The Irish Farmers’ Association said farmers who weren’t already stressed by falling milk prices would be hit by the severity of their cash flow situation when they received their first 2016 milk check around mid-March. The Irish Creamery Milk Suppliers Association criticized the timing of Hogan’s plan, saying that farmers needed help immediately in the form of a hike in intervention prices, not ideas for policy changes that might be enacted a month from now. (Irish Examiner, 2/18/16; EU Observer, 2/16/16; Agriland, 2/16/16, 2/15/16, 2/14/16; Reuters, 2/15/16; Farming Life, 2/13/16)
ThinkUSADairy.org launches revamped supplier search function
USDEC unveiled a new and improved supplier search function on the ThinkUSADairy.org website allowing prospective U.S. dairy buyers to more easily access detailed information about U.S. dairy suppliers and service providers. Customers can now view a company’s complete range of products along with the appropriate salesperson all at once. Contact information now includes name, direct phone number, email and even mobile number, making reaching the right person easier than ever and raising the game in terms of personal communication.
The revamped feature also allows more specific search attributes that provide customers with more precise results to meet their exact needs. Plus, the directory now includes service providers to assist customers with specific areas of concern, such as risk management professionals to advise buyers on mitigating financial exposure and logistics experts to facilitate shipping.
To try the new search feature and see what your customers are seeing, click here. USDEC relies on members for the information in the listings. If your company is not listed or if you have any updates to your company’s listing, please contact John Klees at jklees@usdec.org.
USDEC president announces retirement
USDEC President Tom Suber announced plans to retire at the end of 2016, after leading the organization since its inception 21 years ago. In an email this week to USDEC members, Suber said he had “no idea at the onset how much I would enjoy working with dairy farmers, the cooperatives and processors who handle their milk, and a diverse range of industry partners to identify, address and overcome the necessary factors to get on the right path.”
Suber acknowledged the foresight and support of DMI in creating and fostering USDEC’s development into a member-driven organization focused on assisting U.S. suppliers to understand, enter and sustain an international presence. He said he was proud to play a role in the industry’s “remarkable achievements,” while noting that they still require substantial ongoing focus and effort.
DMI is now conducting a search for the next USDEC president and aims to complete that process by around the third quarter.
U.S. gets 10 percent of ALIC SMP tender
U.S. suppliers secured 200 tons of SMP (10 percent of the total) at the February 18 Agriculture and Livestock Industries Corp. (ALIC) general tender in Japan. New Zealand came away with the biggest portion—1,216 tons, including all 1,000 tons of Special A Grade. Germany (434 tons) and Belgium (150 tons) accounted for the remainder. EU prices for A Grade SMP were the lowest, but within $100/ton of U.S. and New Zealand prices. The average A Grade price was ¥279,427/ton (about US$2,450/ton).
Upcoming tender dates and volumes are as follows:
- February 23. SBS tender for 2,500 tons.
- February 25. SBS tender for 2,814 tons.
- Whey and modified whey. March 1. SBS tender for 2,500 tons.
For more information, contact USDEC’s Japan office at usdecjapan@marketmakers.co.jp or (011) 81-3-3221-6410. (USDEC Japan office)
Aviation deal latest step in Cuba relations; ag group seeks more progress
The United States and Cuba signed an agreement this week that reopens commercial air service between the two countries. Up to 30 round trips a day (20 to Havana) will commence this fall. The deal is the latest in a series of moves over the past year aimed at removing financing and trade restrictions that have limited the ability of the U.S. agriculture industry to competitively serve the Cuban market.
The U.S. Agriculture Coalition for Cuba (USACC), of which USDEC is a member, applauded the progress made to date as a sign that “the wheels of change are turning.” But USACC called for further action, starting with including agricultural products in a January White House move allowing U.S. suppliers to sell many non-agricultural products on credit.
USACC is working with Congress to officially end the trade embargo and will sponsor a trade mission to Cuba in April to build bilateral relationships for the mutual benefit of U.S. farmers, ag businesses and the people of Cuba. President Obama will reportedly visit Cuba—the first president to do so in 88 years—in the first half of the year in an attempt to foster Cuban reforms and further U.S. policy changes. (USACC; Wall Street Journal, 2/17/16, 2/16/16)
MARKET CONDITIONS
GDT continues to dive
The GlobalDairyTrade (GDT) Index fell 2.8 percent to an average price of US$2,235/ton at the February 16 auction. The results were better than expected, given NZX futures market signals preceding the event, but it still marked the fourth decline in a row.
The average winning price declined for nearly all products: WMP, -3.7 percent to US$1,890/ton; SMP -1.4 percent to US$1,762/ton; butter -2.3 percent to US$2,834/ton; and cheddar -5.6 percent to US$2,535/ton. Only AMF gained (+1.5 percent to US$3,527/ton).
Market sentiment remains bearish, given milk production reports. A poll from New Zealand’s Federated Farmers found that more than 10 percent of its members were experiencing pressure from banks over their mortgages. New Zealand financial broker OMF warned that dairy farmers are becoming increasingly reliant on lines of credit and vulnerable to banks’ willingness to “’extend and pretend’ loans are going to be repaid.”
Westpac economists lowered their 2016/17 farmgate milk price by NZ$0.60 to NZ$4.60/kgMS (about US$9.24/cwt.). Analysts expect the continued bearish outlook to trigger additional downward revisions in both 2015/16 and 2016/17 New Zealand milk payout projections in the days and weeks ahead. (USDEC staff; GDT; New Zealand Herald, 2/16/16; BusinessDesk, 2/16/16; Interest.co.nz, 2/15/16)
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:
- Milk production from the top 5 suppliers was up 2.0 percent in December.
- In the fourth quarter, Australia exports of cheese were up 21 percent vs. prior year.
- New Zealand posted record exports of dairy commodities in December. Cheese exports were up 14 percent year-over-year, while butterfat exports were up 15 percent.
- Russia imported just 3,875 tons of cheese and 1,735 tons of butterfat in November (excluding purchases from Belarus).
- Mexico was the world’s largest SMP/NDM importer in 2015. Through November, Mexico imported 231,449 tons, up 27 percent from the prior year. In addition, cheese and butterfat imports were each up 19 percent.
- Japan was the world’s largest cheese importer in 2015. Japan imported 249,286 tons, up 7 percent from the prior year.
- Venezuela reported no WMP imports in the last five months of 2015. For the year, Venezuela imported just 57,345 tons, down 60 percent from 2014.
- In the first 11 months of the year, Indonesia SMP imports were on par with the prior year, while whey imports were up 14 percent.
- Sri Lanka imports of WMP were up 21 percent in 2015.
- South Korea imports of cheese were up 15 percent in 2015, following a 14-percent gain in 2014.
- Indicative price and currency graphs are updated weekly as well.
To browse the full Market Data section of usdec.org, click here.
MARKET ACCESS
Peru updates import requirements
Through Resolución Directoral Nº 0003-2016-MINAGRI-SENASA-DS (RD 0003), Peru has updated its risk categorization for animal-origin products. This legislation reinstates the health certificate requirements for most dairy products. Last September, through RD 0015-2015, Peru had exempted dairy products from certification if they were treated according to the OIE criteria for inactivation of foot and mouth disease. RD 0003 repeals this earlier directive, and restores the certificate requirements in place prior to RD 0015-2015. Pasteurized dairy products now require health certification, with the exception of a few products such as butter, lactose and infant formula, which remain exempt. Exporters should now obtain the AMS sanitary certificate for all risk category 2 products, as noted in Volume 2 of the USDEC Export Guide. For questions, please contact Sandra Benson at sbenson@usdec.org.
Mexico expands expedited inspection program to include dairy
Mexico’s National Service of Health, Food Safety and Food Quality (SENASICA) is expanding a pilot food inspection program to include a number of dairy products. The Comprehensive System of Inspection Service (SISI), launched by SENASICA last summer, allows for inspection of high-volume, low-risk agricultural products at internal customs points for expedited entry. The pilot program began with four non-dairy products, but starting in January 2016, SENASICA expanded that list to 22 items, including SMP, WMP, dry whey, cream powder, butterfat and casein and caseinates. For more information, see the Mexico entry in Volume 2 of the USDEC Export Guide. We will publish additional details on the system as they become available. (USDEC staff; USDA Foreign Agricultural Service)
COMPANY NEWS
GII plans to double Wexford cheese capacity
Glanbia Ingredients Ireland (GII) plans to double cheddar manufacturing capacity at its Wexford, Ireland, facility to nearly 40,000 tons annually. It hopes to start the €35-million expansion project (about US$39 million) later this year and begin production by early 2017. GII recently launched branded Wexford cheddar in the Middle East, and hopes to expand sales to the region. It also markets the cheese domestically and exports to the UK and United States. (Irish Times, 2/18/16; Agriland, 2/18/16)
Mondelez to sell grocery brands, including Philadelphia cream cheese
Mondelez International officially announced it was selling its grocery brands, including the Philadelphia cream cheese label. Kraft Heinz owns the Philadelphia brand in the United States, Canada and the Caribbean, but Mondelez controls it elsewhere. Kraft Heinz has an option to buy back Philadelphia, but a number of other suitors are reportedly interested as well. Mondelez informed bidders that all the grocery brands will go on sale in March. Analysts expected such a sale last year, but Mondelez denied it at the time. (FoodBev.com, 2/15/16; The Drum, 2/14/16)
Mergers, acquisitions and joint ventures
A group of GCC investors is buying a 69 percent stake in Kuwaiti food group Americana, one of the largest food manufacturers in the region, for a rumored $2 billion. Americana also hold a number of international restaurant franchises, including Pizza Hut, KFC and TGI Friday’s . . . Dutch ingredients supplier Barentz International established a new joint-venture distribution facility in Iran with Future Way Holding. (USDEC Middle East office)
Company news briefs
Australia’s Camperdown Dairy International signed a deal to ship A$19 million of infant formula annually to Vietnam. The agreement gives Vietnamese distributor KLF Global exclusive rights to distribute Camperdown’s Green Meadow brand . . . Fonterra shuttered the milk powder dryer at its Whareroa, Taranaki, facility, as the company looks to divert more of its milk supply into “high value” products, including MPC. The company held open the possibility of reopening the line should North Island milk output growth dictate . . . Northland Milk NZ, a startup North Island dairy processor, hopes to begin shipping long-life milk and cream to China in late 2017. The company is lining up funding and obtaining final consents to build an NZ$40 million plant outside of Kerikeri capable of processing 310 tons of milk per day. (Company reports; The Northern Advocate, 2/15/16; The Weekly Times, 2/14/16)
From the U.S. Dairy Exporter Blog
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