• Adaptation, diversification key growth

• U.S. CDE set to open

• New permeate video for customers

• New online cheese “pop-up” experience

• USA cheese app set to debut

• USDEC 25th anniversary

• Proliant named Exporter of the Year

• Market Summary: Prices firm as milk supply rises

• Symposium to explore animal protein benefits

• GI info packet

• Spotlight on U.S. dairy sustainability

Adaptation, diversification key 25 years of dairy export growth
The ability of the U.S. dairy industry to adapt to ever-changing market challenges and aggressively seek out new export opportunities to diversify its customer base are the bedrock behind a quarter-century of dairy export growth, USDEC President and CEO Tom Vilsack told attendees at this week’s USDEC Fall Annual Meeting.

Since the founding of USDEC in 1995, U.S. dairy export volume and value have risen more than five-fold. This year, volume was up nearly 17% in the first eight months while value grew 10%.

“One of the reasons we are able to mark USDEC’s 25^th anniversary and the growth that’s taken place is that folks were willing to take a risk in exports,” Secretary Vilsack said. “They understood the importance of diversifying markets and they appreciated the fact that we needed a deeper presence in those markets.”

Without diversification into places like Southeast Asia and investment in building in-market relationships, for example, the industry would be facing a much more challenging time today given the economic troubles of our traditional No. 1 market Mexico. Southeast Asia this year has taken over that top buyer spot in volume terms.

The importance of being nimble
Adaptation and diversification have been hallmarks of USDEC’s philosophy and are needed more than ever in the time of COVID-19. During the Secretary’s opening remarks and in individual presentations during the four-day virtual conference, viewers saw examples of how USDEC has been pivoting activities to deal with complications from COVID-19.

The Secretary noted how money budgeted for travel was repurposed in innovative and creative ways, including new research projects examining the UK market, supply chain and logistics, and trade negotiations in Kenya. Here just a few additional examples from the meeting of how USDEC is working creatively to adapt to “new normal” conditions.

U.S. Center for Dairy Excellence set to open
On Wednesday, Oct. 21, USDEC will hold a virtual grand opening celebration of the U.S. Center for Dairy Excellence (CDE) in Singapore. The event will feature opening remarks by Low Yen Ling, Minister of State in Singapore’s Ministry of Trade and Industry, a 360-degree virtual tour of the facility with gamification elements for viewers, and a toast/U.S. dairy ingredient demo featuring a mocktail made with U.S. whey protein.

During the ingredients update on Day 2 of the annual meeting, Singapore staff—Ian Stewart, CDE operations director; Dali Ghazalay, USDEC Southeast Asia regional director; Anoo Pothen, director of consumer insights; and Martin Teo, technical director, food applications—provided short descriptions of how the CDE will be used to assist U.S. dairy suppliers to strengthen bonds with Southeast Asian buyers and better cater to the region’s flavor, nutrition and lifestyle trends.

“The CDE is an ambitious, audacious effort to build a gateway between U.S. suppliers and customers in Southeast Asia,” said Vikki Nicholson-West, senior vice president, ingredients marketing. “It’s going to serve as an education and training hub for visitors to learn how U.S. dairy farmers and processors bring the highest quality products and ingredients from the farm to consumers in the most sustainable and efficient way.”

Cheese “pop-up” experience goes digital
The USA Cheese Guild, managed by USDEC’s Cheese Business Unit, has taken U.S. cheese promotion virtual with an interactive “Cheese from the USA” pop-up experience. Originally intended as a temporary, high-impact physical presence in busy locations like festivals, events and high-profile areas, the plan has become a virtual diner experience for consumers in seven markets—Mexico, the GCC, South Korea, Hong Kong, Taiwan, Japan and China—through interactive websites.

Using a 1950s jukebox theme, visitors will be able to explore the world of U.S. cheeses, learning about our industry via videos and downloadable content. The jukebox interface will feature 7-10 cheeses available in each market, providing recipes, explaining flavors and indicating where to buy them. Online characters embody different cheese types for a fun, interactive visitors experience.

The websites will launch in November and will be promoted over a four-week timeframe with traffic driven by media buys and influencers.

New permeate video to share with customers
The USDEC Ingredients Team showed a new video for members to share with potential customers highlighting the benefits and uses of permeate in formulating new food products. The video, another part of USDEC’s efforts to pivot to digital engagement with customers, brings to life permeate infographics rolled out in August (and currently available in English, Chinese and Vietnamese).

It highlights how permeate use is diversifying around the world and across food and beverage categories, the reasons behind increased usage (flavor enhancement, sodium reduction, mineral content, cost savings, etc.) and future opportunities.

The B2B publication Asia Pacific Food Industry Magazine e-blasted the permeate video this Tuesday to its food and beverage industry mailing list across Southeast Asia.

We encourage members to share the video and the infographics with customers. In addition, USDEC is using them to encourage local-friendly innovation with permeate in Southeast Asia; educate food and beverage makers in 1:1 technical consultations in Vietnam; and capitalize on permeate approval in China where per capita salt intake is the highest in the world at 10g per day and reduced-sodium products that maintain flavor have high potential. (A Chinese version of the video is in the works.)

USA Cheese Global Recipe app to roll out by year-end
Another way to engage with buyers who might be ordering groceries online and going out less frequently to restaurants is the upcoming USA Cheese Global Recipe app. The app has two main aims: to help consumers learn uses for U.S. cheeses and to educate them on the U.S. industry.

It will provide recipes by cheese type (developed with each region’s taste preferences in mind), USA cheese facts, drink pairing suggestions and information about brands and companies.

“We really want to use this app to highlight you, to tell your story, to give consumers something more than a product on the shelf that they can connect with,” Ryan Hopkin, coordinator, global cheese marketing, told members at the annual meeting. “Tell them a little bit more about the products and how they came to be. We really want to tell the story of the industry and the people behind it.”

The cheese team will be reaching out to members to be part of the app, but if you are interested in being featured, contact Ryan Hopkin at rhopkin@usdec.org for more information.

The app is still in development, but USDEC expects it to launch this year for iPhones and next year for Android. The initial app will be in English, but an Arabic version is also in the works and expected to roll out in 2021 (with additional languages to follow).

USDEC 25^th anniversary: Panel looks back at USDEC roots, sees positive future for dairy exports
Immediately after his opening remarks at the fall meeting, Secretary Vilsack and USDEC COO Krysta Harden moderated a panel of four USDEC founding companies. They explored the beginning of commercial U.S. dairy exports and how companies and USDEC adapted to meet market needs.

In the beginning
The prospect of exports expanded the industry’s horizons and allowed the co-op to grow, said Ken Nobis, Michigan Milk Producers Association (MMPA). Twenty-five years ago, about 60% of MMPA’s milk went into the bottle “and we really didn’t consider where that other 40% of milk went,” Nobis said.

The formation of USDEC and the opening of trade (through agreements like NAFTA and the Uruguay Round Agreement) “opened our eyes to the global nature of the dairy business,” he said. “It also opened our eyes to the diversity of products that can be produced and distributed across the globe that we probably didn't have a good handle on before.”

Learning the ropes
But tapping those markets did not come easy. There was a learning curve.

“The dairy industry is a business of change,” said Ted Jacoby Jr., chairman, T.C. Jacoby & Co. “The question of how USDEC can facilitate the adjustment to changes is perhaps a key issue, and it's hard to do.”

USDEC has always provided value, but the ways in which that value is realized are always changing, said Niamh Kelly, senior vice president, Dairy Proteins, Glanbia Nutritionals. In the early days, reverse trade missions were one of the biggest benefits. That has shifted to market access and trade policy.

Positioning for the future
Challenges remain today, including how to maintain relationships during COVID-19 restrictions and limiting costs.

But the U.S. dairy industry is well-positioned for competition, said Mike Durkin, president and CEO, Leprino Foods Co. Some of our largest competitors are facing tougher growth prospects. New Zealand, for example, is limited by geography and regulatory constraints and their costs are rising.

Durkin concluded: “I think the dairy industry can remain very competitive and hold our costs. We've proven it out over the last 25 years. And if we are competitive on price, we get our trade policies in order, the dairy industry from an export standpoint and as a whole is going to see many bright years ahead.”

In case you missed it . . .
USDEC is posting archived versions of the Secretary’s opening remarks, the 25^th anniversary panel, the cheese and ingredients presentations and more at usdec.org in the Meetings & Webinars section. Click on the Fall Annual Membership Meeting to access the presentations—the most recent may still be in the process of posting.

USDEC committees get new chairs; Sue Taylor honored
After 15 years, Sue Taylor chaired her last USDEC Trade Policy Committee at this week’s annual meeting. She plans to retire this year from Leprino Foods Co.

Taylor has been a force for the dairy industry and with USDEC. USDEC Senior Vice President Jaime Castaneda calls her “a promoter and protector” of U.S. dairy exports and honored her service to USDEC with a commemorative plaque.

“Everything we have today, the export gains we’ve made as an industry, reflects work that Sue Taylor has done over the years,” Castaneda said.

Other changes
This week, members reelected Larry Hancock as chairman, Tom Gallagher as secretary/treasurer and Brad Scott as vice chairman, and chose two new at-large members for the Operating Committee: Patti Smith, DairyAmerica, and Alfiya Thomas, Schreiber Foods. Sara Dorland, Ceres Risk Management, and John Brubaker, DairyWest, entered the second year of two-year terms on the Operating Committee.

Chairman Hancock named leaders for four committees.

• Cheese & Consumer Products: Frank Alfaro, BelGioioso Cheese, moves from vice chair to chair; Alison Rosenblum, Tillamook County Creamery Association, named vice chair.
• Global Ingredients: Keith Gretenhart, Valley Queen Cheese Factory, moves from vice chair to chair; Jing Hagert, Milk Specialties Global, named vice chair.
• Trade Policy: John Wilson, Dairy Farmers of America, moves from vice chair to chair; Jeff Schwager, Sartori, named vice chair.
• Finance: Incumbents Tom Gallagher, DMI, and Brad Scott, DMI, renamed chair and vice chair, respectively.

The board also voted to approve the 2021 Business Plan. USDEC thanks all the members for their valuable input to develop the plan.

Proliant named 2020 Exporter of the Year
Proliant Dairy Ingredients was named the 2020 Tom Camerlo Exporter of the Year at this week’s USDEC Annual Meeting. The annual award is presented by Dairy Foods magazine and sponsored by USDEC in honor of Camerlo, a former USDEC chairman. Now in its 15th year, the recognition goes to a U.S. dairy supplier exemplifying leadership in advancing U.S. dairy exports, demonstrating a commitment to export market development as it makes exports an integral part of its overall growth strategy.

"Proliant is a deserving Exporter of the Year recipient as the world’s No. 1 whey permeate producer,” said Tom Vilsack, president and CEO of USDEC. “The company has opened doors to high-potential global markets with its value-added products and enhances the image of the whole U.S. dairy ingredients portfolio.”

Proliant earned the recognition for its role in forging new global markets for whey permeate, its extensive and personalized R&D assistance and customer service, and its active participation in USDEC and other national dairy organizations, among other achievements. The company exports roughly 70% of its whey permeate production to more than 30 countries around the world.

See the USDEC press release on the honor for more information. In addition, the company will be featured in Dairy Foods’ November issue. Past Exporter of the Year award winners include BelGioioso (2019), Milk Specialties Global (2018), Sartori (2017), Swiss Valley Farms (2016) and California Dairies (2015).

Milk production rising
While the latest numbers from Europe suggest August EU milk production will be flat, second half 2020 output from the six major exporters looks strong. Almost perfect weather in the Southern Hemisphere and profitable operations across the board should lead to a 1.7% increase in milk in the second half, USDEC Analyst William Loux told attendees during the Market Outlook session at this week’s USDEC Annual Meeting.

This week’s price increase by Fonterra could help make for a strong New Zealand year. Citing resilient demand for milk powder, particularly WMP out of China, Fonterra increased its estimated farmgate milk price for 2020/21 from NZ$5.90-6.90/kgMS to NZ$6.30-7.30/kgMS. The co-op said, however, that it was keeping a close eye on many factors, including U.S. and EU milk production, COVID-19 and global economic growth.

Loux expects some deceleration in milk from the six majors in 2021, under the assumption that the Southern Hemisphere will not have a repeat of recent weather.

Pricing firm . . . for now
Retail sales, foodservice restocking and government buying programs continue to keep powder, cheese and butter prices firm across the EU, Oceania and the United States, with the exception of U.S. butter. The U.S. cheese rollercoaster, however, continues, with prices rising again this week and block cheddar at the CME nearing its July peak.

Loux noted potentially bearish fundamentals on the horizon heading into 2021, between potential COVID-19 lockdowns, expectations for lower USDA dairy purchases, uncertainty over foodservice sales (as colder weather sets in and discourages outdoor seating) and questions over whether large buyers (Southeast Asia and Middle East North Africa) will keep up their buying pace given the sizable stockpiles they accumulated in the first half.

NZX, SGX explore derivatives partnership
NZX and SGX—the New Zealand and Singapore stock exchanges, respectively—signed a nonbinding agreement to explore listing the NZX suite of dairy derivatives contracts on SGX’s trading and clearing platforms.

The two exchanges will consult with their stakeholders over the coming months and seek regulatory approvals. If all goes well, they hope to confirm the partnership in the first half of 2021. A deal between the two would accelerate liquidity in NZX global dairy derivatives contracts and “put the New Zealand dairy industry on an equal footing with its global counterparts in its ability to manage risk,” NZX said.

Download USDEC pricing app
Price trends are always at your fingertips. All you need to do is download the USDEC Commodity Prices Finder app, a mobile resource for tracking a variety of USDA dairy commodity prices. It is available at the Apple Store for iOS devices and Google Play for Android.

If line is trending up, currency is strengthening vs. U.S. dollar (U.S. dollar is weakening). This is favorable for U.S. competitiveness. If line is trending down, currency is weakening vs. U.S. dollar (U.S. dollar is strengthening). This is unfavorable for U.S. competitiveness. Currency exchange rates are calculated for Wednesday of each week. Source: Oanda.com.

Symposium defends animal protein in advance of UN food summit
USDEC is again partnering with the Inter-American Institute for Cooperation on Agriculture (IICA) to host a virtual symposium to promote and defend the important role of dairy in food systems, support science-based policymaking and highlight the benefits of international trade in economic development. USDEC and IICA previously teamed up in August for a symposium on dairy’s role in a sustainable food system (see Global Dairy eBrief, 8/28/20).

These symposiums provide important platforms to debate some of the most pressing issues impacting animal agriculture—many of which threaten dairy and are being used by anti-animal activists to diminish the importance of dairy in the future of the global food system.

The Oct. 20-21 event is titled “The Importance of Livestock Production and Animal Protein: The Western Hemisphere Perspective.” The Western Hemisphere perspective is often overlooked in the current global dialogue driven by European-based organizations and ideologically motivated activist groups because it is more balanced and reflects the importance that livestock products and animal protein play in sustaining the world.

High stakes
USDEC’s concern is that dairy and other animal-sourced foods will lose out to a plant-only agenda driven by these European institutions and activists. The threat is particularly acute as the global dialogue accelerates towards the September 2021 UN Food Systems Summit, which will establish a global policy framework intended to make food systems more sustainable, equitable and nutritious.

The USDEC/IICA symposium will inject a Western Hemisphere counterpoint into the discussion. Like the August symposium, USDEC intends to publish the proceedings of the symposium and leverage them in the ramp up to the UN Food Systems Summit.

Dairy representation strong
Dairy will feature prominently in the programing. USDEC President and CEO Tom Vilsack will provide opening remarks. Expert presentations from USDEC COO Krysta Harden on the U.S. 2050 Environmental Stewardship Goals and U.S. Dairy Net Zero Initiative (NZI), Global Dairy Platform’s Donald Moore on dairy’s place in a sustainable food system, and DMI’s Greg Miller on the important role of dairy in dietary guidelines will follow. Other experts will cover thematic topics including environmental sustainability, nutrition and health, technology and innovation, the role of international trade, and improving communications.

The full program, the speaker list and a link to access the livestream (when it airs) are at IICA’s website for the event. The page will also host a recording of the event after it concludes. Alternatively, USDEC members can officially register to watch in Zoom. The event runs for two days, Oct. 20-21, beginning at 9:00 a.m. ET each day.

Info packet clarifies threat to dairy industry from EU GI overreach
A new information packet from USDEC and NMPF outlines how the EU’s aggressive campaign to monopolize common cheese names threatens U.S. farmers, cheesemakers and jobs. A video, a one-page fact sheet and sample social media posts explain how EU misuse of geographical indications (GIs) limit consumer choice, restrict U.S. dairy export opportunities and harm American dairy farmers, processors and exporters.

The information packet is the latest in a series of informational fact sheets, videos and social media graphics developed by USDEC’s Trade Policy team for sharing with public officials, members, media and other relevant stakeholders.

To download the one-page fact sheet, click here. To access the video, click here. Read tweets sharing key GI information here and here.

Sustainability in spotlight with Net Zero, National Farmers Day
National Farmers Day on Oct. 12 served as a prime occasion to highlight the U.S. dairy sector’s sustainability record—and the industry did just that.

DMI released a video highlighting the winners of the 2020 Dairy Sustainability Awards, including USDEC member Leprino Foods Co. Targeted print and online ads in The Washington Post and New York magazine showcased the industry’s commitment to sustainability. USDEC posted a new U.S. Dairy Exporter Blog by COO Krysta Harden, “Dairy’s sustainable past sets us up for a more sustainable future,” and released a series of tweets, including this one and this one emphasizing U.S. dairy sustainability.

Nestlé joins Net Zero Initiative
In addition, Nestlé announced it was joining the Net Zero Initiative from the Innovation Center for U.S. Dairy, committing $10 million to support the effort and scale access to environmental practices and resources on farms across the country. The Net Zero Initiative seeks to reach “carbon neutral or better” status for greenhouse gas emissions, optimize water use and improve water quality by 2050.