HIGHLIGHTS: JUNE 17, 2022
• President signs Ocean Shipping Reform Act (OSRA)
• OSRA requires increased FMC budget
• ILWU, PMA say no strikes or lockouts ahead
• Defending dairy and trade in global dialogues
• Southeast Asia trade shows present ingredient opportunities
• Market Summary: EU milk collection
• Netherlands sets challenging nitrogen limits
• Data Hub: milk production
• OECD downgrades economic growth
• FrieslandCampina selling German operations
Featured
USDEC celebrates signing, urges robust implementation of Ocean Shipping Reform Act
On Thursday, President Biden signed the Ocean Shipping Reform Act (OSRA), marking the first major overhaul of federal maritime shipping law in more than two decades. The legislation was introduced in response to vocal advocacy by USDEC and its members, NMPF and other agricultural export organizations to find solutions to the ongoing supply chain crisis. USDEC is now calling for the speedy and robust implementation of the law’s provisions.
“We urge the Federal Maritime Commission to implement these rules quickly and begin to conduct the new oversight, regulation and enforcement necessary to end the unfair and unreasonable ocean cargo practices that have impeded American dairy products from efficiently getting to their overseas customers,” USDEC President and CEO Krysta Harden said in a joint USDEC/NMPF press release on the president signing the legislation.
USDEC President and CEO Krysta Harden, President Joe Biden and NMPF President and CEO Jim Mulhern celebrate the signing of the Ocean Shipping Reform Act.
Major changes in store
The legislation ushers in a series of new rules and regulations regarding ocean carrier practices that the Federal Maritime Commission (FMC) must now implement over the next year. Among its many provisions, the law:
- Prohibits ocean carriers from “unreasonably” declining shipping opportunities for U.S. exports (as determined by the FMC in a new required rulemaking).
- Requires accurate invoices for detention and demurrage charges and shifts the burden of proof on those charges from the invoiced party to the ocean carriers. FMC is required to investigate complaints and could impose penalties or require refunds, if it finds a carrier’s invoice contains inaccurate information.
- Bars carriers, marine terminal operators and ocean transportation intermediaries from retaliating against shippers, their agents, motor carriers or others by denying them available cargo space or subjecting them to other discriminatory actions.
- Prohibits carriers from giving unreasonable preference to any commodity group or shipment or disadvantaging any group or shipment.
- Provides the FMC with greater authority to address unfair business practices but also requires the agency to establish a webpage for complaint submissions and investigation requests, maintain an Office of Consumer Affairs and Dispute Resolution Services, and hire additional staff to assist with investigations and oversights.
House vote a landslide
The bill went to the president’s desk after the U.S. House of Representatives overwhelmingly approved the legislation on June 13 by a vote of 362-42. Prior to that vote, USDEC joined more than 90 trade associations in signing a letter to congressional leadership urging a swift vote on OSRA.
USDEC continues supply chain work
OSRA is a significant step in the right direction in resolving the ongoing supply chain crisis. But it is not a silver bullet.
USDEC continues to take a multi-pronged approach to the crisis, working with allied groups to address delays, congestion, equipment and labor shortages, major gaps in data, high costs and other issues hampering U.S. exports. As part of those ongoing efforts, Executive Vice President Jaime Castaneda attended the Agriculture Transportation Coalition (AgTC) 34th Annual Meeting this week, taking part in the members-only strategy session on agricultural export priorities. (USDEC staff; gCaptain, 6/13/22; FreightWaves, 6/13/22)
FMC Chairman Daniel Maffei and USDEC Executive Vice President Jaime Castaneda during a break at this week’s AgTC annual meeting in Tacoma, Washington.
Coalition seeks bigger budget for FMC
Now that OSRA has been passed and signed, the next hurdle is ensuring the FMC has enough resources to effectively implement the act. While enhancing the FMC’s authority, OSRA also significantly expands its program of work. The legislation requires the FMC to conduct numerous new rulemaking activities in the year following enactment, increase its public reporting responsibilities, and broaden its oversight and enforcement responsibilities. The additional work will require more staff and additional funding.
This week, USDEC and NMPF spearheaded a letter to the leaders of the House Subcommittee on Transportation-HUD Appropriations asking them to increase the FMC budget from almost $30 million in 2021 to $38.26 million per year for 2023 and beyond. Twenty-seven U.S. food and ag organizations co-signed the letter. A similar letter to the Senate is also in the works.
The House letter cites FMC Chairman Daniel Maffei from a recent hearing before the House Transportation and Infrastructure Committee. Maffei noted that the FMC required more resources even prior to the new legislation and its expanded program of work. With OSRA, “our workload will certainly increase significantly,” he said.
“Now is the time to invest in the Federal Maritime Commission,” the letter states. “Our members are counting on the FMC to address these anticompetitive, unfair and unreasonable ocean shipping challenges that threaten their businesses, jobs and market opportunities. An effective and capable FMC is necessary to address these challenges and to implement the Ocean Shipping Reform Act.”
ILWU, PMA say no strikes or lockouts on the horizon
The International Longshore and Warehouse Union (ILWU) and Pacific Maritime Authority (PMA) warned that they will not reach a new agreement before the current contract expires on July 1 at 5 p.m. But both parties sought to soothe shipper, retailer and industry concerns in a joint statement: “Cargo operations [will] continue beyond the expiration of the contract. Neither party is preparing for a strike or a lockout, contrary to speculation in news reports. The parties remain focused on and committed to reaching an agreement.” (The Loadstar, 6/14/22)
USDEC highlights critical role of trade, dairy exports for sustainable, resilient food systems that promote nutrition security in global dialogues
Over the last two weeks, Janice Giddens, USDEC’s vice president of Sustainable Nutrition, joined several meetings in Switzerland and Italy with global food systems stakeholders to reinforce the critical role of U.S. dairy exports and trade in promoting sustainable food systems and increasing access to healthy, nutrient-dense foods.
Such global food systems discussions, deliberations and debates often minimize and dismiss the vital role of international trade. Proponents of hyper-localized food systems seek to promote an overly simplified narrative that international trade is bad for the planet and farmer livelihoods because it leads to the displacement of local foods with a concurrent increase in diet-related illnesses.
Defending dairy and trade
Giddens attended both the Global Dairy Platform (GDP) International Marketing and Promotion meeting and meetings associated with the Annual General Meeting of the Private Sector Mechanism (PSM) of the Committee on World Food Security (CFS), a new group that USDEC joined as part of its effort to be more proactive in engaging in Rome-based UN agencies and in the UN System as a whole. She met with representatives from the U.S., Argentina, the UN Food and Agriculture Organization (FAO), CFS and multinational agri-food companies to reinforce messages on the importance of trade and U.S. dairy exports for nutrition security. These were the same messages USDEC’s delegation delivered on an outreach trip to Rome in May (see Global Dairy eBrief, 5/27/22).
Without USDEC proactively engaging with these stakeholders, the discussions too often focus on ideological solutions like increasing consumption of plant-based alternatives, undermining rules-based international trade in favor of protectionism, and advancing EU-style “Green Deal” regulatory policies.
Gender in food security
Giddens also represented U.S. dairy interest during live policy negotiations on gender and female empowerment in the context of food security and nutrition to push back against language that sought to malign the role of international trade and restrict women’s access to markets. In her live comments during the negotiations, which included member states, civil society and UN staff, Giddens noted, among other things, that: “Market access is critical for food and nutrition security, and we should address the issues that prevent women from accessing markets instead of putting more obstacles in their way.”
A healthy debate ensued and new pro-trade language was put forth and vocally supported by many of the member states.
Work ongoing
USDEC will continue to engage within these global fora by contributing subject matter expertise and building its network of policymaker and thought leader allies to promote the role of trade in sustainable food systems and maintain and expand market access for healthy, sustainably produced U.S. dairy products.
Events
Southeast Asia opportunities: three trade shows in September, October
Members interested in building business in Southeast Asia will have three opportunities this fall to work in tandem with USDEC at trade shows in Indonesia, Thailand and Vietnam. The shows offer platforms for U.S. dairy ingredients suppliers to engage face-to-face with food and beverage manufacturers in high-growth markets.
USDEC is exhibiting at the Food Ingredients Asia-Indonesia expo in Jakarta, Sept. 7-9, the Food Ingredients Asia-Thailand show in Bangkok, Oct. 5-7, and the Food Ingredients Vietnam expo Oct. 12-14 in Ho Chi Minh City.
No member booth space is available at the Indonesian or Thai shows, but USDEC will amplify the presence of members attending or exhibiting separately. In addition, USDEC will hold a protein-focused seminar on Oct. 3 prior to the Bangkok expo. If you will be at the show or are interested in learning more about the seminar, please contact Keith Meyer (kmeyer@usdec.org) and Allison Guzman (aguzman@usdec.org).
At Food Ingredients Vietnam, two spaces remain for members to co-exhibit at the USDEC booth. To reserve your space, please contact Keith Meyer at kmeyer@usdec.org. The reservation deadline is June 22, 2022.
Market Summary
EU27+UK April milk production down 0.8%
There’s no end in sight to the EU27+UK’s milk production slide. With nearly all of the 28 countries reporting (including the top seven producers), April deliveries fell 0.8%. And with only Spain, Greece and Sweden outstanding, that percentage is unlikely to improve. March milk deliveries also fell 0.8%.
The decline could have been worse, if not for an 8% increase from Italy. The top three producers—Germany, France and the UK—saw milk deliveries fall 2.6%, 2.0% and 1.7%, respectively. Irish output dropped 1%. Dutch milk deliveries fell 2.6%, and a decision late last week on nitrogen reduction goals reinforces projections for long-term declines (see below).
EU27+UK milk deliveries year to date through April were down 0.4%.
Dutch nitrogen targets to undercut ag sector
The Dutch government announced aggressive nitrogen reduction goals for the ag sector that critics say are unrealistic and will put many farmers out of business. The nitrogen reduction targets differ by region, ranging from 12% to 95% by 2030. More than 130 key agricultural areas will be forced to reduce nitrogen levels by 70%.
The government did not provide details on how it expected farmers to reach the targets, but instead said it would work out the specifics in the coming months with provincial government leaders. The Netherlands’ Minister for Nature and Nitrogen admitted that, "some of our farmers will not be able to continue their businesses as they do now."
Farmers will need to decide between relocation, termination or taking action to improve sustainability. The government is earmarking €24.3 billion in support (about US$25.3 billion) to assist during the transition to the new nitrogen limits. (Euronews, 6/12/22; Irish Farmers Journal, 6/12/22; Reuters, 6/10/22)
USDEC Data Hub: milk production
This week’s chart from the USDEC Data Hub focuses on milk production from the world’s major suppliers. You can find the graph at the USDEC Data Hub under the Dairy Prices tab.
We encourage you to visit the Data Hub and experiment with this and other charts, graphs and tables to investigate trends, plan export strategy and size up global opportunities. If you have any questions regarding the information, please contact William Loux at wloux@usdec.org.
Milk production from the world’s seven largest suppliers dropped for the seventh month in a row in March, and initial April reports indicate that it will become eight straight months once all the data is official.
OECD downgrades economic growth
The Organization for Economic Cooperation and Development (OECD) significantly lowered its growth estimates for the global economy for 2022 and 2023. It now projects global GDP growth at 3% this year, about 1.5 percentage points less than its projections in December 2021. That subdued growth pace is likely to continue in 2023, OECD said.
European economies will be hit hardest, but the U.S. will see growth drop from 5.7% in 2021 to 2.5% this year and 1.2% in 2023.
The group cited “Russia’s unprovoked and unjustifiable war of aggression, which is causing lower real incomes, lower growth and fewer job opportunities worldwide.” Inflationary pressures stemming from the war are eroding spending and will continue to do so. China’s zero tolerance COVID policy and subsequent lockdowns are also playing a role, slowing pandemic recovery not only in China but in countries it trades with.
OECD Chief Economist Laurence Boone called the outlook “sobering,” particularly given a number of prominent risks that could further erode growth.
Company News
Friesland to sell German operations
Dutch dairy giant FrieslandCampina is selling most of its German dairy business to German dairy processor Unternehmensgruppe Theo Müller. The deal includes the brands Landliebe, Tuffi, Südmilch, Puddis and Mondelice, various private labels in Germany, the foodservice brand Gastro, and production facilities, warehouses and distribution centers in Heilbronn, Cologne and Schefflenz.
FrieslandCampina will focus instead on marketing its international brands in Germany, including cheese brands Frico, Holland Master and others, Chocomel beverages, private label products produced outside Germany, and its Valess dairy and meat alternatives. It will also maintain its physical presence in Germany with its Kievet operations in Lippstadt and DFE Pharma business in Goch and Nörten-Hardenberg.
FrieslandCampina will continue to collect and process milk from its member farmers in Germany. Müller will take over the supply contracts of non-member milk suppliers. (Company reports)
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