Multiple lawmakers consequently pressed U.S. negotiators on dairy, causing USTR Michael Froman to assure the House Ways and Means Committee that dairy was not being overlooked and that negotiators were cognizant of the need for a balanced outcome.
USDEC will keep you apprised of further developments in the talks and deliver details of dairy provisions as they are finalized and made available. (USDEC staff; Inside U.S. Trade, 9/29/15, 9/28/15, 9/27/15)
MARKET ACCESS
USDEC members asked to verify AQSIQ registration
China’s General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) successfully transferred previously registered exporter information to the nation’s new exporter filing system, which is now operational. Therefore, exporters who previously registered with AQSIQ in 2012 using the old system are not required to re-register, as previously announced. But USDEC is asking all exporters to verify their companies have been migrated to the new system. For information on how to verify, see the Sept. 29 USDEC Member Alert, “New Update on Company Registration Requirements for China.”
In response to numerous inquiries, USDEC wants to make clear that this exporter registration filing system is a separate process from the facility registration (CNCA Plant Registration) measure. For questions, contact Matt McKnight (mmcknight@usdec.org) or Mitch Bowling (mbowling@usdec.org) or 703-528-3049.
Turkey extends market access for U.S. origin dairy products
Turkey granted a market access extension to allow U.S. and Turkish officials additional time to negotiate dairy health certification language. The APHIS certificate currently used will continue to be valid through the current extension, which is set to expire on Oct. 31, 2015. For more information, see USDEC Member Alerts from Sept. 25, 2105, and Sept. 17, 2015. For questions, contact Matt McKnight (mmcknight@usdec.org) or Mitch Bowling (mbowling@usdec.org) or 703-528-3049.
MARKET CONDITIONS
Japan emerges from butter shortage
The Japanese government says the nation is well positioned to handle the holiday season butter rush and will not import any additional volumes in fiscal 2015, which runs through March 2016. Japan’s ag ministry is projecting a slight rise in 2015 milk production, leading to a 7 percent rise in domestic butter output this year. Combined with import tenders for 12,800 tons held earlier this year, supply is stable and sufficient, the government said. (USDEC Japan office)
WTO slashes global trade forecast
The WTO lowered its estimate for world trade growth from 3.3 percent to 2.8 percent and warned that the forecast remained vulnerable to a cloudy outlook for the world economy and could be downgraded further. The group cited a “sharper-than-expected slowdown” in emerging and developing economies, fallout from the European migrant crisis and a potential rate rise from the U.S. Federal Reserve. World trade grew 2.5 percent in 2014. WTO expects a rebound to 3.9 percent in 2016. (Reuters, 9/30/15; Financial Times, 9/30/15)
Russian dairy observer believes embargo will last to 2018
Mikhail Mishchenko, the editor of the Russian website The Dairy News, told attendees at last week’s International Dairy Federation World Dairy Summit that he thought Russia would extend its embargo on Western ag products until at least 2018. He said domestic dairy farmers have been doing too well since the embargo for the government to remove it.
While the duration of the embargo may extend past its potential repeal in August 2016, multiple media reports from Russia suggest the domestic dairy sector is as troubled as ever. Among other issues, backyard farms still account for nearly half the nation’s dairy herd; the business requires significant investment to modernize its infrastructure and grow; millions of dollars in government aid promised to milk producers in 2015 never materialized due to the nation’s economic troubles; Russian milk production was flat in 2014 and down slightly through the first seven months of 2015; and the nation is beset by a flood of fake “dairy” products containing non-dairy ingredients. (USDEC staff; USDA; Dairy Markets, 9/23/15; Vestnik Kavkaza, 9/26/15; The Moscow Times, 9/23/15)
China expects new infant formula regs will slash domestic brands
Chinese authorities expect new infant formula regulations that went into effect today will eliminate about 80 percent of the nation’s 2,000 domestically manufactured formula brands. The regs place tighter restrictions on domestic processors by preventing businesses from using one formulation for multiple brands (often sold regionally and at a lower price than the “main” brand, unbeknownst to consumers). Under the new rules, companies must register their brands with the China Food and Drug Administration. Each brand must have a unique formulation with at least six nutritional differences from another brand, and products must be sold nationwide. The rules only apply to domestic manufacturers. (FoodNavigator-Asia.com, 9/29/15; Dairy Industry Newsletter, 9/18/15)
PUBLICATIONS
NDC recaps whey protein benefits in print and at SupplySide West
Natural Products Insider published an annotated summary of whey protein research and benefits written by Moises Torres-Gonzalez, Ph.D., director of nutrition research at the National Dairy Council (NDC). “Whey Protein, More Than Just a Simple Protein” summarizes how whey protein excels at meeting consumer health and nutrition demands, particularly for weight management, body composition and aging. Gonzalez will also present in the panel discussion “Protein: Market Potential, Sourcing and Assessment” as part of the Food Product Design track in the SupplySide West Education Program, Oct. 7. For more on SupplySide West, Oct. 5-9 in Las Vegas, click here.
DMI publishes Research Pipeline Quarterly
DMI released the latest Research Pipeline Quarterly, a report that highlights recent high-impact nutrition research and reports that were accepted or published in scientific journals within the last quarter, as well as scientific and regulatory affairs papers. Among the current issue’s documents is a research paper on the impact of cheese consumption on cardiovascular health, a dietary modeling study centered on dairy, a study on using pulsed light to reduce cross-contamination of cheese surfaces, and a regulatory update on proposed revisions to the U.S. Nutrition Facts label. To view a copy of the latest Research Pipeline, click here.
COMPANY NEWS
Fonterra farmers upset with PKE restrictions; co-op to kill GMP scheme
Fonterra Co-operative Group farmers expressed displeasure with the co-op’s announcement that it was looking to limit the use of palm kernel expeller (PKE) as feed (see Global Dairy eBrief, 9/24/15). Producers questioned why Fonterra felt it necessary to establish PKE guidelines, why farmers were not consulted and how the co-op arrived at its 3kg per cow per day limit. Such rules would have significant impact on farm profitability during years of low cash flow and/or drought (which this this year is for many farmers). They also wondered if Fonterra intends to pay a premium for farms abiding by the guidelines or penalize farmers who fail to adhere to the restrictions.
In other policy changes, Fonterra plans to eliminate its guaranteed milk price (GMP) scheme at the end of the current season. The voluntary system locked-in a farmgate payout for a limited portion of milk solids. It was seen as a tool to mitigate volatility but received mixed reaction from members. NZX is reportedly developing a risk management tool for milk prices and is slated to meet with stakeholders in the coming weeks to discuss details and a launch date. (NZME, 9/30/15; The Australian Dairyfarmer, 9/28/15)
Corporate, research partnerships seek to develop dairy products for Asia
Dairy processors in China and elsewhere are shoring up cooperative relationships with research universities and organizations to bolster R&D efforts.
Chinese dairy processor Yili Group is leading the new SINO-U.S. Food Wisdom Valley project, which counts a number of top-line U.S. agriculture and business schools as participants, including Cornell University and the University of California-Davis (UC-Davis). Food Wisdom Valley seeks to upgrade agricultural cooperation between the United States and China, with a focus on nutrition and health, new product development, food safety, ag technology, sustainability and all aspects of farm operation. The first new product target is reportedly a cheese developed with Cornell that utilizes ingredients (such as soy protein) familiar to Chinese consumers.
Separately, Mengniu Dairy and UC-Davis signed a Memorandum of Understanding last month to form the Mengniu-UC Davis Nutrition and Health Innovation Partnership. That project looks to develop novel and innovative food systems to improve nutrition and health for consumers in Asia, particularly those in China.
Outside the United States, New Zealand’s Miraka inked a partnership deal with state-owned AgResearch and Plant & Food Research to develop a family of shelf-stable and healthy dairy-based UHT milk products featuring plant of vegetable ingredients. The project will target high-value markets in Asia. (USDEC China office; Company reports; DairyReporter.com, 9/29/15; Dairy Markets, 9/28/15)
Company news briefs
Lone Star Milk Producers broke ground on a new joint venture specialty dairy ingredients plant in Canyon, Texas. Hoogwegt U.S. is Lone Star’s partner . . . Swiss Valley Farms broke ground on a $21 million expansion and upgrade to its Luana, Iowa, cheese facility . . . Officials from Garden City, Kansas, approved $240 million in funding for Meadowlark Dairy Nutrition (a subsidiary of Dairy Farmers of America) to build a dairy powder plant in the area . . .The Qatari government is developing a vertically integrated dairy farm and processing facility in an effort to lessen its dependence on imports. The government expects the operation will reach full capacity—about 20,000 tons of milk annually—within three years . . . Saudi Arabian dairy processor Almarai raised $427 million in a sukuk bond issue to help finance its $5.6 billion 2016-2020 capital investment plans. (USDEC Middle East office; Company reports; Agrinews.com, 9/29/15; MyHighPlains.com, 9/28/15; KWCH, 9/16/15)
Data Updates on USDEC.org
Have you checked out the interactive charts of market and trade data on the USDEC website? Key metrics like milk production, exports and imports and prices are updated regularly. This week we learned:
- New Zealand’s exports of milk powder, cheese, butterfat and whey in August were up 6 percent from last year.
- Argentina’s exports of milk powder, cheese, butterfat and whey in August were down 28 percent from last year.
- Russia imported just 1,926 tons of cheese and 1,582 tons of butterfat in July (excluding purchases from Belarus).
- In the first seven months of the year, Mexico cheese imports were up 26 percent, butterfat imports were up 47 percent and SMP imports were up 9 percent.
- In August, Japan cheese imports were down 13 percent from a year ago.
- Price and currency graphs are updated as well.
To browse the full Market Data section of usdec.org, click here.
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