• Letter to presidential candidates

• Gardner leads FICC meeting with Alexis Taylor

• Book a meeting with USDEC’s Strategic Insights team

• USDEC staff, members named to ag trade committees

• USDEC prepares FAS trainees

• U.S. dairy ingredients in spotlight at Colombian food trade show

• U.S. CDE meeting focuses on sustainability in SEA

• Market Summary: Chinese imports rise again in July

• Download USDEC’s latest International Demand Analysis

• Brazil subsidizes domestic milk powder purchasing

• New multimodal service links Canada, U.S., Mexico

• Drought causes ship pile-up at Panama Canal

• Round-up of latest company results

• Company news briefs: Arla Foods Ingredients, Glanbia, Wells

 

Letter to presidential candidates calls for U.S. leadership in opening new markets, rules-based trading
A coalition of U.S. agricultural organizations, including USDEC and NMPF, sent a letter this week to all the presidential campaigns calling for the United States “to again take the lead in negotiating new FTAs with other countries and work to strengthen and reform the rules-based multilateral trading system.” USDEC staff helped shape the letter’s message.

The letter highlights the importance of international agricultural trade to U.S. jobs, noting that the United States—which has long enjoyed an agricultural trade surplus—will run a food and agricultural trade deficit of $17 billion this year, according to USDA forecasts. That’s because 1) the U.S. has grown overdependent on China since China joined the WTO in 2000 and 2) the United States has fallen behind the competition when it comes to opening new markets.

Selling nearly 20% of U.S. food and ag exports to any one country—in this case China—leaves the U.S. vulnerable to supply chain shocks, which we saw with the beginning of the U.S.-China trade war that resulted in tariffs and retaliatory tariffs in 2018 and 2019.

The letter asks the candidates to ensure U.S.-China relations are handled in a manner that holds China accountable yet maintains market access for U.S. agricultural goods. It further calls for market diversification to help with risk mitigation for U.S. farm goods.

New FTAs with other countries and work to strengthen and reform the rules-based multilateral trading system could protect American workers and the environment, help contain China’s growing geopolitical influence, and open new export markets for U.S. farmers by meaningfully reducing and eliminating tariffs and nontariff barriers, the letter states.

USDEC stresses critical need for ongoing U.S. government engagement and leadership in Codex
On Wednesday, Aug. 23, the U.S. Food Industry Codex Coalition (FICC) met with Alexis Taylor, USDA Under Secretary for Trade and Foreign Agricultural Affairs, and officials from the U.S. Codex Office urging continued U.S. leadership and engagement with the Codex Alimentarius Commission.

USDEC Senior Vice President, Sustainability and Multilateral Affairs Nick Gardner, in his role as coordinator of the FICC, led the meeting, which also included USDEC Senior Vice President, Trade Policy Shawna Morris, and 19 other food and ag industry representatives.

Threats to Codex
Gardner outlined the key role Codex plays in creating a level playing field for global food trade through its science- and risk-based approach to food standards, and emphasized how that function is under threat as some, like the EU, seek to utilize Codex to advance their own trade and ideological interests. He encouraged continued U.S. government leadership against efforts to undermine the science-based Codex process or expand the scope of Codex beyond its core public health and trade facilitation mandate. He specifically called out the EU’s continued efforts to enshrine EU regulations in Codex when not scientifically justified and expressed concerns about the bloc’s increasingly aggressive efforts to undermine or revise core Codex risk-based principles to introduce precautionary approaches.

The U.S. government and U.S. Codex Office have stepped up international outreach in recent years to build coalitions of like-minded governments to protect Codex’s science-based approach. USDEC has been a strong advocate of this effort, mirroring and complementing it through USDEC’s own partnership with allies like the Inter-American Institute for Cooperation on Agriculture.

Gardner asked Taylor to continue to support and provide resources for the U.S. Codex Office for international outreach and coalition building, particularly in areas where the U.S. needs allies to push back against EU-led efforts to undermine or revise Codex rules. He also requested that she prioritize efforts to engage peers in key foreign ministries on priority issues for U.S. agricultural stakeholders, like protecting science as the core of the Codex decision-making process. Gardner also reiterated the need to be vigilant against any attempts to decrease Codex participation opportunities for the private sector.

USDEC’s role
The FICC is a group of more than 70 U.S. food and beverage companies and associations, including USDEC and NMPF, with a keen interest in Codex activities and the level playing field it creates through the development of science- and risk-based international standards. USDEC’s five-year leadership of FICC and ongoing work with allied groups are essential to building the coalitions needed to deliver Codex outcomes of critical importance to U.S. dairy.

Meet with USDEC Strategic Insights team on Sept. 7, Sept. 20 or Oct. 4
Don’t miss this opportunity for one-on-one time with USDEC’s Strategic Insights (SI) team. The SI team is hosting “Office Hours” for USDEC members on three days in September and October.

“Office Hours” include a dedicated 30-minute block of time to engage in insightful discussions with the USDEC SI team. Whether you require guidance on specific export markets, products or strategic decision-making, the SI team offers a wide range of resources and can provide custom research analysis tailored to your specific requests.

NEW SI office hours are available on the following dates and times:

• Sept. 7: 10 a.m. – 12:00 p.m. ET
• Sept. 20: 10 a.m. – 12:00 p.m. ET
• Oct. 4: 9:30 a.m. – 11: 30 a.m. ET

Sign up for a time to meet with the Strategic Insights team here.

USDEC staff, members named to ag trade committees
USDA and USTR announced 130 new private sector representatives, including USDEC members and staff, for seven Agricultural Trade Advisory Committees (ATACs). The new appointees join 70 additional representatives who are still serving out their full terms.

Jaime Castaneda, USDEC executive vice president, Policy Development and Strategy, was elected chair of the ATAC for Trade in Animals and Animal Products in 2021 and remains in that position.

Shawna Morris, USDEC senior vice president, Trade Policy, was newly named to the ATAC for Trade in Processed Food. Morris also continues to serve on the Department of Commerce’s Industry Trade Advisory Committee.

USDEC members Ken Meyers, MCT Dairies; Chad Vincent, Dairy Farmers of Wisconsin; and Michael Lichte, Dairy Farmers of America, were new additions to the ATAC for Trade in Animals and Animal Products. In addition, DairyAmerica’s Patti Smith is also completing her term.

The committees gather representatives from diverse livestock, poultry, seafood, labor union and academia backgrounds to provide trade policy and technical advice to the U.S. Trade Representative and U.S. Secretary of Agriculture. Dairy sector participants provide critical guidance on technical and policy trade issues to the current or future administrations, helping to ensure that the priorities of America’s dairy producers, processors and manufacturers are heard.

USDEC staff briefs FAS trainees
For the second time this year, USDEC held a training day for Foreign Ag Service (FAS) trainees preparing to head out to their global posts. The USDEC team provided an overview of the U.S. dairy industry including its sustainability commitments, export challenges and priorities, and how USDEC helps to accelerate export growth. Staff conducting the training were: Shawna Morris, senior vice president, Trade Policy; Nick Gardner, senior vice president, Sustainability and Multilateral Affairs; and Sandra Benson, vice president, Market Access and Regulatory Affairs.

Morris, Gardner and Benson also explained how USDEC works collaboratively with FAS offices in D.C. and posts around the world and outlined the top regulatory and policy concerns to be aware of as they head out into the field. FAS and its attachés have long been key USDEC partners in the effort to build U.S. dairy export markets. The briefing was another platform to deepen the relationships with those representatives and build their knowledge of U.S. dairy so they can be even better advocates for the industry.

 

U.S. dairy ingredients in the spotlight at Colombian food trade show
After holding more than 180 quality meetings with current and potential customers at the USDEC booth at the Food Ingredients South America (FiSA) in Brazil earlier this month (see Global Dairy eBrief, 8/18/23), U.S. dairy ingredients suppliers logged another 150-plus on Aug. 16-17 at the Expo IAlimentos show in Bogota, Colombia. Interest at both shows attests to the rising profile of U.S. dairy in South America.

U.S. dairy ingredient export volume to South America grew more than 9% in 2022 and was up 19% through the first six months of 2023. Both shows seek to build on those gains.

“While Expo IAlimentos is a smaller show than FiSA, it’s the most important show for the Colombian food ingredients industry,” says Terri Rexroat, vice president, Global Ingredients Marketing. “154 meetings at a two-day show is an impressive total. USDEC’s booth was highly visible, located right at the show entrance, and booth traffic was steady the entire two days.”

Six members exhibited at the USDEC booth, while one other exhibited elsewhere. Above: Representatives from Agri-Dairy, BTG Ingredients, Hoogwegt, James Farrell & Co., Proliant Dairy Ingredients and Saputo take a photo break at the booth with USDEC staff.

In addition to its presence on the show floor, USDEC also participated in the academic Congress associated with the event. Universidad de Antioquia Professor John Ortiz spoke on behalf of USDEC. He presented to about 150 representatives from food and beverage makers at the Congress, highlighting the U.S. dairy ingredient portfolio, including features and benefits of individual ingredients. Ortiz also leads the training for USDEC workshops conducted in conjunction with the Colombian Institute of Science and Food Technology (INTAL).

Universidad de Antioquia professor and USDEC workshop trainer John Ortiz highlights U.S. dairy ingredient benefits at last week’s Expo IAlimentos in Colombia.

Sustainability focal point of USDEC Southeast Asia meeting with members
This past Wednesday, 19 locally based representatives from nine USDEC member companies attended a half-day informational session on sustainability in Southeast Asia at the U.S. Center for Dairy Excellence in Singapore. At a time when competition from plant and other alternative proteins is intensifying, sharing the U.S. sustainability story is an opportunity for U.S. suppliers in the region to build customer confidence that the U.S. dairy community has a long legacy of, and steadfast future commitment to, environmental stewardship. Yet it is important for U.S. companies to know how to tell that story in a locally-appropriate context that resonates with Southeast Asian consumers.

USDEC Singapore staff sat down with the group to better understand what they are hearing from customers as well as to discuss how Southeast Asian consumers interpret sustainability and how members might use findings of custom USDEC research on sustainability perceptions to tailor messages when engaging with customers. For more information, please contact the Singapore office at info@usdecsg.org.

USDEC members and staff at this week’s sustainability informational session at the U.S. Center for Dairy Excellence in Singapore.

 

Chinese dairy imports grow again in July
Year-over-year Chinese dairy imports (major products, not including fluid) increased 9% in July (+15,467 MT). It was sixth straight month of year-over-year gains. And while China is still lagging behind 2022 year to date, the country has made up a lot of ground since January.

Chinese imports in January were 170,000 MT less than the previous year. From February-July, China made up 100,000 MT, leaving the country slightly less than 70,000 MT behind year-to-date.

Strong demand for SMP, cheese, whey (0404.10) and lactose and slowly rebounding WMP purchasing have led the comeback.

In July, SMP, WMP and cheese posted solid double-digit gains again. Chinese cheese imports were the highest of the year: 17,496 MT (+51%, +5,943 MT). Chinese WMP imports have bested the previous year for three straight months. SMP has been the most consistent growth product all 2023 and rose 20% in July (+5,614 MT).

Whether China will maintain the momentum is questionable, given its economic problems and other challenges.

Despite gains in July overall, the numbers are hinting at potential trouble ahead. Monthly whey (0404.10) gains have steadily eroded since January when they topped the previous year by 72% (+25,515 MT). July imports, by contrast, fell 4% (-2,376 MT), the first monthly decline of 2023. And in the back half of the year, whey (0404.10) is facing much stronger 2022 comparables than the first half.

Lactose also declined for the first time this year in July. It was only a small drop (-1%, -107 MT), but contrasts sharply with the first half, where the average monthly gain was 47%.

Domestic Chinese milk production continues to displace fluid imports. July fluid imports fell 14% and have been down every month this year. Chinese infant formula imports, which started the year strong, have spiraled downward since May, plunging 53% in July.

And New Zealand July exports to China, a precursor of Chinese dairy imports the following month, dropped 4% compared to the previous year. By contrast, New Zealand dairy shipments to China for the April-June period (not including fluid) grew 59%, suggesting China’s run of year-over-year growth is in jeopardy.

USDEC International Demand Analysis with June data ready for download
Year-over-year global dairy trade jumped 5% in milk solids equivalent (MSE) terms in June, according to the latest USDEC International Demand Analysis. It was the second consecutive month of solid gains. But like May, it was driven solely by increased exports from New Zealand (+29%) and the EU (+8%), while U.S. shipments continued to lag (-12.5%).

For more details on June global dairy trade and the outlook moving forward, download the report here. The International Demand Analysis is packed with charts, graphs and commentary, providing members with a forward-looking glimpse at world markets from a U.S. exporter’s point of view. It analyzes demand in the key markets for cheese, NFDM/SMP, whey (HS Code 0404.10) and WPC80+, and also includes shorter summaries for lactose, butterfat and WMP. For questions and comments, please reach out to William Loux (wloux@usdec.org) or Stephen Cain (scain@nmpf.org).

Brazil purchasing milk powder to decrease imports
As part of its ongoing efforts to support the country’s milk producers, the Brazilian government announced plans to purchase powdered milk at retail prices to reduce the import of those products from other South American countries. At the Agroleite 2023 show in Castro, Brazil, the country’s Minister of Livestock and Agriculture Carlos Favaro said the goal of the initiative is to “reduce the market and guarantee profitability to cooperatives and, consequently, to producers.” Favaro also said more efforts are needed to strengthen the dairy sector in the sixth largest milk producer in the world, including enhancing its milk production technologies. Brazil projects milk production will increase about 3.6% in 2023. (Agriland, 8/9/23)

 

Crowley to launch U.S., Mexico, Canada multimodal service
Crowley Logistics has announced plans to launch a new multimodal, end-to-end service between Mexico, the Midwest and Canada. The service will utilize Crowley’s new Mexico-United States route in the Gulf and leverage the inland rail network of Canadian National Railway. The shipping route will go from Tuxpan, Mexico (northeast of Mexico City), to Mobile, Alabama, and avoid the congestion of inland transportation between the United States and Mexico. The ships taking that route will carry up to 1,000 TEU containers and more than 200 refrigerated containers. After reaching Alabama, those containers will be connected to the rail system and moved to cities including Chicago, Detroit, Minneapolis, Memphis, Toronto, Montreal and more.

Panama Canal delays pile up
Low water levels caused by severe drought have created a major shipping backup at the Panama Canal. To conserve water, canal authorities have capped daily transits across the canal to 32 vessels, down from an average of 36 under normal conditions. As a result, more than 150 ships are stuck on either side of the canal, causing extreme shipment delays. In addition, canal authorities have added premiums on heavier loads, forcing companies to transport fewer items.

While only relatively small volumes of U.S. dairy exports traverse the canal, it is used by about 40% of all U.S. container ships, and many ships are backed up for more than 20 days. As ships on transpacific routes from Asia to the U.S. deviate from their typical Panama Canal routes to other terminals, U.S. West Coast ports could see more activity. Experts say the additional time and costs being added to these journeys may be passed down to other companies and consumers and estimate that months of additional rainfall could be required to replenish the canal and resume normal operations. (CNBC, 8/9/23; The Loadstar, 8/22/23; Wall Street Journal, 8/18/23)

Arla inks collaboration deal with Chinese distributor
Arla Foods Ingredients signed a new partnership agreement with Chinese ingredient and chemical distributor Zhongbai Xingye Food Technology (Beijing) Co., a unit of the Brenntag Group. The two companies have a 15-year relationship that includes a jointly funded Innovation & Application Center in Zhongbai’s Beijing facility to develop China-specific formulations. The new agreement expands their cooperative product development work and covers the full range of Arla’s ingredient products. “This agreement will help us adapt, and make our offering to Chinese markets even stronger,” said Luis Cubel, Commercial Director of Arla Foods Ingredients. (Company reports)

Corporate report round-up
Ongoing inflation and increased supply chain expenses continue to hinder companies across the globe as they release their most recent financial performance results.

Glanbia plc reported first-half earnings that exceeded expectations, driven largely by the strong performance of its Glanbia Performance Nutrition (GPN) business. Group revenues for the company, which recently changed its financial reporting currency from the euro to the U.S. dollar, were $2.8 billion for the first half of 2023, down from $3.1 billion in HY 2022. But group EBITA (before exceptional items) grew 6.1% (constant currency). GPN revenue increased by 3.4% in HY 2023 versus the previous year. Based on its half-year results, Glanbia upgraded its full-year guidance to 12%-15% growth in adjusted earnings per share.

In its first quarter 2024 report, Saputo revenues fell 2.8% while net earnings rose 1.4% compared to the same quarter last fiscal year. Factors cited by the company as affecting the first quarter performance included the positive carryover effect of previously implemented pricing initiatives in all its sectors, lower average block market price and butter market price in the USA sector and softening of the global demand for dairy products negatively impacting its sales volumes.

Bel Group revenues rose 6.3% in the first half of 2022. The company attributed the gain in part to sustained double-digit growth in China and strong performances by core brands including Kiri and Boursin. Sales in China increased for the fourth consecutive year, driven in part by the performance of Kiri cheese. Strengthening its presence there was Bel’s acquisition of a majority stake in China’s Shandong Junjun Cheese.

Second quarter 2023 results for Yum China showed record growth in total revenues and operating profit. The unaudited results show total revenues increased 25% to $2.65 billion, up from $2.13 billion in 2022. Total system sales increased 32% year over year, with increases of 32% at KFC and 30% at Pizza Hut. Same-store sales increased 15% year over year, and the company opened 422 new stores during the quarter. Net Income increased 138% to $197 million from $83 million in the prior year period, primarily due to a 216% increase in operating profit, which jumped to $257 million and has already surpassed the entire year for 2022. Company officials credited robust digital capabilities, an agile supply chain and special marketing campaigns for its strong performance, as well as strong sales on holidays including Children’s Day.

In its FY 2023 annual results, A2 Milk reported revenue for FY23 up 10.1% from the previous year and net profit growth of 26.9%. The company credited its China-focused growth strategy for the revenue increase. The China & Other Asia segment saw revenue rise 37.9%, and it exceeded NZ$1 billion (about US$594 million) for the first time. The gains came despite an overall decline in the Chinese infant formula sector of more than 10% in A2’s FY23. The company attributed the decrease to China’s declining birth rate, challenging macroeconomic conditions and increased competition. A2 said it expected another double-digit decline in China’s infant formula sector in FY24 but expected the company to still post low single-digit revenue growth. (USDEC China office; Company reports; Radio New Zealand, 8/21/23)

Glanbia plc leader to step down at year-end
Glanbia plc’s Group Managing Director Siobhán Talbot announced plans to step down effective Dec. 31. 2023, and retire from the company in January 2024. Hugh McGuire, currently CEO of Glanbia Performance Nutrition, will take over as CEO of Glanbia plc effective Jan. 1, 2024. Talbot joined Glanbia plc in 1992 and has been managing director for the past 10 years. (Company reports)

Company news briefs
Wells Enterprises is more than doubling its ice cream and frozen novelty manufacturing capacity at its Dunkirk, N.Y., facility. Construction will begin this fall. Wells is owned by Italian confectionery company Ferrero Group. … The Cheesecake Factory is set to open its first store in Thailand in December through its relationship with Hong Kong-based foodservice operator Maxim’s Caterers. The new store is located in Bangkok. Last fall, Cheesecake Factory and Maxim’s announced they planned to open 18 Cheesecake Factory locations in Thailand by 2028. (Company reports; Lifestyle Asia, 8/17/23)

 

• USDEC members learn more about SE Asian consumer perceptions of sustainability  
• USDEC hosts USA Cheese workshop in Thailand  
• Thailand a growing export market for USA Cheese  
• Harden, state ag officials on NASDA trade mission meet with U.S. Ambassador to Indonesia
• Harden in Indonesia building relationships and promoting U.S. dairy