HIGHLIGHTS: April 14, 2023
• LA/Long Beach restart operations after work closure
• Ocean Shipping Reform Implementation Act
• U.S.-EU dialogue on sustainable packaging
• Member opportunity: global sustainability recognition
• South Korea consumer research
• Market Summary: EU milk production forecast
• India milk growth to slow
• Japan farm program looks to reduce herd size
• Company news: Savencia, Lactalis, Danone
Featured
Los Angeles/Long Beach restart operations after 24-hour work stoppage; USDEC presses for contract resolution
As noted in this week’s USDEC-NMPF Leading Indicators update, the ports of Los Angeles and Long Beach experienced a work slowdown last Thursday and Friday. As a result, four of the six container terminals at Long Beach and all seven box facilities at Los Angeles were closed.
The Pacific Maritime Association (PMA) accused the International Longshore and Warehouse Union (ILWU) of withholding labor in a concerted effort to “effectively shut down” both ports. The union said its members were attending a monthly membership meeting on Thursday and that many workers were observing the Good Friday holiday the following day.
Monthly membership meetings are provided for in the contract between ILWU and the PMA, but typically, such meetings are announced in advance. Good Friday is not a holiday provided for in the PMA-ILWU contract.
Terminals reopened on Friday night, but delays rippled through the system. The Agriculture Transportation Coalition (AgTC) reported that one member had 10 trucks turned away from Long Beach on Thursday night, resulting in a $20,000 loss. And that is “the tip of the iceberg,” said AgTC Executive Director Peter Friedmann. It does not capture the costs of the terminal closure for other agricultural exporters, he added.
Negotiations are continuing. USDEC continues to press for a contract resolution. In March, USDEC joined more than 200 groups representing importers, exporters and others throughout the shipping supply chain in sending a letter urging the Biden administration to take a more active role in resolving the West Coast port labor dispute so goods can continue to flow through the ports without disruptions (see Global Dairy eBrief, 3/31/23).
USDEC and NMPF continue to express concerns to the administration and Congress that the labor negotiations have not yet been resolved.
USDEC backs new ocean shipping reform legislation
At the end of March, Reps. Dusty Johnson (R-SD) and John Garamendi (D-CA) introduced the Ocean Shipping Reform Implementation Act. The bill builds on the progress of the Ocean Shipping Reform Act (OSRA), which USDEC played a significant role in pushing through Congress, and will strengthen enforcement against unfair business practices.
“The Ocean Shipping Reform Act was a key step in the right direction to correcting an ocean shipping market that has for too long disadvantaged U.S. dairy exporters,” said USDEC President and CEO Krysta Harden. “USDEC thanks Representatives Johnson and Garamendi for introducing this follow-up legislation to ensure full implementation of OSRA that will hold ocean carriers accountable for their responsibilities to keep trade flowing. This bill gives the Federal Maritime Commission the full suite of tools necessary to return balance and certainty for American dairy exports.”
USDEC and NMPF provided input on the legislation and are working with Congress to advance the bill into law. Key components of the bill include:
- Authorizing the FMC to streamline data standards for maritime freight logistics,
- Updating and improving the purposes of the OSRA to better reflect current federal policy governing international ocean shipping, and
- A variety of clauses to crack down on foreign government influence on the security of the American supply chain.
USDEC members and importers invited to attend USDA packaging dialogue
USDA’s FAS office in Brussels and the Farm Foundation are hosting a series of events in Brussels on May 3-4 to facilitate dialogue and share perspectives on the potential impact of the EU’s proposal for a revision of EU legislation on Packaging and Packaging Waste (PPWR) (see Global Dairy eBrief Feb. 10 and March 3). USDEC invites members and their importers to attend.
On May 3, the U.S. Mission to the European Union (FAS Brussels) and the European Food Forum (EFF) will host an event entitled, “US-EU Dialogue on Sustainable Packaging.” The program will provide an opportunity for U.S. and European packaging engineers, academics, sustainability experts and consumer and civil society representatives on both sides of the Atlantic to talk about opportunities and challenges in the transition to a more sustainable future of packaging. Experts will discuss practical solutions for sustainable packaging, waste reduction and innovation with politicians, industry and non-governmental organizations. Click here to see the agenda.
On May 4, FAS and the Farm Foundation will host an industry roundtable lunch event with co-sponsorship by the trade publication Packaging Europe. Participants will include Brussels representatives of consumer brands and the packaging industry. The lunch event will have two panels of packaging experts discussing European and international perspectives on the PPWR proposals.
Contact Sandra Benson at sbenson@usdec.org for more information and to RSVP.
Member opportunity: Global recognition through IDF Innovation Awards and UN FSS Stocktaking Compendium
U.S. dairy farmers and processors know they are making significant progress in reducing greenhouse gas emissions and water usage, strengthening animal welfare and making U.S. dairy overall a part of the environmental solution. But those investments and programs are not as well-known beyond U.S. borders—and they need to be. Two upcoming international platforms offer a chance to spread the word to a global audience and burnish the reputation of the U.S. dairy industry as an environmental leader.
IDF Innovation Awards
The annual International Dairy Federation (IDF) Innovation Awards are designed to demonstrate the engagement and dynamism of the dairy sector worldwide, offering a unique platform to showcase innovative processes, practices and products that improve efficiency and contribute to the UN Sustainable Development Goals. This is a unique opportunity for USDEC members to submit success stories and potentially be featured as award winners during the high-profile awards ceremony at the IDF World Dairy Summit (WDS), which will take place Oct. 16-19 in Chicago.
This year’s awards focus on sustainable and community-led initiatives, as well as new product development and innovative practices. IDF is inviting entries in nine categories:
- Innovation in sustainable farming practices: a) environment, b) animal care, c) socio-economic
- Innovation in sustainable processing
- Innovation in sustainable packaging
- Innovation in new product development with a focus on food safety and consumer nutrition
- Innovation in Women empowerment in the dairy sector
- Innovation in Climate Action
- Innovation in Marketing & Communication initiative building dairy category
Ensuring robust award submissions—and hopefully some U.S. winners—is an important component of maximizing the value of the IDF WDS for U.S. dairy and showcasing U.S. global leadership in innovation and sustainable production. We encourage your organization to consider submitting an appropriate program or initiative for the awards to take advantage of this once-in-a-generation opportunity to win such awards on our home turf. The deadline for entries is June 1, 2023.
To learn more about the awards, click here. If you are interested in providing a submission or have any questions, please contact Kelly Sheridan, USDEC vice president, Environmental Affairs, at ksheridan@usdec.org.
Registration for the World Dairy Summit opened in March. Click here to register; anyone who registers by June 30, 2023, will receive the reduced early bird rate. For more information on the show, click here.
UNFSS Stocktaking Compendium
In addition to the IDF Innovation Awards, the USDEC Sustainability and Multilateral Affairs team is working across the U.S. dairy industry to compile exemplary food systems stories and practices for inclusion in a compendium that is set to be released as a part of the United Nations Food Systems Summit (UNFSS) Stocktaking Moment in July 2023.
The UNFSS Stocktaking Moment marks two years since the original UNFSS. It will bring together stakeholders in Rome to share progress on national food systems pathways. In addition, USDEC expects it to generate media coverage and reignite conversations potentially critical of dairy, trade and animal protein in the context of sustainable food systems.
Ensuring the U.S. dairy industry is well represented in submissions into the Food Systems Coordination Hub is an important proactive effort to help promote the critical role of U.S. dairy exports in sustainable global food systems. It may also mitigate negative policy recommendations and/or media coverage coming out of the July meeting that could harm U.S. dairy market access or otherwise constrain dairy demand.
Additional information regarding this opportunity, including the submission template, is available here. Multiple submissions can be put forward for consideration by a single organization. The submission deadline is Friday, May 5, 2023. If you have ideas or questions, please contact Janice Giddens, USDEC vice president, Sustainable Nutrition, at jgiddens@usdec.org.
South Koreans take their vitamins
USDEC’s “Snapshot” examines consumer trends and insights in South Korea so U.S. dairy exporters can strategically position and promote their cheeses and dairy proteins in this important market.
The factoid below provides an example of how the pursuit of wellness is a way of life in South Korea.
USDEC members with a usdec.org login can access the full research here.
Market Summary
EU expects milk production to fall 0.2% this year but dairy production to remain stable
The European Commission’s latest Short-Term Outlook for EU agricultural markets forecasts EU milk production will decrease by 0.2% in 2023. Despite a strong finish to 2022 and a positive start in January 2023, declining farmgate and commodity prices coupled with elevated input costs will lead to a herd reduction of about 1%. Factoring in expectations for increased yields, that will translate to a 0.2% decline in milk deliveries, with most of the damage coming in the second half of the year, the report says.
The EU expressed hope, however, that a return to “normal” weather would positively affect milkfat and protein levels, keeping milk availability for processing stable despite the decline in deliveries.
Early returns for February suggest another solid month of EU27+UK milk production gains, with the UK up 2.9%, German output up 2.3% and Poland up 1.0%, compared to the previous year. France declined 1%, but with 17 of 28 countries reporting (Netherlands, Spain and Denmark among them), year-over-year February deliveries were running up 0.9%.
Indian milk production slows, limiting export potential; imports possible
India appears headed for a potential milk shortage this year. Dairy officials project milk production will rise only 1% in fiscal 2023 (April 1-March 31, 2024). That compares to annual average growth of more than 5% for the past decade.
On-farm challenges are behind the slowdown. An outbreak of Lumpy Skin Disease culled nearly 200,000 head and is curbing output from portions of the national herd.
Reduced dairy consumption in India during the height of the pandemic discouraged farms from expanding at the time. And now, high cattle prices are limiting farmers from rebuilding their herds.
While officials contend that India has sufficient stocks to satisfy demand, consumer milk prices have soared over the past year. Higher milk prices are expected to become a political issue as India heads into state elections later this year. And that is likely to lead to India not only importing more dairy than it has in over a decade but also limiting its dairy export capacity.
Reuters reports that Indian dairy industry officials believe the country will surpass record SMP imports set in fiscal 2011, when India purchased more than 40,000 MT (mostly from New Zealand and the EU). For perspective, India has purchased less than 2,500 MT of SMP over the last five years combined.
In fiscal 2011, India also posted its worst year of SMP exports since it began keeping records in 2009, shipping only 170 MT. While India is a highly variable SMP exporter, it has shipped a total of more than 70,000 MT over the past two calendar years. (Livemint, 4/6/23; Reuters, 4/4/23)
Japan’s latest farmer support package expected to lower milk output
Japan implemented a new program to compensate farmers who reduce their dairy herds. The Ministry of Agriculture, Forestry and Fisheries (MAFF) earmarked 5 billion (about US$37 million) to induce early slaughtering of less-productive dairy cows. MAFF expects the program, which runs from March 2023 to March 2024, to reduce the country’s dairy herd by 40,000 cows and milk production by 300,000 MT.
Japan’s dairy farmers have been struggling with multiple challenges, including a lack of successors to take over the business and reduced demand for fluid milk due to pandemic-related school shutdowns and a foodservice slump that lasted into 2022.
The demand decline is more acute because of Japan’s successful efforts to increase milk production. The country implemented a program in 2018 to boost herd size and feed production in the wake of butter shortages earlier in the decade. The pandemic occurred as milk production was ramping up after a dozen years of steadily declining output.
Farmers were also hit by the steep rise in feed prices over the course of 2022. Feed costs account for half of Japanese milk production costs and are threatening the viability of many farmers’ businesses.
Company News
Savencia buys Argentine dairy processor
France-based Savencia Fromage & Dairy purchased Argentine dairy manufacturer Sucerores de Alfredo Williner and its Ilolay dairy brand. Williner was founded in 1928 in Santa Fe Province, the heart of Argentina’s dairy region. The company operates three manufacturing plants producing cheese, fluid milk and cream, milk powder, butter, yogurt, dulce de leche and desserts. Savencia said the acquisition expands its existing portfolio of brands and strengthens its presence in Argentina. (Company reports)
Lactalis inaugurates South African dryer
French dairy giant Lactalis officially opened a new US$8-million milk powder dryer at its Bonnievale cheese plant in Western Cape Town, South Africa. It added the dryer to serve rising local demand for milk powder and projections for 6% annual growth through 2028. The facility also reinforces the commitment Lactalis has made to the country, the company said. Over the past four years, Lactalis has invested an average of 400 million rands (about US$22 million) per year in South Africa. (Food Business Africa, 4/6/23; Consulate General of France)
Danone opens new innovation center with Qingdao University
Danone China and Qingdao University opened a new innovation center to focus on research into gut health, early-life nutrition and healthy aging with an emphasis on the specific needs of Chinese consumers. The Qingdao University–Danone Nutrition and Health Innovation Centre will utilize resources from the university’s School of Public Health, Institute of Nutrition and Health, and its analysis and test capabilities, combined with Danone Open Science Centre’s research and innovation capabilities. The partnership is the latest in a series of relationships Danone is cultivating with Chinese universities. Since 2020, the company has published 37 scientific papers and reports together with local China health and research institutes. (NutraIngredients-Asia.com, 4/11/23)
Company news briefs
Papa Johns International signed a 10-year development deal with UAE-based PJP Investments Group to open 650 Papa Johns outlets in India. PJP already operates 100 locations in the Middle East, with plans to open 250 more over the next decade. The first Indian location is slated to debut in 2024. … Two Malaysian companies—ag investment firm Kulim (Malaysia) and A2 Fresh Holdings, a subsidiary of investment firm Rhone Ma Holdings—are reportedly moving forward on a joint venture dairy business. The new company, Jemaluang Dairy Valley in Johor, will be a vertically integrated operation, including dairy farming, processing and marketing. … China’s Behai Dairy (also known as Hokkai Pastures) completed a new $146-million dairy manufacturing plant. The facility can produce more than 150,000 MT of shelf-stable and refrigerated dairy products per year. Behai was founded in 2018 and focuses on yogurt products. … Singapore-based Hao Food is looking to expand the White Rabbit ice cream brand throughout Southeast Asia. The ice cream was developed through a partnership between the owner of the iconic White Rabbit candy brand, Shanghai Guan Sheng Yuan Food, and China’s Bright Dairy. Hao Food is the official regional distributor, rolling the line out in Singapore in 2021, and says it is exploring inquiries to launch in Indonesia, Malaysia and Vietnam. (USDEC Southeast Asia office; USDEC China office; The Malaysian Reserve, 4/6/23; Restaurant Business Online, 4/5/23; DairyReporter.com, 3/27/23)
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