• UN Food Systems Summit
• Spring Membership Meeting: Preparation for FSS

• Suez opened but more fallout to come
• Latest on U.S. port issues

• Market Summary: EU milk projection

• Market Talk video: Exploring Chinese demand

• Mexican FOP labeling requirements

• Brazil extends health certificate

• USDEC submits comments to WTO on Indonesia, EU

• National Trade Estimate Report

• New Export Exchange video

• COVID update: Singapore to ease restrictions

 

Food Systems Summit: preparing to safeguard dairy’s role
When the UN Food Systems Summit (FSS) convenes in New York City this coming September, pledges will be made that impact the future of the dairy and food industry in the United States and around the world.

“This is an important event,” says Krysta Harden, USDEC president and CEO. “The UN expects it to be a catalytic moment for achieving its Sustainable Development Goals (SDGs) by 2030. The Summit will promote discussion about and help provide a set of policies on how we should produce, trade and consume food for the next decade or more.”

Outcomes from the Summit could impact international standards, national policies, corporate practices and consumer behaviors related to food—influencing farming, manufacturing, marketing and purchase decisions. Those outcomes have the potential to encourage dairy production, consumption and trade but also hold the potential to hinder them.

“It is critical that U.S. Dairy works with our international partners to be involved in the FSS and makes meaningful, proactive contributions throughout the Summit planning process,” says Harden.

USDEC’s role
USDEC has been working proactively with allied groups since FSS planning began last year, leveraging global partnerships, our international office network and key U.S. stakeholders to position U.S. Dairy as part of the solution for feeding the world responsibly and sustainably. Nick Gardner, USDEC’s VP for Codex and International Regulatory Affairs, has been leading the USDEC response, working closely with USDEC’s Trade Policy team and allied groups. (See Global Dairy eBrief, 10/23/20, and the U.S. Dairy Exporter Blog story, “USDEC Highlights Dairy’s Important Role in the Global Food System in Lead Up to 2021 United Nations Summit.”)

“Our Summit messages complement our U.S. priorities and flow from our existing messaging that dairy plays a vital role in sustainable, equitable and secure food systems, nourishing people, the planet and communities,” says Gardner. “The science shows that dairy provides a unique nutrient package that is hard to replace, and we will continue to insist that the Summit base its recommendations on science.”

USDEC is bringing a number of messages to the FSS built around U.S. Dairy’s legacy of environmental stewardship—a legacy evident in the 2019 report from the Food and Agriculture Organization of the United Nations (FAO) and Global Dairy Platform that found North America was the only region of those studied where both greenhouse gas emissions intensity and absolute emissions fell while overall milk production rose. And those messages show that legacy continuing with the Net Zero Initiative (NZI) to achieve carbon neutrality, optimized water usage and improved water quality by 2050.

Many voices
USDEC is far from the only food group engaging. The UN is positioning the event as a “people’s summit” and it is seeking input from “all of society and all stakeholders.” An ongoing series of Food Systems Summit Dialogues offers opportunities for people everywhere to have a seat at the table.

FSS organizers hope the Summit will lead to dramatically elevated public discourse about food systems and recognition of their impact on people and the planet.

Planning and most of the work for the FSS is evolving along five Action Tracks (ATs), numbered as follows:

1. Ensuring access to safe and nutritious food for all.
2. Shifting to sustainable consumption patterns.
3. Boosting nature-positive production at sufficient scale.
4. Advancing equitable livelihoods and value distribution.
5. Building resilience to vulnerabilities, shocks and stresses.

The ATs are tasked with identifying the “bold new actions, innovative solutions and strategies” necessary to spur action across the SDGs. The leaders of the ATs have already issued initial reports, although work continues to narrow ideas and deliverables.

Anti-dairy interests
While the FSS presents opportunity for dairy, it also presents threats. Multiple interest groups are engaged in the process, many with an eye toward limiting the consumption of animal-sourced foods and discouraging farming practices common in the United States.

For example, Gunhild Stordalen, founder and executive chair of food activist organization EAT Foundation, chairs AT2. The 2019 EAT-Lancet report on diets not only downplays the importance of the nutritional value of dairy (running directly counter to scientifically supported U.S. dietary guidelines), but it also notes that “even small increases in consumption of red meat or dairy foods” would make sustainability goals “difficult or impossible to achieve.”

The preliminary report from AT2 (released in February) already calls for taxes on dairy foods to discourage consumption and to address what it considers is a weak environmental record.

Indications also suggest that FSS recommendations will seek to promote local production at the expense of international trade; threaten innovation and technology critical to efficiently produce sustainable U.S. dairy; and be critical of many U.S. farming practices viewed as harmful to environment.

Timetable
USDEC continues to engage with the U.S. government, influential stakeholders and international partners in key markets to hammer home what’s at stake for dairy and for U.S. dairy suppliers. Given the stakes, this full court press of engagement and outreach will continue through the third quarter. A pre-summit conference takes place in Rome July 19-21, with the full summit slated for September in New York City (exact dates to come).

“We are not going to stand by and let others tell our story, limit dairy demand and create opportunities to block market access,” says Harden.

Don’t miss session on FSS preparations at USDEC spring membership meeting
Get the lowdown on the UN Food Systems Summit (FSS) at the upcoming USDEC Spring Membership Meeting. USDEC President and CEO Krysta Harden will moderate a panel session featuring Sam Kass, food entrepreneur and former White House chef and senior policy advisor for nutrition, Dan Glickman, International Advisory Council Chair for APCO and former U.S. Secretary of Agriculture, Marilyn Hershey, chair of DMI, and Donald Moore, executive director of Global Dairy Platform, on April 22 from 12:30-2:00 p.m. CT.

The session, titled “U.S. Dairy and the UN Food Systems Summit: Looking Toward the Future of Sustainability,” will delve into the rationale behind the FSS, its goals, and the threats and opportunities it brings for U.S. Dairy.

USDEC invites you not only to register now for the Spring Membership Meeting but also invite a colleague. The meeting is taking place virtually again this year over the course of four days from April 19-22. Download the preliminary agenda to see the complete list of sessions and speakers so far.

Watch your email inboxes and Global Dairy eBrief for more on the membership meeting and individual sessions in the coming weeks. For questions, please contact Luke Waring at lwaring@usdec.org or Weston Abels at wabels@usdec.org.

Suez unblocked but fallout still rippling through trade
Aided by a high spring tide, workers beat the odds and freed the wedged cargo vessel, the Ever Given, on Monday, reopening Suez Canal shipping traffic. But the ripple effects of the week-long canal closure will take two-to-three months to dissipate, putting further pressure on already stressed supply chains.

As of Wednesday morning, nearly 300 backlogged ships were still awaiting passage at the Suez, with additional vessels arriving steadily. Carriers and shipping analysts estimate it will take at least a week to clear the stalled vessels and return to normal canal operations.

A surge in volume is expected to hit ports as delayed ships arrive with those regularly scheduled. Europe will be hit particularly hard, with major European ports as well as inland logistics systems facing a huge handling challenge, according to shipping analysts. Asia will see even tighter container availability.

Expect more shipping delays, blank sailings, ships skipping stops and rate hikes, as well as heightened container and equipment shortages and port congestion.

“It will impact all trade lanes, as carriers will seek to cascade vessels to locations where they find the greatest need,” says shipping consultant SeaIntelligence. (USDEC Middle East/North Africa office; Wall Street Journal, 3/31/21; Bloomberg, 3/29/21; Shipping Watch, 3/29/21; The Loadstar, 3/31/21, 3/29/21, 3/26/21)

Buttigieg vows to help U.S. exporters resolve supply chain woes
U.S. Secretary of Transportation Pete Buttigieg said U.S. port issues facing U.S. agricultural exporters have “reached a new level of urgency, given some of the backups that we’ve seen.”

Buttigieg said he would be consulting with the Federal Maritime Commission (FMC) to address both port backups and broader supply chain issues. He did not, however, announce specific actions but instead said resolving the port issues was an example of “where we need to be collaborating and coordinating with other partners in the administration to make sure we have a whole-of-government approach.”

FMC actions
The FMC said that 10 vessel operators and 17 marine terminal operators had been ordered to report on their practices related to demurrage and detention, empty container return, and container availability for U.S. exporters. Their responses will determine the FMC’s next steps. “The Commission will take action against practices that violate the law,” the agency stated. (Read the full article in American Shipper for more.)

From USDEC offices
Customers in some markets (including Indonesia and China) have expressed growing concerns about worsening delays from U.S. dairy suppliers. Chinese buyer also noted concerns about EU suppliers.  (USDEC China and Southeast Asia offices; Agriculture Transportation Coalition; American Shipper, 3/25/21)

EU expects 1% milk growth this year
While the EU expects its dairy herd to decline for the sixth straight year in 2021, increased efficiency should lead to a 1% rise in milk deliveries, according to the bloc’s latest short-term outlook report. Ireland and Poland will lead the percentage gain while milk output holds relatively flat in the two largest producers, Germany and France.

The European Commission sees much of that new milk (about 21%) destined for cheese, supported by renewed domestic foodservice purchasing and a 4% increase in export volume (to over 980,000 MT) focused on Japan and the U.S.

Increased cheese production will lift whey output and should help support a 5% rise in whey exports (to more than 721,000 MT) driven by Chinese demand.

The Commission expects EU SMP exports to rebound by 4% (to more than 861,000 MT) this year after a 14% decline in 2020.

Clarification
Some readers had questions about last week’s report on Chinese import data. To clarify, Chinese SMP imports rose 49% in January (vs. the previous year), while whey soared 81% and milk and cream increased 72%. Cheese imports grew “only” 20% in January to nearly 20,000 MT.

In February, Chinese imports of SMP (+15% vs. the previous year), whey (+24%), cheese (+64%) and fluid milk and cream (+35%) continued the gains.

We apologize for any ambiguity.

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.

Market Talk explores China demand, implications for NZ and U.S.
USDEC market analysts William Loux and Stephen Cain dive into booming Chinese dairy demand and the implications for New Zealand and U.S. dairy export prospects in their latest Market Talk video. The bottom line: China’s appetite for WMP (USDEC forecasts 5% annual import growth through 2025) is likely to dominate New Zealand’s export focus. With domestic Kiwi milk production growth limited (by environmental and regulatory considerations), that means New Zealand will need to cut back on other products to service China—opening the door to U.S. opportunities. For details on the type and size of that opportunity, tune in to the 10-minute March 26 Market Talk.

 

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.

 

Mexico to extend use of temporary stickers and decals for NOM-51
On March 31, the government of Mexico published in the Diario Oficial an Interinstitutional Agreement extending the use of temporary stickers and decals to comply with NOM-51 front-of-pack (FOP) labeling requirements. This agreement will provide a 60-day non-enforcement “grace period” from April 1 to May 31, 2021, in which, producers, importers, and marketers will not be penalized for non-compliance of products subject to NOM-51.

Once this period is over, all imported products that arrive on or after June 1, 2021, must comply with NOM-051 and the corresponding FOP warnings and precautionary claims at the point of sale (i.e., permanent labels). If you have further questions, please contact Oscar Ferrara at aferrara@usdec.org.

Brazil extends deadline for new health certificate
Brazil extended a deadline on a new dairy health certificate for a second time. The Brazilian and U.S. governments have been negotiating changes to the current dairy health certificate—as well as health certificates for beef and seafood—for quite some time. The original deadline for agreeing on a new certificate was Dec. 31, 2020, but MAPA (the Brazilian Ministry of Agriculture) granted the U.S. a deadline extension until March 31, 2021.

That deadline has now been extended until June 30, 2021. Until then, U.S. suppliers can use general dairy health certificates.

Currently, there is a verbal agreement between the two countries on the new dairy health certificate. Brazil granted the second deadline extension because it is processing all certificates (dairy, beef and seafood) together, and there are still unsettled issues related to the beef health certificate.

If you have any questions, please contact Eddy Fetzer at efetzer@usdec.org.

USDEC provides comments on Indonesia Halal and EU antimicrobial regulations
As part of our ongoing review of draft legislation sent to the WTO for public feedback, USDEC submitted comments last week to FAS on proposals from Indonesia and the EU. Both have the potential to impact exports to some of our largest export markets.

Indonesia. USDEC’s comments on Indonesia’s new halal implementing regulation (Government Regulation 39 of 2021, see the March 19 Member Alert) raised concerns with its overly prescriptive nature and the potential impact it may have on U.S. exporters, particularly those that process both halal and non-halal products in the same facility. USDEC encouraged the U.S. government to ensure that there is a path forward for the approval of U.S. halal accreditors, since the U.S. does not have a federal halal agency. We also encouraged recognition of all U.S. halal certifiers that are currently approved. Although the regulation is final, additional implementing regulations are expected to be issued, so it may be possible that some of the concerns noted may be clarified and/or addressed in the future.

European Union. An EU proposal to modify its Official Control Regulation to require compliance with Article 118 of the Veterinary Medicinal Products Regulation will formally allow the EU to enforce production-level controls of antimicrobials on third countries exporting animal-origin products to the EU starting in 2022. USDEC’s comments argued that enforcement of the EU’s domestic antimicrobial requirements on producers in foreign countries amounts to legislative overreach. We also noted the bloc has several pieces of legislation pending, including the list of antimicrobials allowed only for human use, so the full impact of the proposal is unknown at this time but could be significant. FAS plans to work with other countries with similar concerns to challenge the proposal.

For questions, please contact Sandra Benson at sbenson@usdec.org.

U.S. actions against Myanmar do not include all-out trade sanctions
The United States suspended the 2013 Trade and Investment Framework Agreement with Myanmar after government forces killed more than 100 peaceful protesters last weekend, but it did not apply broad trade and economic sanctions against the nation. There are no restrictions on U.S. exports to Myanmar, changes in tariffs/access for U.S. products or other official U.S. government measures restricting U.S. trade.

The FAS office in Myanmar said it remains committed to supporting U.S. agricultural exports to the nation. As noted in the Feb. 19 Global Dairy eBrief and the Volume 2 Myanmar entry in the USDEC Export Guide, FAS suggests U.S. suppliers doing business there remain in close contact with importers/distributors regarding planned shipments. Ocean carrier service to Myanmar and port operations have been inconsistent since the Feb. 1 coup.

USTR report highlights barriers to U.S. dairy trade
The 2021 National Trade Estimate Report on Foreign Trade Barriers highlights numerous impediments to dairy trade drawn from joint comments submitted last October by USDEC and NMPF. The report cites dairy trade issues in Mexico, Canada, China and the EU, among many others, mentioning dairy, milk, milk powder and cheese more than 150 times. It highlights unscientific import requirements, tariffs, country-of-origin labeling and many other issues hampering dairy trade.

In a joint press release, USDEC and NMPF urged the Biden Administration to work to eliminate those foreign tariffs on U.S. dairy products as well as nontariff impediments limiting U.S. dairy trade growth.

Among the most prominent dairy issues, the report devotes more than a page specifically to the EU’s geographical indications policy and impacts both protection of U.S. trademarks and market access for U.S. products that use common names in the EU and third country markets. And USTR even cites restrictions on the ability of U.S. producers to use the common names of the products that they produce and export in its press release on the report.

 

New Export Exchange highlights U.S. dairy capacity
A new Export Exchange video debuted last Friday at ThinkUSAdairy.org. USDEC developed the Export Exchange series last year to provide overseas buyers with accurate, timely information on U.S. dairy market conditions and reassure them that the U.S. remains a reliable source for dairy products.

In the latest edition, USDEC Market Analysts William Loux and Stephen Cain examine the reasons behind today’s lofty international dairy price levels and why the U.S. is the only major supplier not facing production difficulties and should remain a good dairy sourcing option.

The Export Exchange series is subtitled and translated for key markets and is available through the USDEC microsites for those nations. Direct your customers to the following links to see the latest installment in Japanese, Chinese, Spanish and Portuguese. The episode is also translated to Korean (but not subtitled).

Coronavirus: Singapore moves toward business reopening
The Singapore government plans to ease restrictions on working-from-home effective April 5, increasing office capacity to 75%. The USDEC Southeast Asia team will return to the U.S. Center for Dairy Excellence (U.S. CDE) three days per week at that time, rising to 4 days per week in May.

Despite the easing of restrictions, the date to start in-person activities at the CDE is still uncertain since details on pre-event testing requirements and other protocols have not been released by the Singaporean government. In addition, any event is still subject to multiple agency permit applications and reviews and physical distancing measures still apply.

We will update you as soon as more information becomes available. If you have any questions, please contact Vikki Nicholson-West at vnicholson-west@usdec.org.

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