• Food Systems Summit developments

• USDA’s new climate-smart initiative

• Gallagher to leave DMI
• USDEC question? Ask Krysta Harden

• USDA earmarks funds for distribution support

• Register now: South American cheese webinar

• USDEC Mexican bakery workshops

• Register now: USDEC fall board meeting

• Market Summary: prices steady and high

• COVID-19 update

 

Outcome of Food Systems Summit largely positive but extensive work remains
Extensive work in the months leading up to last week’s UN Food Systems Summit (FSS) helped pave the way to a largely dairy-positive start to the UN-led effort to transform food systems. USDEC’s collaboration with allied groups and sustained engagement with the U.S. government, multilateral institutions, non-governmental organizations and the civil and private sectors helped ensure that U.S. dairy demonstrated its global leadership working constructively toward more sustainable food systems.

“The Summit served as a high-profile opportunity for U.S. dairy to reaffirm to an influential global audience its commitments to environmental stewardship, workforce development and high-quality animal care practices ,” said Nick Gardner, USDEC senior vice president, Sustainability and Multilateral Affairs, who led USDEC efforts at the FSS.

USDEC’s collaboration and engagement created numerous opportunities to promote the critical role of U.S. dairy in the future of global sustainable food systems, advocate for rules-based international trade, promote science- and evidence-based policies, and support the technological and innovative approaches that will be needed for U.S. dairy producers and processors to achieve our 2050 sustainability goals.

Activities and achievements
Highlights of U.S. dairy’s extensive involvement and the results obtained include:

• Working closely with NMPF, engaged at all levels of U.S. government to advocate for a UN FSS that prioritized science and evidence-based policy making, respected the rights and roles of member states, avoided one-size-fits all approaches, or advantaged producers in other regions or countries. USDEC was also a founding member of a U.S. coalition of food and agricultural companies and trade associations that advocated these principles to the U.S. government.
• U.S. dairy’s “game-changing solutions” were officially recognized by the Summit and included in the UN FSS Commitments Registry.
• Working closely with key stakeholders, USDEC played an integral role by supporting several UN FSS “Coalitions of Action.” As these coalitions will spur action after the Summit, USDEC is well positioned to engage beyond the Summit.
• USDEC CEO Krysta Harden led outreach efforts to more than 30 decision makers and influencers to ensure U.S. dairy farmers, processors and traders were well represented in high-level discussions spurred by the Summit.
• U.S. dairy farmers and experts participated in panel discussions, moderated and facilitated international dialogues, and provided expert commentary to UN FSS leaders.
• USDEC coordinated closely with the International Dairy Federation (IDF), Global Dairy Platform (GDP) and Pan American Dairy Federation (FEPALE) to align activities and ensure robust government engagement in the Summit.
• USDEC signed on as an early adopter to GDPs, Pathways to Dairy Net Zero initiative, launched in parallel to the UN FSS to represent the ambition of the dairy industry to implement more sustainable practices around the globe.
• Outcomes from the UN FSS dialogue co-hosted by USDEC, the National Dairy Council (NDC), the Global Child Nutrition Foundation, and The Nature Conservancy were included in the second synthesis of the Independent Food Systems Summit Dialogues released by the UN FSS.
• USDEC joined the Private Sector Mechanism (PSM) of the United Nations Committee on World Food Security to advocate for evidence-based policy making that yields positive outcomes for the industry. PSM membership will be a critical engagement tool for USDEC as food systems activities shift to Rome where PSM is most active.

The efforts were integral to reducing the immediate threat from activist groups seeking to marginalize or remove animal-sourced foods from the global food system.

More to come
But the FSS was just the beginning. The food systems concept is here to stay and subsequent work flowing from the FSS includes problematic concepts and proposals. For example:

• Efforts to advance domestic production and local consumption over international trade.
  
  
• The concept of “True Cost Accounting” (TCA) of foods. TCA not only lacks consistency but also ignores the valuable role livestock-derived foods play in human health, environmental sustainability and poverty reduction.
  
  
• Continued engagement by problematic coalitions that seek to reduce livestock production, restrict international trade and brand animal-sourced foods as unhealthy.

“USDEC will continue to monitor and engage in the ongoing global food systems policy dialogue to proactively address potential challenges for U.S. farmers, processors and exporters,” says Gardner. “We will continue to demonstrate all the important ways in which dairy exports fit within a food-systems-focused future. The good news is that after all the work that went into the FSS, USDEC and U.S. dairy are better positioned than ever to engage and advocate successfully.”

USDEC backs USDA’s climate-smart initiative
USDEC applauded USDA’s new Climate-Smart Agriculture and Forestry Partnership that was announced this week alongside a new USDA program to provide relief from agricultural market disruptions, including port and shipping issues (see logistics section below). The Climate-Smart Partnership complements the U.S. dairy industry’s world-leading sustainability commitments.

Guided by science, USDA will support a set of pilot projects that provide incentives to implement climate-smart conservation practices on working lands and to quantify and monitor carbon and greenhouse gas benefits associated with those practices. The goal is to create new market opportunities for commodities produced using climate-smart practices and position U.S. farmers, ranchers and landowners as leaders in addressing climate change.

“U.S. dairy farmers and processors have been and will remain leaders in sustainable agricultural production, supporting innovative use of technology and committing to significantly reduce greenhouse gas emissions through the forward-thinking Net Zero Initiative,” said USDEC President and CEO Krysta Harden in a press release on the program. “USDA’s climate-smart announcement will provide additional pathways for U.S. dairy producers to reduce their environmental impact and aligns perfectly with USDEC’s own enhanced global engagement on sustainability.”

USDA is currently seeking public comment and input on the design of the new initiative.

Tom Gallagher to step down from DMI
Tom Gallagher, CEO of Dairy Management Inc. (DMI), is stepping down after 30 years of guiding the dairy checkoff organization. Gallagher is not retiring but moving on to explore other opportunities.

The DMI board has appointed Barb O’Brien, president and CEO of the Innovation Center for U.S. Dairy, as the next DMI CEO. Gallagher will work with the board and staff to ensure a smooth transition to the next chapter for the dairy checkoff.

“I want to thank Tom for his leadership, commitment to exports and to USDEC,” said USDEC President and CEO Krysta Harden. “His support for U.S. export markets has been instrumental in helping the United States expand international U.S. dairy sales by over 600% over the last two decades. He was essentially a founding father who decided DMI should be USDEC's parent company with primary funding through the dairy checkoff.

“His steadfast commitment to growing markets overseas has had an enormous impact on U.S. dairy's continued success, and he has positioned U.S. dairy as a recognized leader in sustainability,” Harden added. “We all look forward to working with him in the months to come.”

Ask the CEO: We want to hear from you!
Do you have questions about USDEC strategy and tactics? USDEC activities? U.S. dairy export opportunities? We invite all members to submit inquiries for next month’s “Ask the CEO” column.

We will treat the questions as completely anonymous—no company or individual names will appear. Please submit your questions to progers@usdec.org or by clicking the big red button below.

 

USDA allocates $500 million toward ag market disruptions, including transportation challenges
USDA has earmarked $500 million to provide relief to farmers and food producers from agricultural market disruptions, including transportation challenges, availability and cost of certain materials, and other near-term obstacles related to the marketing and distribution of certain commodities.

The money is part of a broader $3-billion USDA package targeting urgent challenges facing agriculture today. It also includes investments to support animal disease preventions, drought resilience and response and purchase of food for the school nutrition program. The $500 million allocated for market disruptions stems from USDA Secretary Tom Vilsack’s work as co-chair of the Biden-Harris Administration’s Supply Chain Disruption Task Force.

USDEC work with task force
As part of its ongoing efforts to resolve the port crisis, USDEC continues to engage with the Supply Chain Disruption Task Force, most recently meeting with the Task Force’s White House Port Envoy John Porcari and Under Secretary for Policy of the Department of Transportation Carlos Monje to emphasize the difficulties USDEC members are encountering in shipping product to Asia.

Last month in a speech to the National Association of State Directors of Agriculture, USTR Katherine Tai attributed the port and shipping problems to the “economic discombobulation” caused by the pandemic, economic recovery efforts and subsequent distortions to supply and demand. The situation continues to fuel container ship backlogs at ports around the world (427 container ships were waiting for berths at ports worldwide last week, up 14% since the start of September), increase shipping delays, and drive truck, rail, warehousing and shipping costs.

USDEC has taken a series of actions to address the crisis, including supporting H.R. 4996—the Ocean Shipping Reform Act of 2021. We continue to work to secure more members of Congress to co-sponsor the legislation, which addresses unfair practices and charges implemented by ocean carriers. (Click here for a briefing paper on the legislation.)

 

USDEC to host “Explore Opportunities for U.S. Cheese in South America” webinar
The USDEC Cheese Team in conjunction with the USDEC South America office are hosting a webinar from 11:00 a.m.-12:30 p.m. ET on Oct. 7 focusing on cheese opportunities in South America. We invite all members interested in cheese opportunities in the region to register for the event.

The webinar will focus on Colombia, Peru, Chile and Brazil. The event aims to help members:

• Understand South American market trends, innovation and consumer profiles.
  
  
• Enhance their knowledge of the region’s cheese market and learn more about competitors.
  
  
• Discover opportunities through presentations from local importers, distributors, foodservice and retail sector representatives.

Click here to register. For questions, please contact Rebecca Vidal at rvidal@usdec.org.

Mexican bakery workshops increase knowledge of U.S. dairy ingredients
More than 100 representatives from Mexican bakery companies, restaurant chains and supermarket chains (that manufacture their own baked goods) participated in USDEC’s inaugural bakery workshop series in August and September. Attendees were staff in charge of production and manufacturing, along with three food science professors from Mexican universities. Due to significant additional demand, eight more workshops have been added to take place in October.

Run in conjunction with CANAINPA (Mexico’s premier bakery association), it was the first time USDEC conducted hands-on workshops targeting the Mexican bakery sector.

Gerardo Avena, an independent consultant with more than 16 years working in the bakery sector in Mexico and Latin America, conducted the six sessions. Avena, also a professor at a culinary institution in Cuernavaca, Mexico, walked attendees through using U.S. nonfat dry milk, sweet whey, WPC 34 and lactose in various applications. Participants then worked with the ingredients, baking six different breads, scones and buns.

Sizable customer base
The baking industry in Mexico is large and diffuse and has exhibited strong interest in learning more about U.S. dairy ingredients and the cost, nutrition and functionality benefits they bring.

“The Mexican bakery sector is somewhat similar to the indigenous cheese industry in that there are literally thousands of small to medium-sized bakeries that need and welcome the technical education and hands-on opportunities that our recent workshops have provided,” says Terri Rexroat, USDEC vice president, ingredients marketing.

USDEC hybrid meeting offers multiple attendance options
If you do not feel comfortable traveling because of COVID, can't travel or just want to tune in remotely, USDEC’s Fall Annual Membership Meeting has you covered. The event—Oct. 18-19 at Chicago’s Swissôtel—will be the first hybrid in-person/virtual USDEC membership meeting in history.

In person, it will look a lot like previous USDEC meetings, but with some COVID safety twists. USDEC, the hotel and the city of Chicago require universal masking, regardless of vaccination status, as well as social distancing where possible. There will be less interaction at the registration tables, and we will have no microphone runners for Q&As. However, you will be able to ask questions using your laptop, tablet and other mobile devices and there will be stationary microphones available for use.

For virtual attendees, a meeting webpage will go live on Oct. 18 and 19. Registered members can go there to view the General Session and ask questions using a Q&A function that will be visible to our presenters. The link for this webpage will be made available on the USDEC website as well as emailed to all participants who have indicated they wish to attend virtually.

To download the full preliminary agenda for the meeting, click here. To register, click here. In addition, you can invite a colleague to attend as well by clicking here. (Please note: Colleagues will need a USDEC log-in to register—to request a log-in, please contact Luke Waring at lwaring@usdec.org or Weston Abels at wabels@usdec.org.)

NZ milk production dips
This week’s milk production report out of New Zealand shed more light on current international dairy commodity price strength. New Zealand’s August output fell nearly 5% compared to the same month the previous year.

Even though August is still pre-peak, the decline caught many by surprise, given adequate pastures and strong export demand. With the October peak about to kick in, questions abound about New Zealand’s ability to match or surpass previous-year volume, particularly with the latest pasture growth index showing the pasture growth rate slowing.

With elevated input costs in major milk sheds and underwhelming EU output, limited supply growth is likely to lend further support to international dairy commodity prices moving forward.

NZ exports mixed
New Zealand dairy exports declined across most major product categories in August. Year-over-year WMP exports fell 24% to 38,436 MT; cheese slipped 31% to 13,420 MT; butter lost 9% to 7,907 MT; and infant formula declined 9% to 7,915 MT.

On the plus side, SMP exports grew 21% to 10,562 MT.

August is New Zealand’s lowest volume export month due to the seasonal nature of the nation’s milk production. But signs of tighter-than-expected milk supply moving forward could limit export growth in the months ahead.

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.

Japan implements milk price supports for fiscal 2020
Japan’s Agriculture and Livestock Industries Corp (ALIC) announced that reduced prices for manufacturing milk in fiscal 2020 (April 2020-March 2021) triggered its “Milk for Further Processing Stabilization Program,” also known as the Narishi program.

The closure of schools last year due to COVID (and subsequent reduction in school milk needs) caused the diversion of more raw milk toward longer shelf-life products. That reduced prices below government-established minimums of milk for further processing.

The program will pay farmers about 1 cent more per kg on more than 3 million MT of milk produced in fiscal 2020—an outlay of more than $30 million.

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.

 

Singapore backtrack while other dairy export target markets move toward reopening
With the Delta wave having apparently peaked, a number of nations are proceeding with plans to loosen restrictions and boost economic growth.

Japan lifted the state of emergency that was in place on 19 prefectures this week, allowing restaurants and bars to resume more flexible hours (although it still is requesting no alcohol be served after 9 p.m.). The change could not come too soon for the foodservice sector: year-over-year restaurant sales decreased 9% in August after COVID cases surged.

Vietnam’s Hanoi and Ho Chi Minh City eased their severe lockdown restrictions in mid-to-late September, allowing several non-essential businesses to reopen, allowing residents to go grocery shopping once a week, and (in Hanoi) eliminating the need for special travel permits that were required even for inner city travel. Ho Chi Minh City is developing a pilot program for vaccine travel passes that it hopes will facilitate economic reopening.

Indonesia downgraded all of its high-risk red zones to orange (medium-risk) and yellow (low-risk), is expanding in-person schooling and is even allowing in-person business meetings (as long as participants abide by social distancing and sanitation guidelines). With loosened restrictions on restaurants, sales are slowly recovering—and with them demand for mozzarella, UHT milk and other dairy products.

Thailand approved a four-phase timeline for reopening. Effective today, it eased control measures in 29 provinces, allowing numerous business types to reopen and, in three provinces, accepting foreign travelers to tourist destinations. Further tourist openings are slated for Nov. 1.

Kuwait plans to enter the fifth phase of its reopening plan this month, resuming normal health club activities, conferences and exhibitions, restarting in-person school and increasing the number of inbound flights. Saudi Arabia and Egypt are focusing on bolstering their tourism sectors, with Egypt running a promotional campaign for the month of September and Saudi Arabia getting into the cruise ship market.

Singapore is one of the outliers in the trend. The country reimplemented work-from-home rules starting this week and lasting until Oct. 25 (although conditions will be reassessed in two weeks). It also tightened restrictions on restaurants, limiting two to a table and requiring that customers be vaccinated. The Singapore government approved a S$650-million (about US$480-million) wage subsidy plan for certain businesses, including food and beverage outlets and retailers, to help them cope with the tightened COVID restrictions.

South Korea might be following in Singapore’s footsteps as early as today. The country began a “live with COVID” strategy in August aimed at bringing back normal shopping, dining, travel and tourism. But an explosive rise in new case numbers following the Chuseok holiday has the country reevaluating its plan. The government was poised to make an announcement today regarding social distancing levels. (USDEC overseas offices in China, Japan, Mexico, Middle East/North Africa, South America, South Korea, Southeast Asia, and Vietnam).

Further delays for Glanbia, Royal A-ware plant
Ireland's Supreme Court agreed to hear An Taisce's appeal to deny planning permission for a new joint-venture cheese plant by Glanbia Ireland and the Netherlands' Royal A-ware (see Global Dairy eBrief, 8/13/21). Irish environmental watchdog An Taisce has challenged the plant project multiple times, citing ecological concerns. The Irish Farmers Association expects the decision will delay the already postponed plant by another six months, assuming the court sides with the dairy processors. (Agriland, 9/24/21; The Journal, 9/24/21)

Company news briefs
Fonterra Cooperative Group said it was launching a process to divest its Chilean holdings and was considering an IPO for its Fonterra Australia division (with the intention of retaining a majority stake) . . . Synlait Milk named Grant Watson as its new CEO. Watson, currently CEO of Kiwi dairy processor Miraka, will replace John Penno, who temporarily stepped in to lead the company after the departure of former chief Leon Clement earlier this year . . . Australia’s Van Dairy said it plans to spend up to A$30 million (about US$22 million) to build a milk powder facility in Woolnorth, Tasmania, and retool a building in Somerset, Tasmania, as a packaging plant . . . Nestlé launched its MilkPak A2 shelf-stable milk in Pakistan. The company is marketing the product as being easier to digest than regular milk and claims it is the first A2 milk on the market in Pakistan . . . As part of a plan to reduce plastic waste, Synlait Milk plans to launch stainless steel reusable milk bottles starting this month on New Zealand’s South Island. The “Swappa Bottle” program will widen distribution over time. (Company reports; Otago Daily Times, 9/27/21; Farm Online, 9/27/21; Stuff.co.nz, 9/27/21; Dawn, 9/24/21)

• Thank you to Tom Gallagher for "steadfast commitment to growing markets overseas"
• Harden in interview: “The world needs U.S. dairy, and the U.S. needs the world”
• U.S. dairy proud to be feeding more people, more sustainably than ever before
• USDEC will work with coalitions for more sustainable food systems
• U.S. dairy provides the world’s most sustainable milk at highest level of quality