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Global Dairy eBrief
April 28, 2016, Vol. 23, No. 17


Senate letter calls for USTR
to address ag issues in TTIP

A bipartisan group of 26 senators sent a letter to USTR Michael Froman calling for the U.S. negotiating team to address the needs of the U.S. ag sector in Trans-Atlantic Trade and Investment Partnership (T-TIP) trade talks with the EU. Among other agricultural issues, the letter singled out the need to address restrictive certification requirements on U.S. dairy exports, as well as the EU’s efforts to capture sole use of generic food names through geographical indication (GI) constraints.

The latest letter is particularly timely given the 13th round of T-TIP negotiations took place this week in New York City, and both sides said they are looking to conclude a deal this year—a timetable that would make it difficult to appropriately resolve critical dairy and other agricultural issues.

 USDEC, NMPF and IDFA issued a joint press release supporting the Senate letter and calling for U.S. negotiators to not conclude a trade agreement with the EU that fails to address EU trade barriers facing the U.S. dairy industry. (USDEC staff)



Click charts to view larger images in your web browser.


A rising index means that an importer’s currency is strengthening against the U.S. dollar. A falling index means that an importer’s currency is weakening against the dollar. When an importer’s currency is strengthening against the U.S. dollar (weak US$), the importer’s purchasing power increases; when an importer’s currency is weakening against the U.S. dollar (strong US$), the importer’s purchasing power decreases. Source:


Note: Numbers in parentheses are changes from previous period. Source: USDA and commercial contacts

Special 301 Report highlights GI battle
Geographic indications (GIs) also held a prominent position in this year’s Special 301 Report, an annual assessment of trade barriers due to intellectual property policies prepared by the USTR’s Office. Among today’s major intellectual property rights challenges, the report highlighted the ongoing GI threat from the EU and the actions the administration has taken to protect the rights of U.S. companies to use common food and beverage names, including securing groundbreaking GI provisions in 2015 in the Trans-Pacific Partnership (see this week’s U.S. Dairy Exporter Blog post, “Three Reasons U.S. Dairy Supports TPP”) and clarifying the scope of GI protections and U.S. exporters’ ability to continue to ship common food name products to Honduras. USDEC and NMPF issued a press release welcoming the report and urging continued U.S. government focus on defending common name rights. (USTR’s Office; USDEC staff)

Free seminar focuses on intellectual property and the threat to common names
For more on the GI battle, including practicable advice on protecting product names and safeguarding sales, sign up for a free, one-day seminar hosted by the U.S. Patent and Trademark Office (USPTO) and the Consortium for Common Food Names (CCFN). The event takes place June 21 at the Chicago Marriott O’Hare, and will examine the expanding threat of restrictions facing U.S. companies and their buyers.

To view the preliminary agenda, click here. To register, click here. For more information, contact CCFN at

Denver Dairy Plant Food Safety Workshop to focus on dry products
The upcoming May 17-18 Denver session of the Innovation Center for U.S. Dairy’s Dairy Plant Food Safety Workshop is a special dry products edition, focusing on milk powder, whey protein and other ingredients. With over half of U.S. milk powder, whey and lactose exported annually, the Denver workshop is especially relevant to many USDEC members.

Leprino Foods, Hilmar Cheese and Ingredients, and California Dairies Inc. will host the session. For more information or to register, click here.

Global Dairy eBrief Exclusives: Dairy makes inroads in food aid
This week’s members-only Global Dairy eBrief Exclusives delves into the growing body of research—much of it backed by USDEC and DMI—demonstrating the value of dairy ingredients to treat malnutrition. Read “Dairy Makes Inroads in Food Aid” for details on a string of recent developments highlighting dairy’s advantages and prospects for sales into food aid products.



NZ milk production -1 percent in March
New Zealand milk production in March was 1.7 million tons, down 0.8 percent from the prior year, according to DCANZ. With two months to go, production in the 2015/16 season was running 2.1 percent below year-ago levels (adjusted for leap day), a notable improvement on Fonterra’s earlier projections of 6-10 percent declines for the season. (USDEC staff, DCANZ)

Helou resigns as Murray Goulburn cutbacks
signal tougher times for Australian dairy farmers

Despite 18-plus months of a global dairy market imbalance, Australian milk producers have generally avoided the steady drumbeat of farmgate price cuts faced by peers in New Zealand and the EU—until now. This week, Murray Goulburn Co-operative (MG), Australia’s top dairy processor collecting more than one-third of the nation’s milk output, admitted its earnings and farmgate milk price projections were way off base.

MG cut it earnings projection for the year ending June 30, 2016, by A$21-$24 million and reduced its farmgate milk price estimate from A$5.60/kgMS to A$4.75-$5.00/kgMS. The announcement came as a shock to members, given that the company vowed to maintain its A$5.60/kgMS as recently as February.

To help its suppliers cope with cash flow needs, MG also announced a Milk Supply Support Package that will borrow from future milk payments to buoy farmgate prices the remainder of the 2015/16 year. The loan program essentially compensates producers for most of the payout reduction, ensuring they receive A$5.47/kgMS through June 30.

Critics say MG should have known sooner if downward payout revisions were necessary, particularly given that others in the industry had commented that the Australian milk price did not reflect international commodity pricing trends. MG President Gary Helou had maintained that the company’s shift in product mix to higher-value, branded products was delivering profits and supported the elevated farmgate price.

Helou and CFO Brad Hingle resigned after the earnings announcement. David Mallinson, executive GM of business operations, will take over for Helou on an interim basis.

Analysts speculate the payout downgrade will trigger similar moves by other Australian dairy processors, since MG is seen as a price setter. Fonterra Australia already hinted it was preparing to lower its payout estimate from A$5.60/kgMS. Bega Cheese and Australian Consolidated Milk though promised to maintain prices at A$5.60/kgMS and above this season.

Between rising input costs, drought and, now, declining prices, some Australian dairy farmers are saying current conditions are the toughest in decades. (Company reports; Sydney Morning Herald, 4/27/16, 4/26/16; The Weekly Times, 4/27/16; The Age, 4/22/16)

EU milk collection remains strong
EU milk deliveries remained strong through February, rising more than 5 percent, after adjusting for Leap Day. In raw volume terms, including all 29 days, EU February collection rose a little over 1 million tons. (Note: USDEC adjusts EC data for Italy, as the reliability of the Eurostat data for Italy has been questioned. Our estimates of monthly EU-28 milk deliveries can be found here.)

Despite the gains, EU farmers and producer groups continue to bemoan rising losses and warn of their increasingly precarious business positions even as processors like Glanbia caution that further farmgate price reductions are on the way.

Britain’s AHDB forecasts prices will begin taking their toll on EU dairy cow numbers this year, with a drop in head count of 0.5 percent in seven major EU milk producing nations, led by declines in Poland, France and Germany. The Irish Cooperative Organization Society projects Dutch farmers will need to cull up to 100,000 head to meet new phosphate limit regulations. (Milk Market Observatory; Irish Independent, 4/28/16; Agriland, 4/24/16, 4/16/16; The Scottish Farmer, 4/22/16; Farming UK, 4/18/16)

Fonterra to open new online sales channel under GDT umbrella
Fonterra Co-operative Group will introduce a new business-to-business e-commerce sales channel starting in June called GDT Marketplace. The site, open 24/7, will only offer products not currently sold through the regular Global Dairy Trade (GDT) auction platform. Fonterra describes it as a service for customers who purchase smaller volumes and who desire flexibility on when they want to buy.

Fonterra will be the first seller but said that the success of the platform will depend on other sellers signing up to utilize it.

In other GDT news, Fonterra said it would start offering a cream grouping in the regular GDT auction in June to deepen liquidity and reduce volatility in butter and AMF. And a new subscription service called DGT Insight will offer round-by-round and post-event data from GDT. (Company reports; Dairy Markets, 4/26/16)

AP claims radioactive isotopes in milk near Chernobyl
The Associated Press suggested this week that milk produced in Belarus near the shuttered Chernobyl, Ukraine, nuclear power plant contained extremely high levels of radioactive isotopes, even though the farm that produced the milk was outside the established boundary zone. The report said the milk it tested is used by Belarusian dairy processor Milkavita to manufacture cheese exported to Russia and marketed domestically. Milkavita and Russian regulator Rosselkhoznadzor denied the allegations, saying that their own tests showed radioactivity of Chernobyl-area milk samples well below safety limits. The AP report criticized the lax oversight of ag production near Chernobyl and farmer assumptions that the threat of radioactive contamination has passed in the 30 years since the nuclear accident. (The DairyNews, 4/26/16; AP, 4/25/16)



U.S. competitors continue trade negotiation push
U.S. dairy export competitors continue to move forward with trade negotiations. Here’s a quick run down of some of the recent announcements. (See Global Dairy eBrief, 4/21/16, of New Zealand’s efforts to rework its FTA with China.)

  • Australia hosted the 12th round of talks toward the Regional Comprehensive Economic Partnership (RCEP) last week. The RCEP includes 10 ASEAN countries (Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Laos and Vietnam) and India, China, Japan, South Korea, Australia and New Zealand.
  • Australian and the EU trade representatives met this week in Brussels to discuss an FTA and prepare to launch negotiations.
  • The EU plans to renew talks with Mercosur (Argentina, Brazil, Paraguay, Uruguay and Venezuela) in mid-May despite EU farmer concerns about sensitive agricultural sectors.
  • The EU and the Philippines plan to launch their first round of trade talks in May.
  • The EU and Indonesia announced the formal launch of talks toward a comprehensive economic partnership agreement in the coming weeks. (European Commission; Australian Department of Foreign Affairs and Trade; Reuters, 4/14/16; Business Mirror, 4/11/16)



Mergers, acquisitions and joint ventures
Nestlé and Britain’s R&R Ice Cream formed a joint venture called Froneri that combines their ice cream businesses in Europe, the Middle East, Argentina, Australia, Brazil, the Philippines and South Africa. Froneri will be based in the UK. (, 4/27/16)

Company news briefs
Saputo President and COO Dino Dello Sbarba, who spoke at this month’s USDEC Board of Directors Meeting, announced he will retire on April 1, 2017. Kai Bockmann, president and COO of Saputo’s international sector, will take over Dello Sbarba’s role . . . India’s Banas Dairy inaugurated a new mozzarella and processed cheese manufacturing plant in Palanpur capable of producing 30 tons per day . . . Australian processor Pactum Dairy Group signed a deal to supply Vietnam’s International Dairy Products with 4 million liters of UHT milk annually . . . Starbucks opened its first Sub-Saharan Africa store in Johannesburg, South Africa. It is planning 12-15 more South African units over the next two years. (USDEC Vietnam office; Company reports; Times of India, 4/26/16; Wall Street Journal, 4/21/16)


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