• Port issues demand united front

• U.S. dairy: feeding the world

• Gallagher’s farewell; board election

• Schreiber named Exporter of the Year

• In memoriam: Douglas Paddon-Jones

• Market Summary: supply concerns bolster GDT

• USDA release Dairy and Products Annuals

• USDEC leads IDF committee

• NZ, UK reach trade deal

• USDEC addresses NASDA

• Letter supports Trevino nomination

• U.S., Mexico ag chiefs meet in Iowa

• September Export Guide updates

• FrieslandCampina opens China center

Port crisis demands united dairy export front
The predominant topic of conversation at this week’s fall USDEC Board of Directors and Membership Meeting was how to address the port crisis that continues to erode U.S. dairy export revenues and challenge growth. There were no easy answers.

The difficulty is that it’s not just a port problem, noted the speakers during the panel discussion, “Exports, Ocean Carriers and Port Congestion.” It’s a fully integrated supply chain challenge, encompassing port congestion, carriers returning empties rather than loading containers of U.S. dairy products (or any U.S. goods), labor shortages, truck, container and chassis shortages, exorbitant and unfair fees, and the list goes on.

There’s only one way to resolve it, noted one USDEC member. He explained that after sending letters to Senate and House members, he was planning to personally travel to Washington, D.C., to speak with congressional representatives, and he called for others to do the same.

“It can’t be just USDEC, which has done a terrific job …. it can’t just be [our company]. It needs to be the industry,” he said. “That’s where the power comes, the power is in the industry, not just one company. So I impress upon all of you to get involved, take part and do what you can to get this thing corrected.”

A second USDEC member went a step further in her assessment of how to facilitate change.

“The issue is a lot bigger than dairy,” she said. “First we have to be a united front as dairy; second, we have to be a united front as agriculture; and third, we’ve got to be a united front as exporters.”

Actions ongoing
USDEC has held several meetings with the White House, USDA, Department of Transportation and USTR seeking action on the port crisis. Trade Policy staff continues to build bipartisan support in Congress for the Ocean Shipping Reform Act (H.R. 4996), which now has 37 cosponsors. (A briefing paper on the legislation is here and a new “frequently-asked questions” document compiled by USDEC can be found here.)

USDEC President and CEO Krysta Harden, who moderated the panel, urged members to ratchet up their involvement by reaching out with concrete stories to elected officials.

Citing her experience on Capitol Hill, Harden noted, “Nothing catches your attention more than a real person, a businessperson who's involved in an issue and who says, let me show you what this is doing to my business. Let me show you what it's doing to my employees in this community—what it might mean for our industry if this is not fixed or changed or improved.”

Glimmers of progress
Mario Cordero, chair, American Association of Port Authorities and former commissioner, Federal Maritime Commission, talked about the need for U.S. ports to move toward 24/7 operation, a recommendation he said that the Federal Maritime Commission made as early as 2016. But it wasn’t until the current port crisis that the work gained serious traction.

In addition to the measures announced last week by the White House (see Global Dairy eBrief, 10/15/21), the Port of Long Beach began a pilot project about a month ago to expand port hours, but true 24/7 operation will take time to gain buy-in from all the parties involved and to implement, Cordero said.

Other potential positive developments: Next month, the carrier alliance Ocean Network Express said it would start servicing the Port of Oakland, which is fully operational again after labor shortages and the closure of one of its piers earlier this year. The Ports of Seattle and Tacoma said they would test extending their hours to facilitate container traffic. Union Pacific Corp. extended hours at a rail facility near the Port of Los Angeles to align with its goal to move to 24/7 operations.

In the meantime, one USDEC member noted, “it’s not easy today. It wasn’t easy yesterday. And it’s going to get harder tomorrow.”

And the impact on U.S. dairy suppliers will continue to strain business.

“Without reliability, it doesn’t matter how good our quality is because reliability is one of the biggest and most important things,” one member said. “The irony of this is that we’ve exported more the last two years than ever before and we’re doing it in this environment. So think what we could really be doing if we didn’t have these constraints.”

U.S. dairy: feeding the world
“One number stands out in my mind,” USDEC President and CEO Krysta Harden said during her opening remarks at the board meeting: “75% of U.S. milk production growth in 2020 went to exports.”

That is important not only to U.S. dairy farmers and processors but to an ever-expanding global population with a growing dairy appetite. As world demand continues to rise, the 95% of the world’s population that lives outside the U.S. will increasingly rely on U.S. dairy products to meet consumer needs.

EU, NZ milk growth slows
USDEC analysts William Loux and Stephen Cain painted an optimistic picture in the Market Outlook portion of the board meeting. The EU and New Zealand both face constraints on milk production growth in the years ahead, largely environmental. Fonterra predicts its milk production could fall by 2% over the next decade; ANZ estimates the decline for New Zealand as a whole could be as high as 1% per year.

In the EU, the new Common Agricultural Policy ties farm payments to environmental improvements while the “Farm to Fork” program emphasizes greenhouse gas emissions through reduced cow numbers. Both will likely undercut the bloc’s milk production growth.

On the other hand, if U.S. producers continue to improve efficiency alongside their world-leading sustainability programs, and producers and processors make the investment to serve world markets, the world will be increasingly looking to the U.S. for dairy.

And demand is expected to continue growing. (Read next week's Global Dairy eBrief for Loux and Cain's near- and mid-term demand outlook analysis.)

“The two things that really motivate me about working in agriculture are 1) keeping farmers on the farm … 2) feeding people, helping people. That’s what we do,” says Harden. “But we don’t just feed our neighbors here. We feed our neighbors around the globe.”

Gallagher bids farewell to USDEC; members elect officers
Tom Gallagher, former DMI CEO and USDEC secretary/treasurer and chair of the finance committee, kicked off the USDEC fall membership meeting by recalling the first USDEC board meeting. It was a time when USDEC had about 15 members and the U.S. was shipping the equivalent of about 2% of our milk beyond our borders. Today, that membership is about 110 companies and the U.S. is exporting the equivalent of around 17% of U.S. milk.

Exports remain “an enormous opportunity,” he said. “We saw that at USDEC years ago and it’s still an enormous opportunity today.”

Gallagher, one of the founding fathers of USDEC, paid tribute to some of those other founders who were no longer with us, like Elwood Kirkpatrick and Tom Camerlo.

“I wish the people that started this in 1995 could sit here today and see what this organization is, see what the industry and each and every one of your companies has done. It’s phenomenal.”

Board elections
Gallagher also welcomed Barb O’Brien, who attended the meeting as DMI’s new president. At the meeting’s end, members reelected Larry Hancock as chair, named O’Brien as secretary/treasurer and appointed Alex Peterson as vice chair. Members also chose two new at-large members for the Operating Committee: Alyssa Badger, HighGround Dairy, and Molly Pelzer, Midwest Dairy. Patti Smith, DairyAmerica, and Alfiya Thomas, Schreiber Foods, entered the second year of two-year terms on the Operating Committee.

Chairperson Hancock named leaders for four committees.

• Cheese & Consumer Products: Incumbents Frank Alfaro, BelGioioso Cheese, named chair; and Alison Rosenblum, Tillamook County Creamery Association, named vice chair.
  
  
• Global Ingredients: Incumbents Keith Gretenhart, Valley Queen Cheese Factory, named chair; Jing Hagert, Milk Specialties Global, named vice chair.
  
  
• Trade Policy: Incumbents John Wilson, Dairy Farmers of America, named chair; Jeff Schwager, Sartori, named vice chair.
  
  
• Finance: Barb O’Brien, DMI, named chair; and Alex Peterson, DMI, named vice chair.

The board also voted to approve the 2022 Business Plan. Thank you for your valuable input on the plan.

Thank you as well to all members who attended the meeting in-person or virtually, and for all your efforts to advance U.S. dairy exports.

Schreiber honored as 2021 Exporter of the Year
Schreiber Foods’ ability to nimbly adapt under the pressure of a global pandemic has earned the company the 2021 Tom Camerlo Exporter of the Year Award.

The award was announced Tuesday at the U.S. Dairy Export Council’s (USDEC) Fall Annual Membership Meeting in Chicago. Sponsored by USDEC, it is given annually by Dairy Foods magazine in honor of Camerlo, a former USDEC chairman with a passionate vision to expand exports.

“The pandemic has challenged many of our member companies to make pivots,” said USDEC President and CEO Krysta Harden. “Schreiber stood out by adding new ports, carriers and routes to what was already one of the industry’s most advanced distribution networks.”

Schreiber Foods’ Senior Vice President and General Manager Europe and Asia, Jason Stephens (center), displays the Tom Camerlo Exporter of the Year trophy. He is flanked by (left to right) USDEC President and CEO Krysta Harden, USDEC Chair Larry Hancock, Schreiber Managing Director of Export Sales Alfiya Thomas and USDEC Chief Operating Officer Martha Scott Poindexter.

In 2020, Schreiber exported to more than 55 countries, achieving double-digit percentage increases in export volume. Schreiber is on track to exceed those totals this year, making it the best year for exports in the company’s 76-year history.

The company made innovative logistical adjustments to cope with the ongoing port upheaval disrupting overseas shipments Schreiber worked with its customers and the USDEC cheese team to promote U.S. cheese around the world. The award, sponsored by USDEC, is in its 16^th year. Schreiber is the first repeat winner, having initially earned the honor in 2008.

Past Exporter of the Year award winners include Proliant Dairy Ingredients (2020), BelGioioso Cheese (2019), Milk Specialties Global (2018), Sartori (2017), Swiss Valley Farms (2016) and California Dairies (2015).

U.S. dairy loses whey champion Douglas Paddon-Jones
USDEC is sad to announce the passing of long-time friend and collaborator Douglas Paddon-Jones, Ph.D., FACSM. Paddon-Jones, 52, was a professor in the Department of Nutrition & Metabolism at the University of Texas Medical Branch and frequent participant in USDEC activities to educate the world on the benefits of U.S. whey protein for healthy aging.

“Dr. Paddon-Jones was a leader in the science of protein metabolism and the role of dietary protein and health, particularly in older adults. His research greatly advanced our knowledge of the importance of protein quantity, quality and timing/distribution in an effort to optimize protein intake recommendations,” said Matt Pikosky, vice president, nutrition research, National Dairy Council.

Paddon-Jones’ research is the basis for key elements of USDEC’s global dairy protein nutrition messaging, including the importance of consuming protein evenly throughout the day and boosting protein intake at breakfast to fill the protein gap and reduce sarcopenia risk.

Douglas Paddon-Jones, Ph.D., FACSM

Reaching people
Equally impressive and valuable was his communications savvy.

“He had an ability to distill, translate and communicate very difficult scientific research topics into clear and concise messaging that even the lay person could understand,” said Kristi Saitama, USDEC vice president, global ingredients marketing.

Saitama and USDEC Japan office chief Jeff McNeill pointed to a memorable example of Paddon-Jones’ unique ability to reach people. Prior to one of his whey protein presentations at the 2015 Asian Congress of Nutrition in Japan, he asked McNeill to secure 2kg of raw steak. Then during the session, as well as at the accompanying USDEC media event, he held up the steak to visually illustrate how much muscle mass a person might lose in convalescence after surgery, pointing out that WPC80 could help mitigate that loss.

“It delivered the message loud and clear: sarcopenia is a serious risk impacting health and quality of life and consuming quality protein could help reduce the risk of such dramatic muscle loss,” said Saitama.

Japan and other success
Through a series of presentations and 1:1 meetings with customers in Japan over a decade, Paddon-Jones helped lay the groundwork for a bigger U.S. high-value whey market in the country. When he presented at USCEC’s ingredients seminar in Tokyo in 2010, USDEC was at the beginning phase of efforts to seize health and wellness opportunities in Japan and the U.S. held under a 20% share of the WPC80+ market, selling less than 1,700 MT per year. Partly as a result of his pioneering work, U.S. WPC80+ export volume to Japan reached almost 9,000 MT in 2020 valued at $56 million, and the U.S. share of the sector had grown to 45%.

He participated as a USDEC-invited speaker at several dairy protein education events outside of Japan as well: in Southeast Asia, Korea and China. He was a founding member of USDEC’s U.S. Whey Protein Advisory Panel and participated in both USDEC Global Whey Protein nutrition key opinion leader meetings. His expertise helped build substantial credibility and influence for USDEC and for dairy proteins with international key opinion leaders.

“His scientific expertise was matched by his personable and friendly nature. I always looked forward to connecting with Doug, whether it be to talk science, or share stories of our life in general,” said Pikosky.

Our deepest condolences go out to his family and friends. He will be missed.

 

 

GDT price gains attest to supply concerns
A confluence of factors sent prices upward across all products and contracts at the Oct. 19 Global Dairy Trade (GDT) auction: Demand remains solid across most import markets; dairy inventories in Southeast Asia and the Middle East are thin; and concerns about milk supply are increasingly weighing on buyers’ minds.

The GDT Price Index grew 2.2%. Individual products were as follows:

• WMP +1.5% to US$3,803/MT
• SMP +2.5% to US$3,401/MT
• Butter +4.7% to US$5,111/MT
• AMF +2.5% to US$6,151/MT
• Cheddar +2.9% to $4,426/MT

China reasserted itself as the GDT price-setter after taking a backseat to Southeast Asia in the previous two auctions. North Asia was the top buyer in SMP, WMP, butter and cheddar. Even in AMF where Southeast Asia /Oceania bought the most, North Asia significantly increased purchase volume compared both to the previous auction and the same auction the previous year.

At the same time, the Middle East significantly increased its butter and AMF purchasing. While Southeast Asia didn’t buy SMP at the volume of the previous auction, year-over-year volume rose. Africa and Europe exceeded both previous-year and previous-auction totals.

Milk production unimpressive
Supply concerns have helped solidify international prices and are likely to keep them at elevated levels through year-end at least. New Zealand milk production limped through August and anecdotal reports suggest the October peak will disappoint.

EU butter and powder supplies are tight. And while we reported last week that EU+UK milk production rebounded in August, rising a healthy 1.5% with data in from 19 nations, that gain dropped to less than 1% when the remaining members of the bloc reported numbers this week. A 0.7% decline from Germany and a 14% plunge in Greece pulled down the overall monthly total.

Although it came after the auction, the 0.2% increase in U.S. milk production in September will add to buyer unease.

Higher input costs, higher feed costs, labor and regulatory constraints are eating into producer margins in the EU, Oceania and elsewhere and will continue to pressure farmers.

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.

USDA releases first batch of Dairy and Products Annuals
USDA released nine 2021 Dairy and Products Annuals. More are expected over the coming days. To download each report, click on the respective country or region: Algeria, Brazil, Chile, China, Japan, Korea, New Zealand, the Philippines and Taiwan.

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.

 

USDEC leads committee at IDF Global Dairy Conference
U.S. leadership in global standard setting shone clearly in the largely neutral outcome of the UN Food Systems Summit (FSS). But as Nick Gardner, senior vice president, Sustainability and Multilateral Affairs, noted at this week’s fall board of directors and membership meeting, the FSS was only the beginning.

Gardner represented U.S. interests at International Dairy Federation (IDF) business meetings and the IDF Global Dairy Conference in Copenhagen just prior to the board meeting. He chaired the Standing Committee on Standards of Identity and Labeling and will be leading work to assess environmental labeling schemes globally and to develop an IDF position on the issue.

As Gardner pointed out this week, sustainability is the new frontier in nontariff barriers, so leading such work is beneficial for U.S. dairy, particularly given the strong European presence at the meetings.

“We made the trip to show our commitment to IDF and demonstrate our leadership,” said Gardner.

Gardner was one of only four U.S.-based representatives out of 160 people attending in person. NMPF, IDFA and USDA AMS also had in-person reps. The events provided opportunities for continued engagement and collaboration with other likeminded dairy stakeholders on multilateral issue like the UN FSS and key dairy topics before the World Health Organization, UN Food and Agriculture Organization and UN Environment Programme.

UK, NZ reach agreement in principle on trade
Great Britain and New Zealand reached an agreement in principle on a new trade deal. Complete details of the agreement have yet to be released, but New Zealand is reporting some of the initial dairy tariff provisions.

• New Zealand dairy suppliers will receive a 24,000-MT tariff rate quota for cheese in the first year, with volumes increasing over five years to 48,000 MT. Duty-free access would begin in year 6 of the agreement.
• The butter tariff rate quota would start at 7,000-MT quota for butter in the first year, rising to 15,000 MT over five years. Duty-free access would begin in year 6 of the agreement.
• Milk powder, whey and other products would have limited duty-free access through the first two years, with duty-free access starting in year 3 of the agreement.

The UK’s National Farmers Union slammed the agreement, saying it holds “nothing for farmers.”

Negotiators still need to finalize the full legal text of the deal and conclude negotiations consistent with the agreement in principle. It would then need to proceed through each nation’s approval process for trade deals for enactment of the agreement. (UK government; New Zealand government; BBC, 10/20/21)

USDEC highlights importance of USMCA enforcement to state ag commissioners
A USDEC representative spoke to members of the National Association of State Departments of Agriculture (NASDA) this week, highlighting the benefits to the dairy sector of the U.S.-Mexico-Canada Agreement (USMCA) as well as ongoing challenges U.S. dairy suppliers face in both Mexico and Canada. USDEC was one of five speakers providing a world overview of agricultural trade at the virtual conference.

USDEC and NMPF will provide a more in-depth half-hour, dairy-only briefing next week to NASDA commissioners in person. These events are examples of USDEC’s ongoing efforts to highlight the importance of dairy trade priorities—in this case, enforcing trade agreements.

In Canada that means not only ensuring the nation abides by its market access commitments but that it does not sidestep promised milk-pricing structural reforms or export caps. In Mexico, the focus lies on ensuring the country abides by its commitments on geographical indication and refrains from implementing regulatory measures that hinder dairy imports.

Letter to Finance Committee supports Trevino nomination
USDEC co-signed a letter to Senate Committee on Finance Chair Ron Wyden and Ranking Member Mike Crapo urging the committee to advance Elaine Trevino’s nomination as Chief Agricultural Negotiator of the U.S. Trade Representative. More than 160 food and agricultural companies and organizations representing more than 20 million jobs (about 13% of total U.S. employment) signed the letter.

“We believe that Ms. Trevino has the experience and expertise to secure greater market access for U.S. products and ensure enforcement of clear and fair rules with our trade partners so U.S. food and agriculture workers and our industry sectors may fairly compete in the global economy,” the letter states.

USDEC has been working with allied groups and legislators since the president’s inauguration, calling for the nomination and appointment of a Chief Agricultural Negotiator. The position is central to achieving improved and expanded market access for U.S. dairy and food sectors in trade agreements.

 

U.S. and Mexican ag leaders meet to affirm relationship
Mexico’s Secretary of Agriculture and Rural Development Victor Villalobos met with USDA Secretary Tom Vilsack in Iowa this week to discuss the U.S.-Mexico agricultural trade relationship. The meeting comes with the backdrop of Mexico having reopened seven Normas Oficiales Mexicanas (NOMs)—Official Mexican Standards—for dairy products, part of an overall rise in Mexican regulatory measures and protectionist actions aimed at discouraging dairy imports.

Secretary Vilsack and Minister Villalobos issued a joint statement after the meeting, noting: “We affirm the importance of our two nations’ exceptional agricultural trading relationship and its role in supporting rural prosperity, creating good jobs and providing nutritious, safe and affordable food to consumers in both countries . . . We share a commitment to keeping our markets open and transparent so that trade can continue to grow.”

USDEC continues to work with Mexico’s National Chamber of the Dairy Industry (CANILEC), the Mexican processing industry, and importers on a common strategy to address the main issues in proposed cheese and milk powder regulations by participating in working groups and actively engaging with Mexican regulators and primary dairy organizations to address these and other U.S. export issues. In parallel to that, USDEC has consistently worked to secure strong U.S. government support in addressing the concerns posed by the evolving Mexican dairy regulatory landscape.

September updates for USDEC Export Guide
The Market Access and Regulatory Affairs team updated 25 documents in the USDEC Export Guide in September. Some of the changes include:

Volume 2: Import Requirements

• Egypt: Added sections on Halal certification and shelf-life requirements.
  
  
• Indonesia: Updated the questionnaire and recommended responses for U.S. dairy plant registration and approval.
  
  
• UK: Updated all health certificate sections indicating that exporters must now use health certificates specific to Great Britain (rather than EU certificates).

Volume 3: Compositional Standards and Labeling

• Added a list of accredited laboratories for 15 countries: Chile, Colombia, Ecuador, Iran, Iraq, Jordan, Korea, Malaysia, Peru, the Philippines, Saudi Arabia, Singapore, Thailand, the UAE and Uruguay.
  
  
• Mexico: Added a list of allowable flavors in the additives document.
  
  
• Pakistan: Updated infant formula rules and milk powder microbiological, moisture content and labeling requirements.

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)

 

FrieslandCampina opens “Experience Centre” in China
Dutch dairy giant FrieslandCampina opened what is it calling an “Innovation Experience Centre” in Shanghai. The company said it plans to use the 13,000-sq.ft. facility to demonstrate its portfolio, corporate values and heritage to consumers, customers and other stakeholders. Through AI, testing and trial, live-streaming and other “next-gen” technologies at the center, FrieslandCampina believes it can better identify and target Chinese dairy and food preferences and needs. For more, see this FrieslandCampina press release. (USDEC China office; Company reports)

Company news briefs
Glanbia Co-operative Society is reportedly weighing a bid to acquire the remaining 40% of dairy processor Glanbia Ireland. The co-op owns 60% of the company, with Glanbia plc holding the remainder. The transaction would cost the co-op an estimated €400-500 million (about US$466-582 million). . . . Oatley Group and Singapore’s Yeo Hiap Seng Ltd. opened their new joint-venture oat beverage facility in Singapore. It is Oatley’s first manufacturing plant outside Europe and North America. . . . Separately, Australian milk alternative supplier MILKLAB launched its oat milk in coffee shops and other foodservice venues in Singapore. . . . German dairy processor DMK unveiled its entry into the plant-based dairy alternative sector at this month’s ANUGA expo in Europe. DMK’s line of vegan “cheese” will debut in spring 2022. (USDEC Southeast Asia office; The Irish Times, 10/17/21)

• A World Food Day salute to those who put nutritious U.S. dairy products in front of consumers around the world
• Michigan dairy farmer emphasizes need for new free trade agreements
• Join online event detailing U.S. dairy’s sustainability journey (retweet)
• Opportunities to create new products with U.S. dairy proteins (retweet)