U.S. releases details of interim U.S.-Japan trade deal
USTR Robert Lighthizer and Japanese Ambassador to the United States Shinsuke Sugiyama officially signed the bilateral interim trade deal on Monday, Oct. 7, simultaneously releasing a series of documents outlining the details of the pact.

Select specifics
USDEC has prepared a summary of the agreement’s key dairy elements. You can download that summary here.

In addition, staff is preparing a more thorough rundown of the dairy-relevant portions and will publish a complete outline in the Trade Agreements section of the USDEC Export Guide later this month. For those interested in poring through the original documents on their own, see the links below.

USTR released the agreement in nine online documents and created seven fact sheets outlining specific parts. The dairy-relevant links are as follows:

• U.S.-Japan Trade Agreement Dairy Fact Sheet
• Tariff details for U.S. products shipped to Japan (116 pages)
• Side letter on Japanese Agricultural Safeguards (4 pages)
• Side letter on WTO TRQ for SMP (2 pages)
• Side letter on whey safeguards (4 pages)

More work to be done
USDEC has been working closely with the administration to advocate for a strong dairy package with Japan that will help restore U.S. competitiveness in that key market.

As USDEC noted when President Trump and Japanese Prime Minister Shinzo Abe signed the initial agreement in late September (see Global Dairy eBrief, 9/27/19), this is clearly an important step in the right direction and a sizable improvement on the status quo with Japan. However, it does not deliver the full range of access to the Japanese dairy market that USDEC has been seeking.

We have been encouraging the administration to pursue those further pieces as it continues negotiations with Japan aimed at concluding a comprehensive agreement.

Questions on the agreement can be directed to Jaime Castaneda (jcastaneda@usdec.org) or Shawna Morris (smorris@usdec.org).

Doud to speak at next week’s board meeting
The USTR’s Chief Agricultural Negotiator Gregg Doud has confirmed that he will speak at USDEC’s Board of Directors and Annual Membership Meeting during the lunch on Oct. 15. Doud plays a critical role in ensuring U.S. dairy and agriculture are represented during U.S. trade talks, and has participated in U.S.-Japan negotiations, U.S.-Mexico-Canada Agreement talks, discussions to resolve the U.S. trade war with China, and other matters of interest to U.S. Dairy.

More than 130 U.S. dairy industry representatives have registered for the Oct. 14-15 USDEC Board of Directors and Annual Membership Meeting at Chicago’s Swissôtel. If you haven’t signed up, you still have time. Go to USDEC’s board meeting page where you can find links to register as well as details on presentations, speakers and start times. See you in Chicago!

Last chance to sign up for Oct. 16 halal workshop
Opportunities for halal-certified products are growing exponentially throughout Asia. Learn how your company can take part in that growth at the Oct. 16 USDEC seminar, “Making Halal Work for You.”

Read the USDEC Exclusives story, “The gateway to dairy exports in Southeast Asia,” to hear why USDEC Southeast Asia office leader Dali Ghazalay strongly recommends the seminar for any U.S. supplier looking to serve the region’s rising demand for halal foods and beverages. The meeting will explore a range of topics, from regulatory vs. commercial requirements to who certifies halal products in each country. Whether you are a halal novice or your cheese or ingredient has already obtained certification, you will acquire important market insights and tips to grow your business at “Making Halal Work for You.”

For more information, go to USDEC’s halal seminar page.

Onward and upward for SMP
European prices for milk powder and whey are higher this week, led by ongoing strength in SMP. Current supplies of SMP are tight. Algeria recently concluded a tender for an estimated 55,000 to 60,000 tons of milk powder, with most of the SMP volume reportedly awarded to the EU. European cheese supplies are snug, but sentiment is dampened by the pending UK-EU split and news of U.S. retaliatory tariffs on EU cheese. Butter trade is quieter.

EU milk production is nearing its seasonal trough, though volumes are above a year ago. We project fourth-quarter output up 0.7% from the depressed levels of a year ago.

Southern Hemisphere
Oceania prices are generally steady. The forward curve on dairy futures in New Zealand is flat into 2020, reflecting a balanced market looking for a push to move one way or another.

A mild winter and favorable pasture conditions are supporting a strong flush in New Zealand. Here, too, we project fourth-quarter production up 0.7% over last year’s record volume. Seasonally strong production is keeping a lid on Oceania prices.

Australia milk production was down 5.9% in August, and down 6.9% in the first two months of the new season. Dry weather and herd reductions continue. Lower production is translating into considerably lower exports: shipments of milk powder, cheese, butterfat and whey were down 23% in July-August, with especially steep declines in SMP.

Argentina exports also remain reduced. Shipments in August were down 20% from last year, with WMP exports just half of prior-year levels. Suppliers could see improvement in the months ahead, as most of the WMP volume in the Algerian tender reportedly will come from Argentina.

U.S. dairy export value reaches five-year high
Through the first eight months of 2019, U.S. dairy export value reached $3.92 billion, up 3% from January-August 2018 and the highest figure in five years. Higher cheese and WPI sales helped drive the increase together with stronger dairy ingredient commodity pricing.

In August, U.S. export performance aligned with recent months, with overall volume about the same as June and July. August volume of major products (milk powder, cheese, whey products, butterfat and lactose) fell 14% compared to the previous August. But there were some bright spots. WPI volume remains on a record pace, up 9% in August vs. the previous year and up 6% year to date. August also saw record whey sales to Southeast Asia (12,129 tons) and the second-highest volume of U.S. WMP shipments of the past nine years (6,216 tons).

For a deeper dive into August and year-to-date data, download the Latest Month Trade Data Summary. To explore interactive charts that allow you to analyze performance product by product, visit USDEC’s U.S Export Data page.

If line is trending up, currency is strengthening vs. U.S. dollar (U.S. dollar is weakening). This is favorable for exports, because it increases import purchasing power. If line is trending down, currency is weakening vs. U.S. dollar (U.S. dollar is strengthening).  This is unfavorable for exports, because it decreases import purchasing power. Currency exchange rates are calculated for Wednesday of each week. Source: Oanda.com.

 

Indonesia to review U.S. dairy plant applications
In mid-November, the Indonesian Ministry of Agriculture Directorate General of Livestock and Animal Health Services (DGLAHS) will be conducting a desk audit (review) of all dairy plant registration applications for dairy plants that are not currently listed on the Indonesian dairy plant list. USDEC members wanting to add plants not currently registered to export to Indonesia must complete the dairy plant questionnaire, including all required supporting documentation, and submit this packet to the Foreign Agricultural Service (FAS) office in Jakarta no later than Thursday, Oct. 31. For more information, see USDEC’s Oct. 9 Member Alert.

Mexican lawmaker seeks tariff on milk powder imports
Earlier this month, a Mexican lawmaker introduced a proposal to apply a tax of up to 30% on milk powder imports. While there is no certainty that the proposal will move forward and gain approval, USDEC is taking the move seriously. Staff is already working on it with the U.S. Embassy in Mexico as well as USTR and USDA, given that a similar threat emerged a few months ago. USDEC is underscoring to the U.S. government the damage such a move would cause to the U.S. dairy industry and the need to ensure the Mexican administration rejects what would quite clearly be a violation of Mexico’s trade commitments. We will notify you of any developments with the issue as they become clear. (USDEC Mexico office; USDEC staff)

USDEC leads defense of science-based rules at IDF summit
USDEC staff traveled to Istanbul, Turkey, in late September for the International Dairy Federation (IDF) World Dairy Summit as part of our continuing effort to defend the role of science-based regulations and policies affecting the global dairy industry. The World Dairy Summit brings together dairy farmers, processors and others integral to the dairy supply chain to strategize and collaborate to advance dairy’s global interests and develop the necessary scientific base to support those goals.

The U.S. sent over 50 participants, including several members of USDEC’s Trade Policy and Market Access teams.

• Shawna Morris served as the U.S. National Committee’s (USIDF) lead delegate to the IDF General Assembly and Chair of the USIDF delegation.
• Morris also joined Jaime Castaneda and William Loux in attending the Dairy Policies and Economics Standing Committee meeting, fielding questions from other countries’ dairy delegations regarding U.S. dairy policies and trade-related activities.
• Nick Gardner attended the Standing Committee meetings on Nutrition & Health, Standards of Identity & Labeling, and Food Additives. Gardner was elected to a leadership position on the Standing Committee on Standards of Identity & Labeling and served as the U.S. spokesman for several critical issues with specific impacts on U.S. dairy exporters.

In each meeting, USDEC’s goals were to secure consensus on IDF positions that promote rules-based dairy trade grounded in sound science. Outreach ahead of the meeting helped to generate consensus and IDF adoption of several key U.S. positions on IDF projects that will help to advance U.S. priorities in Codex, through IDF’s national network and in other international organizations. This successful utilization of IDF to advance USDEC’s global priorities reflects USDEC’s enhanced focus on IDF engagement as an important tool to support and grow U.S. dairy exports.

Peru meetings strengthen relationships with U.S. allies in Latin America
USDEC’s Jaime Castaneda and Nick Gardner have been in Peru the past three days meeting with USDEC’s Latin American partners in the Pan American Dairy Federation (FEPALE) as well as government and industry officials. It is the latest in a series of strategic outreach efforts in the region to foster collaboration to combat trade-inhibiting regulations and policies from Codex, the World Health Organization (WHO) and the U.N. Food and Agriculture Organization (FAO), as well as actions by some producer organizations seeking limits on the use of milk powder. (See the Aug. 8, 2019, issue of Global Dairy eBrief for Castaneda and Gardner’s visit to Costa Rica this summer to sign a Memorandum of Understanding with the Inter-American Institute for Cooperation on Agriculture and to build relationships with local Codex officials.)

This week, Castaneda and Gardner met with the Ministries of Health, Agriculture and Commerce as well as local industry to discuss important topics such as collaboration for upcoming Codex challenges, how some WHO/FAO policies are harming dairy and how the parties could work together to manage these challenges. They also met with the U.S. Embassy to advance the interests of the global dairy industry and support U.S. dairy exports.

Latest updates to USDEC Export Guide, Testopedia
USDEC updated 12 sections of the USDEC Export Guide in September and added  test methods in Testopedia for four countries/regions. Major changes include:

Volume 1: Tariffs

• China: Updated to reflect that as of Sept. 17, 2019, whey permeate for feed of 0404.10 is excluded from China’s retaliatory tariffs and is subject to the MFN rate of 2% through Sept. 16, 2020.

Volume 2: Import Requirements

• Algeria: Changed introduction to reflect the fact that the temporary ban list is no longer in effect and has been replaced with additional temporary safeguard tariffs.
• Indonesia: Updated the U.S. Dairy Plant Registration or Approval section with recommended responses to the plant registration questionnaire.

Volume 3: Standards and Labeling

• Canada: Incorporated Safe Food for Canadians Act into all documents.
• Qatar: Added shelf-life requirements for milk and cheese.

Testopedia: Test Methods

• Gulf Cooperation Council (GCC): 11 new methods for the GCC, including microbiological criteria and sampling of food products.
• Korea: Aflatoxin in powdered milk.

Every month USDEC’s Market Access team emails a list of guide updates to interested members. If there is anyone at your company who should be included on the distribution list for that email in the future, please contact Jessica Smith at jsmith@usdec.org. (USDEC staff)

Join USDEC’s Central American Ingredient Innovation Seminar on Nov. 5
There are clear opportunities for U.S. dairy ingredient suppliers in Latin America as the region’s food and beverage processors learn about U.S. proteins, permeate and milk powder. USDEC will be providing some of that education at a Nov. 5 U.S. Ingredient Innovation Seminar in Guatemala City and invites USDEC members to take part.

The seminar targets food and beverage processors in the six largest countries in Central America: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama. The aim is to increase U.S. dairy ingredient use via a two-fold approach:

• Educating potential U.S. dairy ingredient end-users (R&D, procurement, marketing) on the functionality and nutrition of U.S. dairy proteins, permeate and milk powder for a broad range of food and beverage applications.
• Connecting USDEC members with potential buyers in the region via member presentations, one-to-one meetings and a networking reception in a mini-trade show environment.

For more information, please contact Keith Meyer at kmeyer@usdec.org. In addition, for a full list of upcoming marketing events, visit USDEC’s online Marketing Calendar.

Vilsack outlines reasons for export optimism to World Dairy Expo attendees
USDEC President and CEO Tom Vilsack sought to reinforce farmers’ faith in the benefits and growth potential of exports during a speech at last week’s World Dairy Expo in Madison, Wis., and in subsequent media interviews stemming from his appearance.

Vilsack expressed confidence that despite challenges like China’s retaliatory tariffs, the United States needed to play the long game with exports. And he pointed to several reasons for optimism moving forward, everything from the U.S.-Japan interim trade deal to potential for new business in Indonesia to next year’s launch of the U.S. Dairy Center for Excellence in Singapore.

Listen to the Secretary’s 9-minute interview from World Dairy Expo with Brownfield Ag News. Also read the U.S. Dairy Exporter Blog piece: “Vilsack lists reasons for U.S. dairy farmers to smile about the future of exports.”

Nominations open for 2020 sustainability awards
The Innovation Center for U.S. Dairy is seeking nominations for the 2020 U.S. Dairy Sustainability Awards program. If you know of any original, cutting-edge, successful examples of dairy farm, dairy manufacturer or community efforts that demonstrate sustainable practices or sustainability leadership, fill out a nomination form now.

There are four nomination categories: Outstanding Dairy Farm Sustainability; Outstanding Supply Chain Collaboration; Outstanding Dairy Processing & Manufacturing Sustainability; and Outstanding Community Impact.

For inspiration, take a look at the stories from past winners and download a nomination template to recommend your candidate. Nominations are due Nov. 15, 2019. Winners will be announced during a special ceremony on April 22, 2020, during the annual Dairy Sustainability Forum.

U.S. dairy has a great sustainability story to tell. We know U.S. dairy manufacturers are devoting significant time and resources toward becoming socially responsible companies. Competitions like the sustainability awards are excellent opportunities to spread U.S. dairy sustainability efforts to a broader audience, while at the same time addressing negative misperceptions about dairy’s environmental impact.

 

MILK creates clickable dairy export impact map using GotDairyJobs.com data
Farm Journal’s MILK magazine has created an interactive graphic that puts the state-by-state impact of dairy exports just a click away. The graphic makes it easy to quickly pinpoint the role of dairy exports in your state’s economy and job market, information that could be useful when communicating with city, state and federal officials.

The data comes from an economic analysis by USDEC and NMPF, based on 2018 data from USDA and the U.S. Census Bureau. For state-by-state info bundles showing not only the impact of dairy exports but the impact of all dairy products, see GotDairyJobs.com. For MILK’s original article containing the map, see, “How Many Dairy Products Does Your State Export?”

 

Saturday is National Farmers Day
USDEC appreciates its farmer-funders. The national dairy checkoff funds 63% of USDEC’s 2019 budget, with an additional 12% from state and regional checkoff organizations that have chosen to support The Next 5% initiative. Farmers have a great sustainability story to tell, and in the past week USDEC has helped share two new videos recognizing dairy farmers as “the original environmentalists.”

Both farmers and U.S. dairy manufacturers and exporters have great sustainability stories to tell. We urge you to utilize the farmer videos as well as information about your own company’s sustainability efforts in your storytelling and to provide a more complete picture of U.S. Dairy’s overall sustainability. Watch USDEC’s Twitter page on Saturday for more information on National Farmers Day.

FrieslandCampina signs mozzarella agreement with Royal A-ware
Dutch dairy giant FrieslandCampina signed an agreement with Royal A-ware that the company says will expand its international position in mozzarella cheese as well as its product portfolio. Under the terms of the deal, FrieslandCampina will provide raw milk to A-ware. A-ware will process the milk and make the cheese at its new production facility in Heerenveen, Netherlands.

The mozzarella plant was originally built as part of A-ware’s partnership with New Zealand’s Fonterra Co-operative Group. The mozzarella agreement was recently terminated as part of Fonterra’s strategic reorientation, but Fonterra will continue to process whey and cream from the cheese facility at its neighboring Heerenveen site. (Company reports)

Fonterra expects underutilized mozzarella plant to eventually reach capacity
Fonterra’s NZ$240-million foodservice mozzarella facility at Clandeboye, South Island, is only running about 25% capacity, according to recent New Zealand press reports. The plant opened a year ago to high expectations that it would provide a fast-growing source of high-value exports to the co-op, with Fonterra cheese from Clandeboye topping half a billion pizzas per year.

The plant utilizes technology that supposedly slashes mozzarella production time down to hours rather than months.

Fonterra says it overestimated initial demand, although the company maintains that “significant quick-service restaurant demand” will increase Clandeboye’s throughput over the next six months. However, the continued strong growth of the pizza sector in target markets before and after Clandeboye’s opening suggests the under-utilization might be due to more than slow demand. (USDEC staff; Timaru Herald, 10/9/19; The Bullvine, 10/4/19)

Company news briefs
Canada’s Agropur Cooperative named Émile Cordeau as its new CEO effective Oct. 15. Cordeau will replace Robert Coallier, who is retiring at the end of the year . . . Agropur also announced the closure of its Lachute, Quebec, ice cream and frozen novelties plant in August 2020. It will transfer production to existing facilities in Truro, Nova Scotia, and Edmonton, Alberta . . . Fonterra named Fraser Whineray to fill the new role of chief operating officer starting in early 2020. Whineray is currently chief executive of Kiwi energy company Mercury NZ, but started his career as a graduate of the New Zealand Dairy Board’s technical training program and served at Puhoi Valley Cheese. (Company reports)