• Dairy protein event in South Korea
• All-Member Webinar recap

• Market Summary: NZ exports dip
• Wisconsin AgTalk to highlight dairy Sept. 1

• Webinar: dairy’s place in online grocery boom

• Senate USMCA letter

• IICA partnership highlights sustainability

• Coronavirus: China import testing

• Exporter of the Year nomination deadline today!

• Lion sale falls through

Impact of dairy protein event reverberates in South Korea
Less than 48 hours before the Aug. 19 Korean Dietetic Association (KDA) conference in Seoul, the organizers shifted the entire meeting online. An uptick in COVID cases made the in-person event too risky, even with social distancing plans that would have kept attendees more than 6 feet apart.

But in these days of rapid reinvention, the USDEC South Korea office, USDEC Ingredients team, organizers and even attendees were ready. The conference, even after moving online, attracted more than 1,800 KDA members—licensed dietitians, nutritionists and researchers. And the switch to online had no negative impact on the strong consumer and trade media campaign USDEC began weeks earlier or the speaker lined up by USDEC to deliver a special lecture on the role of dietary protein in fighting sarcopenia.

Spreading the dairy protein message
Dr. Douglas Paddon-Jones, Department of Nutrition and Metabolism, University of Texas Medical Branch, delivered a pre-recorded 40-minute presentation at the virtual conference highlighting key messages on protein quality (where dairy is unmatched) and the importance of protein consumption throughout the day. USDEC issued a Korean-language press release on Paddon-Jones’s key points about optimizing protein to encourage healthy aging on the day of the conference to major South Korean publications.

The release also highlighted USDEC’s partnership with KDA, connecting it back to a new review paper, “Optimizing Adult Protein Intake During Catabolic Health Conditions,” published in the journal Advances in Nutrition. USDEC also offered virtual interviews with Paddon-Jones for interested media. The response has been significant.

So far, nine online media outlets picked up the story, including the digital edition of the JoongAng Ilbo (in the health section), one of South Korea’s top-tier newspapers, with a reputation akin to the New York Times. The paper’s digital edition gets about 600,000 daily page views.

These are NOT paid advertorials, but hard-earned media publicity. USDEC has been in touch with other journalists interested in the health aspects of dairy proteins and is aware of additional stories in the works in both online and print publications, as well as potential coverage on two TV programs.

This comes on top of the positive messaging we expect will spread via the nutritionists and dietitians who will take back what they learned to their patients and clients.

Additional outreach
The only portion of the conference that was cancelled outright was the accompanying in-person trade show. However, even though USDEC was not able to hand information directly to nutritionists at the USDEC booth, virtual attendees will still be getting the materials.

U.S. dairy protein “care packets,” including nutritional facts, recipes for using U.S.whey protein in both Korean and Western-style menus, and whey protein treats are being sent directly to attendees. The recipes, developed and tested in partnership with KDA over the last two years, were created for easy use by seniors and others for every-day consumption.

All-Member Webinar: adapting to a changed world
COVID-19 and the fallout from the virus are seriously testing the resolve and resiliency of the U.S. dairy industry, USDEC President and CEO Tom Vilsack said at the start of this week’s USDEC All-Member Webinar. But the industry, as well as USDEC, are adapting.

“It has required us at USDEC to reimagine how we do the business of exports, transitioning what we used to do in person to a variety of virtual meetings and activities,” said Vilsack. The staff and the industry both have done remarkable jobs in making that transition, he added. “It has shown the ability of this industry to adjust . . . it has shown the resiliency of this industry.”

Moving forward into 2021, COVID, economic uncertainty and geopolitical issues will continue to challenge business.

“We look forward at USDEC for the opportunity to meet the challenge,” the Secretary said.

Vilsack and USDEC staff went on to outline how USDEC has reimagined everything from programs to the budget. That includes:

• Proceeding with the delayed opening of the U.S. Center for Dairy Excellence in Singapore, now set for this October.
• A rapidly expanding social media network encompassing nearly 87,000 followers on 22 accounts in nine markets.
• Accelerated expansion and overhaul of the one-of-a-kind USDEC Export Guide.
• Additional research into emerging market opportunities that may result from free trade agreements and identifying markets where USDEC can continue work to reduce tariffs, as we’ve done recently in China and Vietnam.

To hear the Secretary’s full comments and see individual department presentations outlining expectations, goals and strategies moving forward, watch the archived version of the webinar. It is available exclusively to members in the Meetings & Webinars section at usdec.org under the 2020 All-Member Webinar link.

NZ sees lowest July export volume since 2014
European prices are slightly higher this week, as traders come back from holiday and try to assess supply conditions. Heat in western Europe is a concern. A new Algerian tender opened this week, providing support to powder prices. Cheese prices in the region continue to grind higher, rising to their highest level since January.

Meanwhile, Oceania prices are steady as New Zealand gets off to a good start for 2020/21. Kiwi output in the offseason of June-July was up 3.2% from a year ago, though these two months represent less than 2% of annual volume.

New Zealand exports in July were below prior-year levels, with the lowest July volume since 2014. WMP was the lone exception with a 10% gain. Otherwise, SMP was down 40%, cheese was down 19% and butterfat was down 11% compared with a year ago.

Heavy supply out of South America
Argentina milk production is running at 5-year highs this year, with 2020 output up 8.6% from last year. July production alone was up 7.6%. Further, production continues to ramp up towards the seasonal peak. Winter weather was good, but farmer margins have been squeezed, which may weigh on production growth in the months ahead. WMP production is higher and stocks are building, even with exports up 85% in the first seven months of the year.

Next door, Uruguay milk production was up 8.5% in July.

Mexico economy warning
Mexico’s central bank warned this week that the economy could shrink by nearly 13% this year. In the first half of the year, Mexico’s NDM/SMP imports were down 16%, while cheese imports were up 11% from last year’s depressed level.

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.

 

USDEC to co-host Sept. 1 Wisconsin edition of AgTalks virtual town halls
Please join us on Sept. 1 from 11:00 a.m.-12:30 p.m. CT when the AgTalks series comes to Wisconsin, with its focus squarely on dairy. AgTalks were launched by USDEC, NMPF, Farmers for Free Trade and eight other U.S. agricultural groups as a forum for farmers, ag businesses and policy leaders to discuss solutions to challenges on trade, supply chains and global competitiveness. With so many ag fairs cancelled over COVID-19 concerns, the virtual town halls provide a much-needed platform for discourse.

The Wisconsin session is the last of five AgTalks; the four previous events took place in Iowa, Minnesota, Michigan and Pennsylvania. USDEC President and CEO Tom Vilsack will moderate a panel of five dairy and agriculture experts: Jeff Schwager, president of Sartori Cheese; Chad Vincent, CEO of Dairy Farmers of Wisconsin; Jeff Lyon, CEO of FarmFirst Dairy Cooperative; Randy Romanski, Secretary-Designee, Wisconsin Department of Agriculture, Trade and Consumer Protection; and Jim Mulhern, president and CEO of NMPF.

Panelists will share their views on the future of Wisconsin agriculture, with an emphasis on trade’s importance for and benefits to the U.S. dairy sector. As a town hall, the floor will be opened to attendees to ask questions of the panelists. We encourage USDEC members to participate. To register, go to AgTalks Wisconsin Town Hall.

The online grocery boom and what it means for dairy exports
COVID-19 has accelerated the global shift to online grocery shopping. From China to the United Arab Emirates to Chile, more and more consumers are opting to purchase their food online and retailers and investors are responding by pouring money into the online ordering, logistics systems and labor needed to make them work efficiently.

While online food ordering has been trending for well over 10 years, consensus suggests this shift has staying power and the velocity will accelerate in the medium and long-term.

To understand the dairy export implications, USDEC in collaboration with Dairy Management Inc.’s (DMI’s) Global Innovation Partnership team, created a primer explaining key trends and identifying export markets with the greatest opportunities for cheese at retail. Please join USDEC’s Katie Phelan and DMI’s Beau Hayden on Wednesday, Sept. 9, at 1:00 p.m. ET for a members-only webinar to discuss these findings and further research ideas to navigate this growing channel. To register for the webinar, click here. For questions, please contact Rebecca Vidal at rvidal@usdec.org.

If you missed the USDEC Export Guide webinar . . .
On Aug. 25, USDEC held a member webinar to demonstrate the features of the new Export Guide Volume 1 system. USDEC recently launched a complete overhaul of Volume 1, merging current year tariffs in the former Volume 1 module with the competitive trade agreements and future tariff reduction schedules of the Trade Agreements module, and the classification guidance in the Tariff Classification Guide module. The goal was to put all information related to tariffs, taxes and classification in one location. If anyone missed the webinar and would like more information, please contact Bryan Jacoby at bjacoby@usdec.org.

Senate letter mirrors House on call to enforce USMCA
A bipartisan group of 25 senators sent a letter this week to USTR Robert Lighthizer and USDA Secretary Sonny Perdue asking them to use USMCA’s enforcement measures to ensure full compliance with the trade deal.

The letter mirrors another sent earlier this month by a bipartisan group of House members (see Global Dairy eBrief, 8/14/20). As with the House letter, USDEC partnered with NMPF and worked closely with the lead Senate offices—in this case, the offices of Sens. Tina Smith, (D-Minn.) and Mike Crapo (R-Idaho)—to ensure it captured U.S. dairy concerns and secured a robust set of cosigners.

“Canada has already begun implementing USMCA in a way that thwarts its market access promises and prevents U.S. dairy from making full use of the benefits that Congress and the administration fought so hard to secure,” noted USDEC President and CEO Tom Vilsack in a joint USDEC/NMPF press release on the letter. “There are also unanswered questions concerning how Mexico will translate its commitments to safeguard common name cheeses into action. These are unresolved concerns that affect everyday dairy farmers and workers across our industry.

USMCA enforcement fact sheet
To help educate Congressional offices on this issue and secure their support for the letter, USDEC also created a 1-page USMCA enforcement fact sheet. The document emphasizes that U.S. dairy farmers, processors and exporters will not fully realize the benefits of hard won USMCA concessions unless the dairy provisions of the agreement are fully enforced. Feel free to download the fact sheet for use in your communications on this issue as well.

Webinar gives nearly 350 attendees crash course on dairy sustainability
“Dairy’s Role in a Responsible and Sustainable Food System,” came at a perfect time, USDEC President and CEO Tom Vilsack noted in his opening remarks to the webinar. With heightened interest in nutrition and health, rising instances of food insecurity, increased focus on sustainability (particularly the impact of livestock production on the environment), and growing economic disruptions—all of it exacerbated by COVID—it is incredibly important to understand and communicate how dairy is part of the sustainable nutrition solution.

USDEC joined Global Dairy Platform (GDP) and the Inter-American Institute for Cooperation on Agriculture (IICA) to host the event, which was opened by Secretary Vilsack; Manuel Otero, director general, IICA; and Rick Smith, president and CEO of Dairy Farmers of America and chair of GDP. (Click here to watch a 16-minute clip of Smith and Secretary Vilsack’s opening comments.)

Global leadership
The webinar is another example of how USDEC is raising its international profile with the help of valuable partnerships with like-minded allies. USDEC executed the webinar as part of the MOU it holds with IICA. That relationship with IICA is focused on supporting the development and implementation of science-based regulatory and trade policies around the world.

The organizers plan to produce a publication from the webinar that USDEC will leverage globally (in international organizations like Codex, the World Health Organization, the UN Food & Agriculture Organization and the World Organization for Animal Health) to promote and defend dairy’s important role in the ongoing dialogue on sustainable foods systems. This dialogue will culminate next year with the UN Sustainable Food Systems Summit, where it will be essential to accurately portray the benefits that dairy provides in the food system (nutrition/health and socioeconomic) and the significant progress that dairy is making toward sustainable production. Given the U.S. dairy industry’s ongoing efforts to reduce greenhouse gas emissions, the U.S. has a particularly important story to tell.

Strong turnout
Nearly 350 attendees joined the webinar, including government officials and thought leaders influential in establishing policies impacting dairy trade and consumption in the Americas and Caribbean. Click here to view the full 3.5-hour archived version of the event and hear expert presentations on dairy’s nutrition and health benefits, environmentally sustainable production, socio-economic development and animal care.

USDEC is planning to hold a second webinar with IICA in October looking more broadly at the important role that livestock production and animal protein play in Western Hemisphere food systems, utilizing several examples specific to U.S. dairy. This will be a strong rebuttal to continued calls for the removal of animal protein from our food systems and dietary guidance in favor of all plant-based diets. Stay tuned for additional details in the coming weeks.

Coronavirus: China testing demands vary
The following is a rundown of the latest COVID-related news from USDEC’s overseas offices and media reports.

China

• Dairy import testing continues to evolve in China, typically based on the status of new virus cases in the region. For example, according to one importer, all imported frozen and refrigerated food products coming into the port of Shenzhen, including dairy, are being tested for COVID using nucleic acid testing due to cases in the area. The testing is not a General Administration of Customs (GACC) mandate.
  
  USDEC understands that GACC is doing the testing, but the importer may be requested to perform the test (especially if GACC is backed up).

Japan

• Eat-at-home continues to drive food sales in Japan as it does in many markets. After rising 8.3% year-over-year in June, sales through major supermarket chains in the nation increased 7.3% in July.

Mexico

• Milk production rose 2.1% in July and was up 2.2% through the first seven months of the year. The dairy sector is working at full capacity but demand for certain products categories like drinkable yogurt and other on-the-go packaged dairy products remains slow.

Middle East

• The Middle East office notes steady growth in the region’s confectionery sector. despite negative COVID impact on demand in certain channels like schools. New confectionery capacity is coming online in Kuwait and multinationals are looking to expand in Saudi Arabia. The climate is creating interest in U.S. whey permeate and dairy ingredients.

Oceania

• Midway through a strict six-week lockdown, the Australian state of Victoria reported its lowest new case total in two months, giving the nation hope that efforts to control the virus are back on track.
  
  
• New Zealand extended a lockdown in Auckland through Sunday and made masks mandatory on public transportation in an effort to get back to zero new cases.

South America

• In Argentina, as well as Brazil and other Latin American nations, dairy demand during COVID continues to dividing along lines of basic and value-added. The Observatory of the Argentine Dairy Chain reports sales gains since COVID for UHT milk (+36%), butter (+20%) and powdered milk (+7-9%), and declines for yogurt (-1%), hard cheese (-5%), semi-hard cheese (-10%), puddings and dairy desserts (-9%), and flavored milk (-35%).
  
  
• In Colombia, an estimated 40% of the nation’s restaurants have permanently closed.

South Korea

• The government extended tighter “Stage 2” social distancing measures from Seoul to the entire nation this week and implemented a nationwide mask mandate to combat the recent uptick in COVID cases. As part of the move, Seoul and Incheon reclosed schools through at least Sept. 11, a decision that will put additional strain on domestic dairy sector. Stage 2 also includes closing buffets, nightclubs and other businesses.

Southeast Asia

• Vietnam continues to keep its guard up, particularly around Da Nang, the epicenter of its second wave of COVID cases. However, some areas are relaxing social distancing measures after more than two weeks of no new cases. The ongoing worry, as in many markets, is the impact on Vietnam’s economy. Urban unemployment rose 33% in the second quarter while average income per worker declined by 5%.
  
  
• Thailand remains one of the most successful countries in battling COVID, but now mass demonstrations by students seeking reform of the government and monarchy are creating additional potential for business disruption, particularly in Bangkok. USDEC’s Southeast Asia office is closely monitoring developments.
  
  
• Foodservice operations in the Philippines are not getting hoped-for returns after being allowed to reopen for dine-in service (at 50% capacity). Even fast-food operations are being affected. Philippine fast-food leader Jollibee closed 255 company-owned stores and plans to sell another 95 units to franchisees.
  
  
• Indonesia postponed plans to reopen Bali to international tourists on Sept. 11. The government opted instead to wait until the end of the year. (USDEC overseas offices in China, Japan, Mexico, Middle East/North Africa, South America, South Korea, Southeast Asia and Vietnam; Wall Street Journal, 8/24/20; Jakarta Post, 8/24/20; AP, 8/23/20)

Nomination deadline extended until today
Dairy Foods magazine extended the deadline for the 2020 “Tom Camerlo Exporter of the Year Award” until today, Aug. 28. So if you want to nominate your company or another deserving exporter, you have a few more hours.

The Exporter of the Year should play an active role in driving global dairy demand; exhibit industry leadership in advancing U.S. dairy exports; display a commitment to export market development; and demonstrate export sales success. To nominate, visit Dairy Foods’ confidential online nomination page.

Deal to sell Lion to Mengniu falls through
Japan’s Kirin Holdings and China’s Mengniu Dairy halted plans for Mengniu to buy Kirin’s wholly owned Australian dairy firm Lion Dairy & Drinks (see Global Dairy eBrief, 12/6/19). The decision came after Australian Treasurer Josh Frydenberg said the government might block the Lion sale to Mengniu even though Australia’s Foreign Investment Review Board (FIRB) already green-lighted the deal.

The Treasury’s move is the latest fallout from rising political tensions tied to Australian criticism of China’s COVID response and Hong Kong crackdown as well as China’s trade sanctions on Australian beef and barley and anti-dumping probe on Australian wine.

In July, Australia revamped its foreign investment laws, giving the treasurer last-resort powers (under the auspices of “national security”) to halt or impose conditions on foreign investment deals even after FIRB weighed in.

Mengniu offered A$600 million (about US$433 million) for Lion, Australia’s No. 2 milk processor. Kirin said it would “continue to look for the best scenarios” for the Lion business. (Reuters, 8/24/20, 8/20/20; Nikkei Asian Review, 8/24/20; Financial Times, 8/20/20)

A2 stake in Mataura Valley targets infant formula
New Zealand’s A2 Milk made a non-binding, NZ$270-million offer (about US$176-million) for a 75% stake in Mataura Valley Milk. A2 said it plans to establish canning and blending capacity at Mataura’s plant in Gore on New Zealand’s South Island, creating a fully integrated infant formula facility.

The offer already has the approval of Mataura’s current majority shareholder China Animal Husbandry Group. China Animal Husbandry will maintain a 25% share in Mataura should the deal proceed.

A2 said the agreement would not affect its current contract manufacturing deals with New Zealand processors Synlait Milk and Fonterra.

A2 reported that sales to China almost doubled to NZ$338 million (about US$220 million) for its fiscal 2020 (year ending June 30). It said it expects continued strong revenue growth for 2020-21. (Inside FMCG, 8/23/20; Farmers Weekly, 8/21/20; Kalkine Media, 8/21/20)

Mergers, acquisitions and joint ventures
Switzerland’s Emmi increased its stake in Swiss goat cheese manufacturer Bettinehoeve from 60% to 90% . . . Australia’s Remarkable Milk Co. acquired the assets of Organic Dairy Farmers of Australia (ODFA), which entered receivership earlier this year. The deal includes ODFA’s manufacturing plant in Geelong, Victoria. (Company reports; Farm Online, 8/19/20)

Company news briefs
Infant formula and baby food marketer Bubs Australia entered into an agreement with China’s Beingmate for the Chinese dairy processor to manufacture Bubs goat milk infant formula in China . . . U.S. Pizza Hut franchisee NPC International plans to close up to 300 locations, most not well-suited for carryout and delivery. NPC is in the middle of a financial restructuring as part of an effort to emerge from Chapter 11 bankruptcy. (Company reports; FoodBev.com, 8/24/20)

 

• Vilsack emphasizes U.S. Dairy commitment to nutrition, animal welfare & environment
• USDEC’s Kristi Saitama cites progress toward protecting environment
• Bipartisan group of U.S. Senators seek full enforcement of USMCA dairy provisions
• Pennsylvania’s ag leaders hold virtual town hall meeting
• U.S. dairy proteins can help protect against age-related muscle loss (retweet)