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Global Dairy eBrief
May 28, 2015, Volume 22, Issue 21


Japan announces additional butter, SMP imports
Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) announced that the nation would import an additional 10,000 tons of butter and 5,000 tons of SMP this fiscal year beyond current access. Agriculture and Livestock Industries Corp. (ALIC) will hold tenders in June for delivery by the end of October in an effort to stabilize supply ahead of peak holiday dairy consumption.

This is the second straight year MAFF has called for additional imports beyond current access volumes. Last year, the government sanctioned an additional 10,000 tons of butter and 8,000 tons of SMP due to strong demand in the face of declining milk production and depleted domestic stockpiles. This year, Japan Dairy Association projects no change to the nation’s milk output, but demand also remains steady, necessitating a repeat of additional imports. (USDEC Japan office)

After Senate passage, focus turns to TPA vote in House
Following successful Senate passage of Trade Promotion Authority (TPA) legislation late last week, focus now shifts to the House, which could take up the bill as early as the second week of June, after it returns from its Memorial Day recess. USDEC applauded this action and urged fast House approval of TPA as well. Leaders of the effort to line up support for TPA in the House, including House Ways & Means Committee Chairman Paul Ryan (R-Wis.), have expressed optimism about its prospects. Reports indicate, however, that a number of potential Congressional supporters have not yet committed to vote in favor of the legislation and are facing strong pressure to oppose it. In light of this, continued outreach to the House in support of TPA will be essential to moving the legislation quickly and successfully to completion.


Click charts to view larger images in your web browser.


A rising index means that a competitor’s currency is strengthening against the U.S. dollar. A falling index means that a competitor’s currency is weakening against the dollar. When a competitor’s currency is strengthening against the U.S. dollar (weak US$), exporters in that country expect lower returns from export markets; when a competitor’s currency is weakening against the U.S. dollar (strong US$), exporters in that country expect higher returns from exports markets. Source:


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

With TPA still in progress, TPP members canceled a ministerial round that was tentatively slated to take place this week in Guam. Instead, they extended an informal negotiating round that was already underway.

During that meeting, Canada reportedly finally began discussing market access for sensitive agricultural products, including dairy, but negotiators released no details. Press reports did not mention whether progress had been made on key outstanding issues with Japan regarding dairy market access. The next ministerial round is now expected in June, possibly in Singapore. (USDEC staff; Inside U.S. Trade, 5/26/15, 5/25/15, 5/23/15, 5/21/15)

Mexico expects to determine COOL sanctions by early June
Mexico said it hopes to decide by the end of next week what type of sanctions to impose on U.S. products should Congress fail to comply with a WTO ruling on U.S. country of origin labeling (COOL) labeling rules for meat (see Global Dairy eBrief, 5/21/15). USDEC has urged swift action to bring the United States into compliance with its WTO obligations in order to avoid retaliation by both Mexico and Canada, our No. 1 and No. 3 markets, respectively. (USDEC staff; Reuters, 5/21/15)

Sign up now for chance to be part of 2016 USDEC Gulfood booth
Historically, USDEC’s booth for the Gulfood show, the Middle East’s leading exhibition for the food and hospitality sector, fills up literally seconds after registration opens. To make the process more equitable, we are implementing a new lottery system for the six USDEC booth positions for the 2016 event, which is slated for Feb. 21-25 in Dubai.

Here’s how it works: Members interested in space in the USDEC pavilion must submit a request to John Klees at no later than Friday, June 26, 2015. Two of the six spots are reserved for first-time Gulfood exhibitors. We will first randomly select from qualified “new companies” for those two spaces, then combine all entries for a random drawing for the final four spaces. USDEC will notify all companies of their status no later than June 30.

We are starting the process early this year so that companies who don’t get a USDEC booth slot will still have a chance to request a booth through the USA Pavilion when it begins taking reservations in late July or early August.

USDA releases dairy product semi-annuals
USDA’s Foreign Agricultural Service has released six “Dairy and Products Semi-Annuals” over the past two weeks. To download each report, click on the respective country or region: Argentina, Australia, China, European Union, New Zealand and Russia.


Fonterra reduces payout again, announces 2015/16 opening forecast
Noting that global commodity dairy prices had not risen as expected, Fonterra Co-operative Group reduced its forecast payout for the 2014/15 year from $4.50/kgMS to NZ$4.40/kgMS (about US$10.41/cwt.). The reduction, Fonterra’s fifth this season, surprised analysts who expected the payout to remain steady. (The co-op left the projected dividend unchanged at NZ$0.20-NZ$0.30 per share.)

Industry organization DairyNZ estimates the breakeven price for New Zealand dairy farmers at NZ$5.40/kgMS.

Fonterra also announced an opening forecast farmgate price of NZ$5.25/kgMS for 2015/2016, but even to reach that modest level, WMP prices would need to average about US$3,150/ton for the year. Competitor Westland Milk Products, by contrast, set its initial forecast payout for 2015/16 at NZ$5.60-NZ$6.00/kgMS, on the expectation that market conditions will improve later this year. (Company reports;, 5/27/15; New Zealand Herald, 5/26/15)

GDT to seek public input
GlobalDairyTrade plans to seek public comments on a series of proposed reforms aimed at making the platform more attractive to a large range of sellers. An independent advisory board is currently reviewing the proposals. Management has yet to reveal details of the changes, but said it would like to publish sold quantities and increase the platform’s independence from owner Fonterra. It expects to make them public in a matter of weeks. (Dairy Markets, 5/21/15)


Three more infant formula plants in the works
Three companies announced plans to build new infant formula capacity in Canada, Germany and New Zealand.

  • A company called Canadian Milk Manufacturing purchased a former Abbott manufacturing facility and all equipment in Brockville, Ontario, and plans to refurbish it to manufacture infant formula, milk powder and fluid milk for export to China. A local paper reported that a principal in the deal was also involved in a failed attempt in 2014 to build a formula manufacturing and export facility in Scarborough, Ontario. The Abbott plant used to make Similac and Ensure products and shuttered in 2013. Canadian Milk Manufacturing released no details of the timing or capacity of the project.
  • Hong Kong-based He Run International Investment plans to build an NZ$70-NZ$80 million (about US$51-$58 million) infant formula factory in Otorohanga, Waikato, on New Zealand’s North Island, to manufacture 25,000 tons of formula per year. It plans to export and market domestically, with 20 percent of the initial output organic.
  • Switzerland’s Hochdorf is spending €25 million (about US$27 million) on a new infant formula line at its recent acquisition Uckermärker Milch in Prenzlau, Germany. The company expects to start production in autumn 2016. The project should boost infant formula capacity at the facility to 35,000 tons per year. (Recorder and Times, 5/26/15;, 5/23/15; Nordkurier, 5/22/15)

Mergers and acquisitions
Dutch cheesemaker DOC Kaas voted to merge with Germany’s DMK . . . South Africa’s Spear Capital bought a 27 percent stake in Zimbabwe’s second largest dairy manufacturer Dendairy, which recently expanded to Mozambique and Zambia. (Company reports;, 3/22/15)

Company news briefs
China’s Bright Dairy and partner Wuhan Linkonggang Investment laid the foundation stone on a new $193 million fluid milk and beverage plant in Wuhan City. Once completed in 2018, the plant will process 800 million tons of milk per year . . . Saudi Arabia’s Almarai plans to spend $5.6 billion over the next five years on farming, manufacturing, distribution and logistics operations across the Middle East . . . Germany’s DMK is streamlining its ice cream operations, closing plants in Recke at the end of this year and Nuremberg by the end of 2017 and expanding facilities in Waldfeucht-Haaren, Everswinkel and Prenzlau. (USDEC China office; Dow Jones Newswires, 5/26/15; Top Agrar Online, 5/22/15)

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