• June U.S. export data

• Positive news on EU health and transit certificates

• Register now! 2022 Business Plan webinar

• Market Summary: WMP drags down GDT

• South Korea sanitary certificate

• July Export Guide updates

• Dairy farmers urge expanded access

• COVID drives hunger

• New global vaccine tracking website

• Exporter of the Year nominations

• Ornua butter plant stalled

• Company news: High Desert, Nestlé, Starbucks

Half-year data shows U.S. dairy exports on record pace
June dairy exports extended the year-over-year U.S. growth streak to five straight months, as U.S. suppliers shipped products equivalent to 199,383 MT of milk solids (+6%) to customers beyond our borders. Halfway through the year, we remain on record pace, having exported products equivalent to nearly 1.2 million MT of milk solids. Export volume is equivalent to 17.5% of U.S. milk produced over the same period.

U.S. export value through six months was $3.809 billion, only 4% behind the record pace of January-June 2014. June value rose 15% to $670 million vs. the previous year.

Ingredients strong
Dairy ingredients drove volume in June as they have for most of the first half. Demand for U.S. milk powder and whey remain strong. Through the first six months, U.S. whey export volume jumped 24% (+61,018 MT) compared to the previous year, with China continuing to fuel growth. Shipments to China in the first half soared 75% (+66,530 MT).

The first-half NFDM/SMP export gain was almost identical to the whey gain: +61,021 MT, a 15% increase over the first half of 2020. The increase comes despite port issues hampering exports, particularly to Southeast Asia. U.S. SMP exports to Southeast Asia grew 7% in June and were up 1% for the first six months, but USDEC believes that plenty of additional product has been booked for export but has not yet left U.S. shores.

On another positive note: U.S. NFDM/SMP exports to Mexico grew 28% in June to 34,508 MT. That’s the highest monthly total of milk powder to Mexico since August 2018.

Cheese holds its own
Year-over-year cheese exports have been all over the board in 2021, going from -10% in January to +51% in April to -13% in June, with other monthly results somewhere in between. Year-to-date, however, U.S. cheese volume (+2%, +4,498 MT) is hanging tough, despite ongoing pandemic uncertainty and its impact on global foodservice networks.

The U.S. bright spot in June? Latin America (minus Mexico). U.S. cheese shipments to South America grew 18% in June; exports to Central America rose 50% and sales to the Caribbean gained 41%.

For more in-depth analysis of half-year U.S. dairy export data and some clues about what to expect for the remainder of the year, read the U.S. Dairy Exporter Blog post, “U.S. dairy exports on record pace through first half of 2021.” Also download the Latest Month Trade Data Summary and experiment with the interactive charts in the U.S. Export Data section under the Research & Data heading at usdec.org.

USDEC work ensures new EU health certificate creates no new impacts for U.S. farmers and suppliers
U.S. dairy farmers and suppliers scored a major success this week when the U.S. government (USG) reported that an updated export verification process to comply with new EU health certificate requirements will create no new impacts for dairy farmers or manufacturers. The process will only require AMS to verify additional information during future export verification audits.

USDEC integral in success
USDEC played a critical role in ensuring a positive outcome regarding the new EU rules. Over the past year, USDEC’s Trade Policy and Market Access and Regulatory Affairs staff worked extensively with the USG and with members to ensure that the new EU requirements did not lead to a closure of the EU marketplace or to overly burdensome new requirements for U.S. dairy exporters.

USDEC helped review, identify and lay out dairy’s concerns and questions, submit comments, and prod the USG to take the issue on aggressively. Staff shared information with members, helping provide guidance on leveraging pressure from their buyers in the EU, worked with the USDEC EU office, brought political pressure to bear through meetings with USTR, USDA and congressional offices in multiple forums, and leveraged additional association connections to press the EU from more angles.

The fact that market access was preserved with no new burdens being imposed on the dairy industry and that the market will stay open is a huge success, particularly given the daunting challenge the new EU demands posed. We are extremely pleased that our investments to tackle this challenge—both politically to underscore the importance of resolving this critical issue and at technical levels to work through a myriad of certification details—and our close collaboration with several USDEC members that partnered with us to help advocate for a successful pathway forward has resulted in maintenance of access to the EU dairy market on workable terms for American dairy farmers and manufacturers.

More information
USDEC issued a Member Alert on Aug. 4 outlining details of the new requirements as well as outstanding questions on transit certificates, and held a conference call with members on Aug. 5 to review and answer further questions. USDEC has learned that additional interagency discussions have taken place on the transit certificate questions since. We will be updating members as soon as the USG confirms the transit requirements; changes to those transit requirements, if any, would be more favorable than initially reported in our Member Alert.

If you have further technical questions on the rules, also contact Jacoby at bjacoby@usdec.org or refer to the EU link in Volume 2 of the USDEC Export Guide.

Mark your calendars: USDEC 2022 Business Plan webinar set for Sept. 10
Register now for USDEC’s Sept. 10 All-Member Webinar to review the draft 2022 Business Plan: A Unified Strategy for Long-Term Growth. The virtual meeting will feature representatives from all USDEC areas of operation outlining how the organization plans to continue to open markets, facilitate trade and build demand for U.S. dairy in the upcoming year, as the world continues to face the challenges of the pandemic.

In addition to reviewing the plan, USDEC’s William Loux will provide a market outlook presentation, and Jonathan Gardner and Jaime Castaneda will offer updates on, respectively, the latest market access and trade policy developments from around the world.

Multiple Q&A periods will allow you to ask questions on USDEC plans, programs and priorities. Please download the plan, read it and jot down any questions or comments you might have in preparation for the virtual meeting. (You will need a usdec.org username and password to download it.) The webinar runs from 12:45 p.m.-2:15 p.m. ET. If you need assistance accessing the plan, please contact Weston Abels at wabels@usdec.org.

WMP drags down GDT
WMP prices fell 3.8% to US$3,598/MT at the Aug. 3 Global Dairy Trade (GDT) auction. It was the fifth straight decline for WMP and came as somewhat of a surprise, considering that prior to the event Fonterra Co-operative Group slashed the volume of WMP on offer by 20,000 MT from August 2021 and July 2022 (3,100 MT were removed from the Aug. 3 auction). That volume removal followed a 20,500-MT reduction announced prior to the previous auction July 20 (where WMP fell 2.9%).

Fonterra also forecast flat milk production over the coming season, suggesting there would be little room for volumes to rise. With that combination of factors, one might expect auction prices to increase. That hasn't been the case.

One potential explanation might lay in Fonterra’s reasoning for cutting WMP volumes on GDT: the co-op claims very strong demand and higher levels of contracting off the GDT platform, which may translate to less buying at auction.

Another potential reason may lay in skepticism from buyers over whether Fonterra’s flat milk production forecast is accurate—and a preference to wait and gather more information. Historically, the co-op has been known to underestimate production.

A third reason might simply be reduced WMP demand, with buyers sufficiently stocked and pandemic uncertainty injecting a note of caution into purchase plans (for WMP as well as other commodities). WMP volume purchased fell significantly from a year ago for China (the No. 1 buyer) and Southeast Asia.

Other prices rise
The drop in the WMP price pulled the GDT Index down 1%—the eighth straight decline dating back to April 20. Despite the trend, and questions around WMP, overall dairy demand remains pretty solid.

China continues to dominate buying across most products categories, but Africa played a larger-than-usual role at the Aug. 3 auction. Africa lifted its WMP purchasing, significantly raised its SMP volume and led all cheddar buyers.

While China still accounted for the highest volume of SMP sold, Africa, the Middle East, Southeast Asia/Oceania and the EU all increased buying compared to the July 20 auction. The SMP price gained 1.5% to US$3,020/MT, finding a toehold after four straight declines.

Butter rose for the first time in seven auctions, climbing 3.8% to US$4,589/MT, with North Asia and Southeast Asia showing gains vs. the previous auction. Prices increased across all contract periods by a minimum of 2.1%.

The Middle East drove a 1.3% gain in AMF prices to US$5,668/MT. And Africa led cheddar to its second straight increase: +0.7% to US$4,065/MT.

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.

Members cite issues with Korea sanitary certificate and ATLAS
With the launch of the new electronic certificate system, ATLAS (Agriculture Trade Licensing & Attestation Solution), exporters have notified USDEC of issues with obtaining their sanitary certificates for South Korea.

The South Korean government requires the plant number, company name and plant address associated with the Korea Ministry of Food and Drug Safety (MFDS) livestock facility or food facility plant registration to match the plant number listed on the AMS sanitary certificate for Korea. We encourage exporters to check the dairy plant registration information with MFDS and make sure that the information on the plant number, company name and plant address matches information on the AMS Korea dairy certificate. If there is any discrepancy, MFDS may question the certificate and may detain the shipment.

If any exporters experience challenges obtaining their South Korea certificates in the ATLAS system, please contact AMS Dairy Grading directly via ATLAS or by email at DairyExportsQuestions@usda.gov.

Background
As a reminder, the U.S. and Korean governments negotiated specific attestations on a new dairy sanitary certificate. Starting July 1, 2021, shipments from U.S. exporters must be accompanied by this Korea-specific AMS sanitary certificate, which will need to be in duplicate (no copies of the original). This new AMS sanitary certificate includes a section on the type of heat-treatment utilized and a section on dairy products containing egg ingredients, replacing the requirement of including a manufacturer’s declaration and APHIS certificate. If you have any questions, please contact Eddy Fetzer at efetzer@usdec.org.

July updates for USDEC Export Guide
The Market Access and Regulatory Affairs team updated 20 documents in the USDEC Export Guide in July. Some of the changes include:

Volume 1: Tariffs and Classification

• Central American countries: Updated all FTA rates for 2021, confirmed MFN tariffs and taxes, and added rules of origin for the U.S. FTAs.

Volume 2: Import Requirements

• ATLAS update: AMS is now asking companies to obtain certificates for Chile, China, the EU (until Aug. 20) and Turkey in eDocs until technical issues with ATLAS can be resolved.
  
  
• EU Certificates: Updated dairy and composite health and transit certificate issuance information based on the Member Alerts of July 16 and Aug. 4.
  
  
• China: Included link to the updated plant list in U.S. Dairy Plant Registration section.
  
  
• Malaysia: Included link to the updated plant list in U.S. Dairy Plant Registration section.

Volume 3: Compositional Standards and Labeling

• Lebanon: Updated infant formula document.

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)

Dairy farmers underscore to USTR the importance of international opportunities for U.S. dairy
Darigold/Northwest Dairy Association members Jeremy Visser and Mike Schoneveld conveyed to USTR Katherine Tai directly dairy’s need for greater export opportunities and a more level playing field in international markets this week at a roundtable in Burlington, Wash., hosted by Rep. Suzan DelBene (D-Wash.). Washington State farmers and food producers, including Visser and Schoneveld, emphasized the need for the administration to implement a trade policy that expands agricultural exports.

USDEC, working closely with Darigold, provided support to the participating dairy farmers on key messages and preparations for the roundtable.

“Expanding while also defending market share abroad is critical to U.S. dairy manufacturers and exporters, especially cheese exporters that are encountering barriers disguised by the EU’s geographical indications agenda,” noted USDEC President and CEO Krysta Harden in a joint USDEC/NMPF press release thanking DelBene for hosting the event.

Shipping crunch could last until 2023; USDEC working to mitigate impacts
A return to pre-pandemic port and shipping conditions isn’t expected until the 2022 Chinese New Year, and some say the challenges could extend all the way into 2023. Ports continue to report imports well above comparable periods in 2019 and 2020. At the ports of Los Angeles and Long Beach, for example, container traffic in the first five months of the year was up 47% from 2020 and 29% from pre-pandemic 2019.

Container ship reliability worsened in June and extenuating circumstances continue to complicate any return to normalcy. The latest setback is the heavy typhoon season in China that continues to close ports, divert carrier traffic and strand containers.

USDEC efforts
To address the negative impact that the heightened shipping demand is having on dairy exporters, USDEC has been leading efforts with Capitol Hill and the administration, urging them to take steps to improve container availability and tackle the steep, unpredictable charges carriers are levying on exports.

Those efforts have been extensive, including multiple meetings with officials at the Federal Maritime Commission, USDA and the Department of Transportation (DOT); helping craft and sign coalition letters to President Biden and DOT Secretary Pete Buttigieg; building support for House and Senate letters to the Federal Maritime Commission; and building support for a hearing on the port crisis with the House Transportation and Infrastructure Subcommittee for Coast Guard and Maritime Transportation that took place in June.

The shipping portions of President Biden’s July 9 Executive Order aimed at boosting business competitiveness were a positive step (see Global Dairy eBrief, 7/16/21), and we expect more potentially positive moves in the near future with new port legislation from the House that seeks to amend the Shipping Act to increase regulation of ocean carriers and expand the FMC’s regulatory powers.

Just this week, in response to allegations that ocean carriers are assessing new additional fees, such as “congestion surcharges,” with little notice or explanation, the FMC notified eight ocean carriers that they had 10 days to show that their surcharges are legal and comply with FMC regulations, according to the Agriculture Transportation Coalition.

See Leading Indicators for more on logistics
For more on port and shipping issues, don’t miss USDEC’s new fortnightly newsletter Leading Indicators. Every other Monday, Leading Indicators features the latest developments in ports, shipping and logistics and how they might impact U.S. dairy exports—in addition to market intelligence snapshots and other information. All Global Dairy eBrief recipients should receive Leading Indicators. If you are not getting it and would like to, please contact William Loux at wloux@usdec.org.

World hunger continues to rise
One of the consequences of the pandemic and associated income loss is the rise in global hunger. World hunger spiked in 2020, rising to its highest level since 2005, according to the United Nations. About 811 million people—around one-tenth of the global population—were undernourished in 2020. A new report from USDA projects 291 million more people will not have enough to eat in 2021—and that estimate does not take into consideration detrimental effects of climate change, armed conflict or political instability.

Dairy plays an essential role in nourishing the world and has proven benefits in treating malnutrition. Earlier this year, for example, the World Health Organization reaffirmed that life-saving ready-to-use therapeutic foods (RUTF) should be made with at least 50% dairy protein.

In addition, despite COVID-19 supply chain logistical challenges and market disruptions, U.S. dairy exporters continued to serve global customers with record level exports of dairy products that support health and wellness. (USDEC Southeast Asia office; Bloomberg, 7/29/21; 7/12/21, 7/8/21)

International organizations launch new COVID website
The World Trade Organization, World Health Organization, World Bank and International Monetary Fund launched a new website to serve as a platform for information on access to COVID-19 vaccines, therapeutics and diagnostics and on the activities of the organizations in tackling the pandemic. The website offers a variety of interactive maps and filters that provide data on COVID conditions, vaccine supply and administration, diagnostics and other key factors in the global effort to bring the virus under control.

The website is a product of the joint Task Force on COVID-19 Vaccines, Therapeutics and Diagnostics, whose goal is to support delivery of COVID-19 tools to low- and middle-income countries and to mobilize relevant stakeholders and national leaders to remove critical finance and trade roadblocks.

 

Don’t pass up a chance to become the Tom Camerlo Exporter of Year
Dairy Foods magazine is seeking nominees for the 2021 Tom Camerlo Exporter of the Year Award. Every year, the award recognizes a U.S. dairy company that exhibits exceptional leadership and commitment to the international market.

To read more about the selection criteria and to nominate your company or another worthy USDEC member, visit Dairy Foods’ confidential online nomination page. The deadline is Aug. 16.

USDEC sponsors the award, which is named for former Chairman Tom Camerlo. The winner will be featured in the November issue of Dairy Foods and receive the award at the fall USDEC membership meeting. To read about last year’s winner, Proliant, as well as other previous recipients, click here.

 

Construction stalled on another Irish dairy plant
An engineering firm filed an appeal with An Bord Pleanála, an Irish quasi-judicial body that rules on planning disagreements, to halt an expansion project at Ornua’s Kerrygold manufacturing site in Mitchelstown, Ireland. The appeal claims that the decision to allow construction of the €40-million (about US$47-million) butter expansion did not take into account the impact of effluent odor or traffic on the local community or the climate impacts from increased milk production to supply the facility.

An Bord Pleanála will rule on the appeal by Nov. 23, but Ornua has already said construction (which was to start by the end of summer), will be delayed. This is the second major Irish dairy plant project stalled by environmental appeals after planning permission was granted. A joint-venture cheese plant in Belview, Ireland, by Glanbia Ireland and the Netherlands’ Royal A-Ware, was held up by multiple challenges before gaining final approval last month (see Global Dairy eBrief, 7/9/21). The two incidents illustrate the increasingly rocky road Irish dairy processors may face as the nation’s milk supply rises. (Agriland, 8/3/21)

High Desert completes butter, MPC expansion
Idaho’s High Desert Milk completed a $50-million expansion that increases annual butter output by more than 18,000 MT and adds MPC70 to its product portfolio. The facility in Burley, Idaho, can produce more than 16,000 MT of MPC70 annually. High Desert says 60% of the MPC is earmarked for customers in Latin America. (Pacific Northwest Ag Network, 7/29/21)

Growth on tap for Chinese cheese market
In another sign of rising interest in cheese in China, dairy processor Shanghai Milkground Foods Tech and the Chinese Nutrition Society established the Cheese Nutrition and Innovation Research Center. The facility will conduct research on the nutritional benefits of cheese, new product R&D and sensory evaluation, all with the aim of expanding Chinese cheese consumption. (USDEC China office)

Starbucks, Nestlé expand partnership
Nestlé and Starbucks announced a new collaboration to bring Starbucks ready-to-drink coffee beverages to select markets across Southeast Asia, Oceania and Latin America. The agreement, which expands a three-year-old partnership on Starbucks coffee and tea products outside of Starbucks stores, will originally cover existing brands and products but the companies said they would “continue to develop a strong innovation pipeline.” (Company reports)

Axxon buys Brazil’s Alibra
Private-equity fund Axxon purchased a majority stake in Alibra Ingredientes, a Brazilian manufacturer of dairy and non-dairy food ingredients, powdered food mixes and cheese substitutes for the food and beverage industries. Alibra has plants in Campinas, São Paulo, and Marechal Cândido Rondon, Paraná, and exports to Latin America, Africa and the Middle East. (USDEC South America office)

New products focus on health
New product rollouts in key markets continue to focus on health and wellness and delivering to the consumer needs of the region. A few of the latest from China and Thailand include:

• Thailand’s CP Meiji launched a ready-to-drink yogurt in a shot format that is high in vitamin C and probiotics. The company is marketing Meiji Pro-C as an immune booster.
  
  
• Thailand’s Dutch Mill Group developed a new yogurt featuring a probiotic that the company claims reduces stress. The Dutchy line comes in two flavors: yuzu-orange (with orange flakes) and pomegranate-Earl Grey (with coconut jelly).
  
  
• Nestlé launched its first two products under China’s “blue hat” certification program: a glucosamine and calcium-fortified milk powder and a probiotic protein powder. The blue-hat program (so-called because the logo resembles a blue hat) requires years of testing, clinical trials and regulatory hurdles to prove functional health benefits of a product. Nestlé is touting the products for healthy aging, marketing the glucosamine powder as contributing to increased bone density and the probiotic as enhancing immunity. Both products will be sold under Nestlé’s Yiyang brand.
  
  
• China’s Yili Group launched a cream foam product to meet demand from the milk tea sector. The foam is made using whipping cream and cheddar cheese, with the cheddar content reportedly more than 16%. (Company reports; USDEC China office; USDEC Southeast Asia office)

Company news briefs
UK-based Bridge Cheese is doubling capacity at its Telford, England, plant. The expansion plan comes on the heels of a decision to focus on export markets outside the EU, including pizza cheese and other varieties aimed at foodservice buyers . . . Singapore-based Olam International plans to build a new milk processing facility in New Zealand. Media reports suggest the location will be Tokoroa on the North Island. More details are expected in the coming months . . . Coca-Cola reportedly plans to launch fairlife milk in China. No details were provided . . . China’s Mengniu Dairy signed a partnership with ecommerce platform MissFresh under which MissFresh will offer the full range of Mengniu’s 70 dairy products from milk to yogurt to ice cream. As part of the deal, the companies will develop and launch a new yogurt product customized to Chinese consumer preferences, based on direct feedback from buyers . . . CKE Restaurants, parent of Carl’s Jr., signed a master franchise deal with Australian franchisor CJ’s QSR Group that calls for 200 new Australian Carl’s Jr. units over the next 10 years . . . Malaysian conglomerate and dairy processor Johore Tin is changing its name to Able Global. (USDEC China office; USDEC Southeast Asia office; DairyReporter.com, 8/2/21; Dow Jones Newswires, 7/26/21; Franchising.com, 7/15/21; BusinessDesk, 7/13/21)

 

• Learn more about Olympic runner Elle Purrier from her former school principal
• Elle Purrier, who grew up on Vermont dairy farm, advances to Olympic finals
• The Nature Conservancy develops Roadmap for a Sustainable Dairy System
• Dairy nutrition’s role in building sustainable food systems (retweet)