USDEC continues to maintain efforts to ensure a beneficial result for the U.S. dairy sector in TPP negotiations. This week, USDEC and NMPF placed ads in two publications read extensively by policymakers on Capitol Hill and throughout Washington, D.C., calling on Japanese Prime Minister Shinzo Abe to go further in reducing barriers to U.S. dairy exports to Japan.
Prime Minister Abe visited Washington this week to meet one-on-one with President Obama and address a joint session of Congress. There was speculation prior to his visit that the United States and Japan might use the occasion to announce a bilateral TPP deal, but due to a number of reasons (including the unresolved nature of TPA), the two leaders simply issued a statement emphasizing the “significant progress” negotiators have made in bilateral talks.
TPP members slated May 26-28 as the dates for the next ministerial conference, in the Philippines immediately following a gathering of Asia-Pacific Economic Cooperation trade ministers. (USDEC staff; Inside U.S. trade, 4/29/15, 4/28/15, 4/27/15, 4/24/15)
MARKET CONDITIONS
Fonterra, Westland reduce payout estimate; Fonterra lifts 2014/15 milk forecast
New Zealand’s Fonterra Co-operative Group and Westland Milk Products reduced their respective forecast payouts for the 2014/15 season. Fonterra dropped its estimate from NZ$4.70/kgMS to NZ$4.50/kgMS (about US$10.51/cwt.). Westland lowered its projection from NZ$5.00-$5.40/kgMS to NZ$4.90-$5.10/kgMS (about US$11.44-$11.91/cwt.). This is the fourth time Fonterra has cut its payout forecast since the initial forecast in May 2014.
Both companies attributed the chance to the ongoing imbalance between supply and demand. Fonterra Chief Executive Theo Spierings cited slow demand caused by geopolitical unrest in key regions like the Middle East, North Africa and Russia. Westland CEO Rod Quin said he expected the next three months to be “really tough.”
In addition to the payout announcement, Fonterra increased its 2014/15 milk collection forecast to 1,607 million kgMS, up 1.5 percent from last year’s record. To achieve this figure, collections in the last two months of the season would need to be about 4 percent higher than the volumes seen in April-May 2014. (USDEC staff; Company reports)
Volcano threatens Chilean milk production
Two eruptions from Chile’s Calbuco volcano dumped nearly 2 feet of ash in some areas of the country and is threatening the major dairying region of Los Lagos, which accounts for about half of Chile’s annual milk output. Favorable winds have spared most dairy farms so far, but geologists have warned that more volcanic activity may be forthcoming. Calbuco’s last major eruption was in 1962; a minor eruption occurred in 1972. (USDEC staff; AP, 4/28/15; CNN, 4/26/15)
India dairy farmers struggle with current, predicted weather
The India Meteorological Department predicts this year’s monsoon rainfall will be around 93 percent of the long-term average. If accurate, it would be the fourth straight year of below average monsoon precipitation for India. (Between 70 and 80 percent of the nation’s rainfall comes during the June-September monsoon season.)
Last year, a 14 percent shortfall in monsoon rain drove up fodder and domestic milk prices, causing the government to halt export incentives for milk powder. This year, many dairy farmers in the north are already facing fodder issues. The states of Haryana, Punjab and Uttar Pradesh, which are responsible for nearly a quarter of the nation’s milk output, received unseasonably heavy rains in March and April. (March rains were the highest in more than a century in some areas.) The weather caused significant farm and crop damage, tightening fodder supplies. To mitigate the loss, the Indian government increased disaster payments to farmers most affected by the storms. (India Meteorological Department; Wall Street Journal, 4/22/15; TheDairySite, 4/20/15; The Economic Times, 4/6/15, 3/23/15)
German dairy supplier exits GDT
Germany’s Molkerei Ammerland has withdrawn from selling products on the Global Dairy Trade (GDT) auction platform, citing a new sales and marketing strategy. The company joined GDT in September 2014 and was the first to offer sweet whey powder at the auction. (GDT)
Northern Ireland launches dairy export program
The Dairy Council for Northern Ireland and the EU are jointly funding a three-year €625,000 initiative (about US$682,000) to help Northern Irish dairy suppliers expand to the Middle East, Southeast Asia and Russia. The project will provide funds for dairy companies to attend key trade events (starting with SIAL China next month and ProdExpo in Russia in 2016) and make business trips overseas. In addition, it will bring 16 overseas buyers and three journalists per year on reverse trade missions to Northern Ireland to tour domestic processing facilities and meet face to face with suppliers. (Belfast Telegraph, 4/29/15; Farming Like, 4/28/15)
COMPANY NEWS
Chinese investors expand Australian dairy reach
The consortium formed by Australia’s Freedom Foods Group, its controlling shareholder Perich Group, and Chinese ag industry giant New Hope Group—announced last year after Australia and China inked their FTA (see Global Dairy eBrief, 11/20/14)—purchased Australia’s largest single-site dairy producer Moxey Farms. The consortium, known as Australian Fresh Milk Holdings, plans to invest A$80 million into Moxey and other greenfield farms in New South Wales and Victoria. Moxey already supplies A2 Milk (in which Freedom is the largest shareholder). The additional milk would go to A2 for the domestic Sydney market and Freedom’s Shepparton, Victoria, milk plant, where it would be used to manufacture UHT milk and potentially other products for China.
China’s Yo You Dairy, a subsidiary of Ningbo Dairies, is having a more difficult time with its investment in Gippsland, Victoria. Yo You bought three farms over the past year and reportedly has its eye on two more properties. Citing environmental, noise and traffic concerns, local community groups have mounted stiff opposition to the company’s plan to build a $6 million bottling facility and barn to house 800 additional cows in Kernot, Victoria—a doubling of the farm size. Yo You plans to export fresh bottled milk to China, making the bottling facility its showpiece for Chinese consumers. It would also contract to have other Australian facilities process milk for the China market. Ningbo owns 30 dairy farms with 20,000 cows in China. (Farm Weekly, 4/29/15; The Australian Dairyfarmer, 4/27/15, 4/17/15; The Australian, 4/23/15, 4/16/15)
UDP milk suppliers find alternate outlets
Australian dairy farmers unceremoniously dropped by United Dairy Power (UDP) last week after receivers sold off parts of the company and closed two manufacturing plants (see Global Dairy eBrief, 4/23/15) quickly found new buyers for their milk. Warrnambool Cheese and Butter Factory reportedly took the bulk of the volume, with Lactalis-owned Parmalat getting a small slice. In addition, National Dairy Products, a new milk broker founded by former UDP owner Tony Esposito, signed up a number of farmers as well. (The Weekly Times, 4/29/15)
Clinical study backs Synlait’s sleep ingredient
A clinical trial from Otago University’s WellSleep Centre supports claims that Synlait Milk’s iNdream3 dairy-based powder ingredient improves sleep patterns. Synlait says it manufactures iNdream3 from milk collected at night when cows naturally produce increased concentrations of melatonin in their milk. Melatonin is a sleep-promoting hormone that plays a role in helping people regulate their day/night cycle. The study found that iNdream3 reduces the time to onset of sleep, increases the length of the deep-sleep phase and reduces daytime sleepiness, fatigue, impaired memory and poor concentration. A Korean company has been using the ingredient in its Sleepiz powder sachets since January 2015. (Company reports)
Mergers and acquisitions
China’s Beingmate paid $19 million for fellow infant formula maker Dunhua Meilijian, a subsidiary of Meilijian Group. The company operates a vertically integrated infant formula business—from milk production through sales—manufacturing 10,000 tons of formula per year . . . Ornua, the new name for the Irish Dairy Board, is looking for joint ventures and acquisitions to expand its international footprint. The company also said it was developing “products for specific consumer tastes in specific markets,” including WMP for Africa and UHT milk drinks for China. (USDEC China office; Irish Examiner, 4/22/15)
Company news briefs
Australian meat processor Midfield Group is spending A$60 million to turn an old potato chip processing plant in South Australia into a milk powder processing facility serving export markets. The company expects to complete the project in mid 2016 . . . Colombian dairy major Alqueria plans to increase milk powder exports to Africa and the Middle East . . . Arla Foods extended and expanded its exclusive distribution agreement with Israel-based G. Willi-Food subsidiary Gold Frost. The deal grants Gold Frost exclusive rights to import, export, market and distribute Arla cheese and butter products in Israel for the next five years . . . China’s Mengniu Dairy rolled out a new milk drink containing oat and wheat grains and called Telunsu. The company is targeting the growing demographic of on-the-go consumers looking for quick nutrition to match their busy lifestyles . . . Johan Priem, president of Fonterra Co-operative Group’s Greater China unit, will take on the additional role of managing director, Asia Middle East and Africa . . . The South Australian Dairy Farmers Association sent its first commercial shipment of 1-liter bottles of fresh milk to China. The company is contracted to export nearly 4,000 bottles per week for the next three months and, assuming the market responds, expects that volume to double at that point . . . Australian construction company FK Gardiner & Sons is looking to build an A$80 million joint dairy and beef processing complex in Queensland. (Company reports; The Advertiser, 4/30/15; StreetInsider.com, 4/27/15; Dairy Markets, 4/24/15; Packaging Europe, 4/23/15; ABC Rural, 4/22/15; Stock Journal, 4/16/15)
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