looking to the future, animal health and welfare, reduced antibiotic use and promoting self-sufficiency in feed, were cited as the focus of Omsco’s farm strategy.

Henry Dimbleby, non-exec director of Defra leading the development of a National Food Strategy, recognised Omsco and its members as paving the way in sustainable farming and food production.

“The future success of the UK food and farming industry is vital for the UK economy, and to secure this we need to build a resilient food system,” he said.

“Omsco farmers have been at the forefront of sustainable farming from an environmental perspective, through their continued efforts to protect soils, retain carbon and restore biodiversity.”

Paying further tribute to the relationships that have been formed over the last 25 years, Omsco honoured Yeo Valley with an award in recognition of its longstanding and ongoing partnership with the co-operative, which sees the two businesses selling more organic dairy than anyone else in the UK.

The post Omsco celebrates 25 years appeared first on Dairy Industries International.

In 1979, Errico Auricchio left Italy with his wife and young children to craft specialty cheeses with the same artisan methods his family had used for 100 years.

“The idea was to start a cheese company in America, find a good manager and go back to Italy,” Auricchio said.

A manager was never found, so Auricchio stayed in the United States to become the manager, president and CEO of BelGioioso Cheese Inc.

Over four decades, Auricchio has built a cheese company with more than 700 employees making more than 30 varieties of specialty cheeses, for America, and export to 45 countries.

These and other accomplishments have made BelGioioso the 2019 Tom Camerlo Exporter of the Year. The award is presented annually by Dairy Foods magazine and sponsored by the US Dairy Export Council in honor of Camerlo, a former USDEC chairman.

The Dairy Foods Exporter of the Year must be a US dairy supplier that:

• Exemplifies leadership in advancing US dairy exports.
• Demonstrates a commitment to export market development.
• Makes exports an integral part of its overall growth strategy.

In a letter to Auricchio, Dairy Foods magazine said it chose BelGioioso as its 2019 honoree because:

• The company has grown its export activities substantially since the mid-1990s, now exporting to 45 countries.
• BelGioioso’s strategic partnership with Tropical Foods helps it target key markets, including the Middle East/North Africa.
• The company has helped USDEC design its cheese activities to meet the needs of specialty US cheesemakers, encouraging more of them to consider exports.
• BelGioioso has led efforts to preserve the right to use common cheese names around the world with Auricchio serving as chairman of the Consortium for Common Food Names.
• The company has found a way to export fresh mozzarella as its No. 1 product at a time when many foreign buyers insist on longer-shelf-life products.

Exporting with patience 

BelGioioso’s relationship with Miami-based Tropical Foods as its distributor opened up global opportunities, and exports now comprise about 6% of BelGioioso’s sales.

“The goal is definitely to increase that percentage,” said Auricchio. “But it takes a long-term investment. You don’t want to go too fast. The consumer should know your brand, know your quality. You need to establish a relationship with a good distributor. You don’t want to do this overnight.”

In China, cheese has not been part of the traditional diet but Chinese consumers are discovering and falling in love with it. The potential upside is huge.

An ongoing trade war featuring retaliatory tariffs between the US and Chinese governments has made exporting cheese to China far more expensive for US suppliers.

When Costco opened its first China store in August, BelGioioso provolone was on display, selling out in one day, thanks in part to a relationship brokered by USDEC with Costco.

Protecting common cheese names 

In his role as chairman of the Consortium for Common Food Names (CCFN), Auricchio works closely with CCFN executive director and USDEC senior vice president Jaime Castaneda to protect cheese and other food names in the public domain.

For years, the European Union has moved to give geographical indications (GIs) to common cheese names like provolone, parmesan, mozzarella and feta.

Auricchio and the CCFN support the proper use of GIs for specialised foods from particular regions, for example, Mozzarella di Bufala Campana, but oppose any attempts that would force farmers and food producers outside of Europe to rebrand familiar foods with unfamiliar names.

The new agreement brokered by CCFN provides greater support for robust protection in the United States and around the world for the name Mozzarella di Bufala Campana. The agreement protects Mozzarella di Bufala Campana as a product originating from parts of Italy but establishes the free use of the generic term “mozzarella.” The deal is a win-win, says Auricchio, because the agreement provides clarity while reducing expensive court battles, enabling cheesemakers to get on with the business of making cheese.

Read Errico Auricchio’s full story here

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In August, US export performance was in line with recent months, with overall volume about the same as June and July. Still, these volumes lagged last August’s totals across most product categories.

Exports of nonfat dry milk/skim milk powder (NDM/SMP) were 50,993 tons in August, down 18% from a year ago. Sales to Mexico were off 23%, while shipments to the Philippines (-62%) and China (-91%) were also significantly lower.

Since record export volume in March, US cheese exports have continually declined five months in a row, due to strong domestic markets. Shipments in August were 26,595 tons, down 6% from a year ago. Sales to Southeast Asia were nearly a record high (2,811 tons, +127%), but lower exports to Australia (-46%), Japan (-42%) and South Korea (-12%) dragged down the total. In addition, sales to Mexico, though up 3%, were the lowest in 11 months.

Total whey exports were 38,722 tons in August, down 21% from last year. As has been the case all year, nearly all the decline can be attributed to lost sales to China from retaliatory tariffs and African swine fever. Suppliers sold just 5,430 tons of whey to China in August, down 63% and the lowest monthly figure in 19 years. These losses were only partially offset by record whey sales to Southeast Asia (12,129 tons in August, +6%).

Within the whey complex, exports of whey protein isolate (WPI) were up 9% in August, and remain at a record pace for 2019, led by improved sales to the EU, Southeast Asia and South Korea.

Lactose exports dipped in August, falling 9% to 31,550 tons. Sales to China were down 40%, while shipments to New Zealand (-43%) and Japan (-31%) also were lower. Suppliers were successful in diverting some of these lost sales to Southeast Asia, where volume was up 36% for the month.

Exports of whole milk powder (WMP) spiked in August, reaching 6,216 tons, more than double last year, and the second-highest monthly figure in the last nine years. More than a third of the volume went to Algeria (vs. nothing last year), and Colombia and Peru also made larger purchases.

Shipments of fluid milk/cream stayed on a record pace, up 13% in August. Nearly 90% of the volume this year has gone to Taiwan, Mexico and Canada.

Among other products, exports of butterfat and food preps (blends) remained depressed in August, down 55% and 26%, respectively.

On a total milk solids basis, US exports were equivalent to 14.2% of US milk solids production in August. In the first eight months of the year, exports accounted for 14.1% of production.

From usedec.org

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Distance is no longer a difficulty for Arla Foods, which has pioneered a new supercooling technology, enabling fresh dairy products to travel long distances on ships, opening up international export opportunities.

Every year, Arla exports more than 1 billion kilos of milk-based products from the company’s 10,300 farmer owners from across Northern Europe to international markets as far afield as Asia, the US and Australia. While some fresh dairy products are frozen and flown, this method doesn’t suit the majority of Arla’s fresh portfolio, triggering its innovation team to investigate this new natural, preservative-free transport solution for fresh dairy products.

“An easy and well known way to distribute foods to distant markets is freezing and flying but this destroys the quality of some of our products. We’re seeing more and more markets requesting chilled, fresh tasting and natural products rather than frozen products that require defrosting or products with preservatives. Our new, innovative cooling tool overcomes this challenge, creating possibilities to expand our product portfolio globally,” said Lars Dalsgaard, senior vice president product and innovation.

“We have found that the relationship between time and advanced cooling is one of the keys to unlocking portfolio limitations in markets outside of Europe. Controlling these variables enables us to put the product into hibernation mode, or ‘to sleep’, and deliver it fresh and in top quality at its arrival,” said Lars.

A supercool new launch in Australia

Arla has been looking to expand its range of Castello cheese in Australia, but many of its short shelf-life products can’t be frozen and wouldn’t make the journey from Denmark where they’re made.

Recently, the first shipment of Castello Decorated Cream Cheeses landed in Australia, having been stored in special containers under supercooled conditions.

“We are thrilled by the quality of the product and excited to launch a unique and premium offering of cream cheeses for Aussie consumers. Supercooling has been instrumental for the launch of Castello Decorated Cream Cheeses, but this is just the beginning.” said brand manager for Castello in Australia, Rucha Sarma.

The new process can unlock significant growth opportunities by bringing a broader portfolio of short shelf-life products to markets.

“This may sound simple, but achieving the extremely precise time versus temperature balance, which supercooling requires, demands unwavering persistence and passionate focus from our innovation team. In close collaboration with supply chain, logistics and local markets, they’re making mission impossible, very possible,” said Lars.

The new tool is currently being tested on a range of different fresh dairy products from milk and yogurt to cheeses.

The post Arla employs supercooling technology for long-distance transport appeared first on Dairy Industries International.

The State Council Tariff Commission of China has announced (Friday Aug 23) that it would from September 1 and December 15 impose 10% and 5% additional duties on a wide range of American exports (both rates being applied to different products on both days) – with Chinese government documents clarifying the wide range of products affected.

The Chinese commission released two lists of tariffs – the September 1 schedule of duties – see here and the December 15 list – see here

The commission said this was a response to recent US government announcement of a 10% tariff on approximately USD300 billion’s worth of goods imported from China, also to be imposed on September 1 and December 15.

In a statement released in Beijing, it said: “The US measures have led to the continuous escalation of Sino-US economic and trade frictions, which have greatly harmed the interests of China, the United States and other countries, and have also seriously threatened the multilateral trading system and the principle of free trade.”

Most dairy products sold by the USA to China will be affected, from September 1 – opening potential market opportunities for European dairy exporters, especially as these duties augment tariffs already charged om American products.

The September 1 list notes that 5% duties will be charged on US-made cheese (including fresh, powdered and blue cheese), milk, cream, butter, buttermilk and curd. Also, on December 15, 5% duties will be imposed on US-made anhydrous lactose, and other lactose and lactose pulp; and 10% on US-made ice cream. American-made food products including dairy – for instance cookies – are also covered. These, for instance, attract a 10% Chinese duty from December 15.

American dairy exports to China have already been falling, as many have already been subject to retaliatory Chinese duties since last July (2018), when sugared and unsweetened milk and cream, buttermilk, whey, butter, cream sauce, solid milk products, yoghurt, and cheese were hit with 25% duties, to which the new 5% duties will be added.

In 2017, the USA exported USD61.8 million’s worth of cheese to China – that fell to USD57 million in 2018, according to international trade data. And US exports of powdered milk or cream to China fell from USD68 million in 2017 to USD40 million in 2018. European Union (EU) dairy exports to China have yet to benefit significantly, however, although EU cheese exports to China have risen slightly from USD98 million in 2017, to EUR100 million last year (2018). EU dairy industry association Eucolait noted on August 1 that June (2019) “EU whey exports to China [are] almost on par with last year thanks to the US-China trade war.”

American dairy sales to China have continued to fall, noted the USA Dairy Export Council, which said that first half 2019 sales to China for key products milk powders, cheese, butterfat, whey products and lactose were down 54% year-on-year, while sales to other markets were up 5%. Sales of cheese to China for this half were down 46% year-on-year, and whey exports to China were down 58% in the first half, a loss of more than 12,000 tons per month, said the council.

A note from Asian business advisors Dezan Shira & Associates said: “The new tariffs represent an overall total value of about 10% of all US-China bilateral trade, which …means that another USD75 billion…is about to have new or additional tariffs imposed upon them – a significant burden for US suppliers to China.”

The trade war has also been bad news for Chinese dairy exporters hoping to enter the US dairy market. The latest duties announced by the US Trade Representative (USTR) – which sparked the latest round of Chinese retaliation – include 10% tariffs on a wide range of dairy products. Those that come into force on September 1 are being levied on China-made milk, cream, powdered milk or cream, condensed milk, buttermilk, yoghurt, sour cream, butter, milk protein concentrates, and cheese, including fresh, powdered, processed and blue cheese. Chinese dairy exports to the USA, are, however, negligible.

Will the US-China trade war end any time soon, restoring export competitiveness to the American dairy sector? US President Donald Trump claimed at the G7 summit in Biarritz, France, on August 26, that serious talks with China over resolving the ongoing trade war with France are imminent. But the Chinese government said no date had been fixed for the resumption of talks – perhaps indicating that US weakness in the China dairy market may continue for the rest of this year least.

The post China imposes retaliatory tariffs in US dairy sector appeared first on Dairy Industries International.

• Coastal Cheddar – a rugged and 15-month matured cheddar produced and matured at the Ford Farm Dairy, Dorset
• Il Truffelino – a premium cheese combining the creamy texture of English cheddar with Black Summer Truffle, made by Somerdale
• Wensleydale & Cranberry 
• Mexicana – a mix of bell and jalapeño peppers blended with British cheddar, made by Norseland
• Somerdale Best of British Cheese four cheese selection pack

Alexander Macdonald, director of LondonFood Ltd, Somerdale’s associate partner in China said: “We are very much looking forward to promoting Somerdale International’s fantastic range of British cheeses in the first of what, I believe, will be many Costco stores in China. It has been a great experience working with the Costco team here in China. We have focused on ensuring that the British cheese we are offering is tailored to local demand requirements and we are confident that the sales will be significant.”

Stephen Jones, managing director of Somerdale International said: “Costco is one of the world’s most successful retailers. Having already established a strong relationship with Costco in Australia, we are delighted that our British cheese will be part of the food offer in their first store in China. There is an increasing demand for high quality British food in China and we are witnessing increasing interest in British cheese and dairy products. We have a great story to tell in relation to product quality, environmental standards and provenance and, last but not least, the great taste of our cheeses.”

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Finalising a deal

In an effort organised by the National Milk Producers Federation and the US Dairy Export Council, 70 dairy companies, farmer-owned co-operatives, and associations sent a letter to the United States Trade Representative and the US Secretary of Agriculture asking the US government to capitalise on the conclusion of Japan’s national elections and quickly finalise a strong trade deal with Japan in order to secure critical market access for the dairy industry here at home.

“Given that Japan is an established market with a growing demand for dairy products, the successful negotiation of a robust trade agreement with Japan will bring a much-needed boost to the economic health of the US dairy industry and set our industry up on a path to compete effectively there moving forward. Securing robust dairy export opportunities into this overseas market will be critical to restoring confidence for our dairy farmers and processors across the country,” they wrote.

The US dairy industry relies on stable export opportunities to markets abroad and Japan represents a major opportunity to expand growth. However, the group fear the Japan-EU agreement and the Comprehensive and Progressive Agreement for Trans- Pacific Partnership (CPTPP) have allowed the European Union, New Zealand and Australia to position themselves to seize sales from the US dairy industry. They demand “swift negotiation of a trade deal with Japan that builds upon the best components of the Japan-EU agreement and the CPTPP is urgently necessary for America’s dairy farmers and processors”.

Industry comments

“Eroding dairy competitiveness in Japan is at a critical point. The time to re-level the tariff and access playing field is right now,” said Stan Ryan, president and CEO of Darigold. “Today Darigold supplies over 50% of the US American-style cheese exports to Japan. Those sales will soon be lost as competitor trade deals take effect.”

“Japan has been a very important market for Leprino Foods Company’s US-produced products for years,” said Sue Taylor, vice president of dairy policy and procurement for Leprino Foods Company.

“We invested heavily in developing lactose and whey protein exports several decades ago and, more recently, mozzarella exports into this important market and believe that the market has significant further growth potential. We risk losing these sales and growth opportunities to competitors who recently finalised preferential trade agreements unless the US negotiates a strong agreement. We are
very supportive of the administration’s efforts to secure an agreement that allows us to retain and grow this important market.”

“Japan is an important market for Glanbia Nutritionals, where we have the opportunity to grow our dairy exports,” said Wilf Costello, chief commercial officer for global cheese with Glanbia Nutritionals.

“We are at an important juncture where our competitors have secure preferential trading terms that are impacting US dairy ambitions. To ensure we can deliver on the opportunity in Japan, we need our trade negotiators to quickly finalise a trade agreement that secures access for American dairy products and ample room to grow.”

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The UK cheese supplier, which was launched by business partners David Evans and Kevin Beer in January 2019, buys in cheese from manufacturers across the world, and sells in bulk to its customer base both nationally and internationally.

The business is now on track to sell 4,000 tonnes of cheese against a prediction of 1,650 tonnes in its first year of operation. As a result of strong demand, the company turned to Lloyds Bank to secure an invoice finance facility to free up cash ahead of client invoices being paid.

The funding is part of the bank’s pledge to lend £1.5billion to local businesses this year. It will be used to support the firm’s daily cash flow needs and allow it to take on more contracts to enable quicker growth.

The business has already secured £5million worth of sales and is set to more than triple its £3million target by the end of the year. By 2020, the business expects to increase its workforce to five people, including finance, technical and administration roles.

David Evans, co-founder of Millbrook Dairy, said: “Between Kevin and I, we have almost 60 years’ experience in the dairy trading industry. The cheese sector has a high capital demand, but this isn’t something that was going to stop us setting up our own business. We both felt the time was right for us to make our move, so without hesitation we agreed to set up our trading and grading company.

“We are passionate about what we do, and we take the time to identify the best possible ranges of cheese for our clients. This has led to an incredibly positive reception so far this year, and Lloyds Bank has stood by our side by committing to support us in the coming months and years ahead.”

Jon Cockbain, relationship manager at Lloyds Bank Commercial Banking, said: “We have established a close working relationship with Millbrook Dairy. The funding facility is allowing the business to reach for heights well beyond its hopes and expectations for the first year, to help both the South West and Britain prosper.”

“Millbrook Dairy has a very bright future ahead, and we are looking forward to continuing to work alongside them as they continue to invest in the business.”

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The new agreement will remove nearly all tariffs on goods traded between both sides, phased over a period of 10 years. The European Parliament still needs to approve the deal, before it can come into force. They hope this will be before the end of the year.

Vietnamese trade in goods is estimated to be worth €47.6 billion a year. Under the new agreement, Vietnam will remove 65% of duties on EU exports with immediate effect, with the rest removed over a 10-year period. EU duties on Vietnamese exports will be eliminated over a 7-year period; the shorter time period accounting for the fact that Vietnam is still a developing country.

Currently, EU dairy exports to Vietnam face tariffs of up to a 20%. Under the new agreement, these will be removed over a 5-year period.

The EU exported nearly 74,500 tonnes of dairy products to Vietnam last year.  Like many Asian countries, milk and whey powders accounted for the largest proportion of exports, given their multiple uses for reconstituted drinking milk or food manufacturing inputs. Exports of small packs of liquid milk make most of the remaining export volumes.

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The headline figure, which has risen from 74% since the 2018 report, highlights the mutual importance of the relationship between the two long-standing trade partners, as businesses prepare for a number of possible Brexit scenarios.

Despite the impending deadline, the research revealed 57% of respondents reported an increase in sales to the UK and a further 29% reported stable revenues, with 8 out of 10 Irish companies planning to maintain or grow sales in the UK over the coming year.

However, the report also revealed that Irish firms are becoming increasingly concerned by the cost implications of customs compliance and stockholding; potential challenges around logistics; and, consequently, many have halted investment plans due to the continued uncertainty of the evolving Brexit landscape.

Bord Bia’s 2019 Brexit Barometer is the third in a series of annual studies that provide a comprehensive measure of Brexit readiness across Ireland’s food and drink sector with findings from 130 companies. It is the basis and risk diagnostic tool from which Bord Bia offers a tailor-made suite of supports to Ireland’s largest indigenous industry which is uniquely impacted by Brexit. The UK accounted for 37% (+2%) of all Irish food and drink exports last year, amounting to trade worth €4.5 billion.

Launching the report, the Minister for Agriculture, Food and the Marine, Michael Creed, said: “Amidst the continuing uncertainty around Brexit, this report highlights the true value of preparedness. My Department, working with Bord Bia, has dedicated considerable resources to ensuring that the unique position of the Irish food and drink industry in all Brexit scenarios is firmly understood. The coming months will bring another Brexit deadline, but it is encouraging to see that our industry is doing all it can to prioritise what it can control in facing these challenges.”

Presenting the findings of the 2019 Brexit Barometer, Tara McCarthy, CEO of Bord Bia, said that it points to a year of emphatic progress as Ireland’s largest indigenous industry prepares for one of its most significant challenges ever.

“With 93% of food and drinks companies that responded to the Barometer, representing 72% of all UK exports, makings plans and taking action, we have witnessed transformative levels of engagement due to two interlinked factors: firstly, the expectation for much of 2018 that a negotiated agreement was finally in sight and, secondly, the return to prominence of a ‘cliff edge’ no deal Brexit which remains a looming threat. This experience left Irish exporters in no doubt that their future trading relationship with UK customers should be managed as a priority.”

Key findings from the full report:

Brexit readiness: 93% have made progress but 68% still uncertain about impact:

• 86% of respondents are clear that Brexit will have an impact on their business but 68% (are still uncertain about what that impact will be.

Customer relationships: stockholding and customs top of agenda for UK customers

• Irish food and drink firms are now highly engaged with their customers on Brexit planning.  79% have spoken to their customers about Brexit in the past month, rising to 96% in the past 3 months, while many large food and drink firms cite daily conversations with key buyers. Key discussion topics are stockholding (58%), customs duties (47%) and the sharing of general Brexit updates (42%).
• In the past year, 57% of respondents reported an increase in sales to the UK and a further 29% reported stable revenues.
• That said, Irish companies are taking a more measured approach to growth projections for the UK due to the continuing uncertainty that prevails. 8 in 10 companies are planning to maintain (36%) or grow (41%) sales in the UK.

Supply chain: companies fear UK supply chain partners aren’t prepared

• The number of Irish firms who have actively mapped their supply chain has increased significantly to 89% (62% in 2018). However, there are clear levels of discomfort amongst respondents about how prepared some supply chain partners are.
• 70% of companies have developed contingency options for holding stock in response to Brexit, with 85% of companies activating those plans.  Stockholding adds a layer of unrecoverable cost for companies and it is important that this is incorporated into financial planning.
• Over half (52%) of respondents are holding up to 3 weeks of stock outside of Ireland.  In the lead up to the October Brexit deadline, stockholding will become far more complex due to storage being at full capacity in preparation for busy Christmas trading.

Customs and controls: A doubling in firms now counting the cost of customs

• The number of Irish companies expressing high or slight confidence in managing customs compliance in the 2019 Brexit Barometer has increased four-fold to 83%, up from 28% last year, and highlights the extensive customs training resources Bord Bia has deployed across the food and drink industry.
• Food and drink firms are taking many of the practical steps required to be customs ready, evidenced by the 85% of respondents who have applied to the Irish Revenue Commissioners for an EORI number bucking the trend nationally in other sectors, but there is still more to do ahead of the next Brexit deadline.
• 51% of respondents have now calculated the cost of customs processes and compliance, a doubling on the 25% in 2018.

Financial resilience: half of companies expect Brexit hit of up to 10% on EBITDA

• Two thirds (62%) of food and drink firms outlined that Brexit is having an impact on their investment plans, compared to one year ago when half (50%) said that Brexit was having no impact on their plans. The passing of two Brexit deadlines in March and April is likely to have crystalized Brexit as material risk to which firms responded by tightening future investment.
• 29% of respondents have put investments on hold while 20% have delayed or put operational spend on hold.
• Brexit costs relating to logistics and supply chain and customs compliance are having the biggest impact on companies’ cost base. Estimating the financial impact of Brexit is challenging due to uncertainty around the outcome. However, almost half (45%) of respondent companies expect Brexit to cost them in the region of 1-10% of their profitability.

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While cheese imports in 2018 increased by 1,734 tons (+3.0%) compared to 2017, fresh cheese and mozzarella grew by approximately 1,337 tons, representing about 80% of volume growth.

The average import price rose again in 2018 to CHF 6.85/kg (€6.17) compared to CHF 6.48/kg in 2017.

Germany remains the most important market for Swiss cheese, both in terms of export and import, especially for low-priced products for industry and gastronomy.

Swiss cheese exports (up 1.4% by volume) increased both to European and to non-European markets.

Growth was weak in the saturated and competitive European market. Therefore the SCM has decided to intensify its activities in six markets. In the Nordic countries, Swiss cheese exporters and a variety of organisations can now rely on an SCM expert, who works exclusively for the promotion and marketing of Swiss cheese. And in the near future, such an option will be employed in the US as well.

The export of Swiss cheese remains essential, so that the current level of production can be maintained. The worldwide search for new sales opportunities is therefore a major challenge facing SCM, the organisation says.

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The overall global butter fat fraction market is expected to register growth at a CAGR of 7.5% in terms of market value from 2018 to 2028 (Forecast Period).

In the overall global butter fat fraction market, there is an increase in the competition and high fragmentation. This competition is increased due to the presence of various players in the butter fat fraction market, however it helps to boost the development of innovative and new products in the butter fat fraction market. This will aid the growth of the butter fat fraction market in terms of market value throughout the forecast period.

MFGM segment holds lion’s share of market value

By ingredient type, the MFGM (Milk Fat Globule Membrane) segment is expected to hold a share of more than 66% in terms of market value, which will reportedly increase to around 75% towards the end of the forecast year 2028.

The Ganglioside segment, however, is expected exhibit a slow growth in terms of value in the butter fat fraction market.

Among regional segments, North America held the largest market share of 42.1% by 2018’s end in terms of market value. In Europe, the demand for butter fat fraction is  increasing at higher growth rate especially in UK, France, Germany, Spain, Italy, and other European countries.

An increasingly health conscious population, changing lifestyle habits and increasing consumer expenditure on healthy and premium food products are some of the key factors driving the growth of premium nutrition products in these countries.

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