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Global Dairy eBrief
June 9, 2016, Vol. 23, No. 23


Impending Brexit vote could
shake up British, Irish dairy trade

UK voters will go to the polls June 23 to decide whether the nation remains in the European Union or leaves. As the vote approaches, analysts are increasingly issuing warnings about how a British exit, or “Brexit,” might impact agricultural trade, including dairy export flows.

A Brexit would bring a surplus of trade uncertainties both to Britain and its former bloc partners, including whether the rest of the EU would erect barriers to British exports and whether Britain would open its borders to a wider array of suppliers from outside the bloc. Prior to the formation of the EU, Britain traditionally followed a “cheap food” policy to keep down consumer costs.

Irish farmers have expressed the most concern. Britain accounts for as much as half of Irish ag exports, including 30 percent of Irish cheese exports. If the UK leaves the EU, the cost of Irish companies doing business with Britain would likely rise and regulatory procedures become more burdensome. Essentially seamless dairy shipments between Ireland and Northern Ireland would suddenly get a lot more complicated. Ireland’s Teagasc estimates more than one-fifth of Irish ag exports would need to find a new home in the case of a Brexit.

The UK bought nearly $1 billion in dairy products from Ireland in 2015 and $2.7 billion from all other EU members. Conversely, Britain shipped nearly $1.4 billion in dairy exports to other EU members last year. A Brexit would create a great deal of uncertainty for significant volumes of dairy products currently moving into and out of Britain.


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

WTO Director-General Roberto Azevedo also suggested the UK might need to renegotiate elements of its WTO membership and bilateral WTO agreements, as well as reestablish trade dealings with the entire EU and the 58 countries with which it had trade relationships through the EU.

British farmers are split on on the vote. Brexit supporters cite the need to remove what they consider a massive burden of EU regulations, while those that back EU membership point to EU farm subsidies that, for some, make the business viable. At present, overall British public opinion is virtually deadlocked, with 43 percent favoring a Brexit, 42 percent favoring maintaining the union and the rest undecided. (Global Trade Atlas; Inside U.S. Trade, 6/8/16; The Economist, 6/7/16; RTE News, 6/6/16; CNN Money, 5/27/16; Financial Times, 5/22/16)

Milk powder, WPC highlight April U.S. export numbers
U.S. exports of milk powders, cheese, butterfat, whey and lactose reached 150,713 tons in April, according to USDA trade data released late last week. Although that was down 19 percent from the previous April, it was the highest monthly total since June 2015.

Milk powders and WPC were the bright spots. SMP shipments totaled 46,213 tons, the most since last October. WMP exports rose 72 percent from April 2015 hitting 6,822 tons—the highest monthly volume since May 2010. WPC shipments grew 5 percent to 23,520 tons, the second largest month in history.

Most other products recorded lackluster results. In value terms, U.S. April exports were $366.7 million, a 31 percent decline from the same month the previous year. For an in-depth analysis of April and year-to-date export numbers, go the the U.S. Export Data section on

Italy passes country-of-origin labeling for dairy
Italy passed a country-of-origin labeling decree for dairy products and sent the document to the European Commission for approval. Should the Commission approve it, the decree would mandate separate labels showing where milk was sourced, processed and packaged.

The European Parliament has repeatedly called for country-of-origin labels for varying products, but the European Commission has balked at the prospect, citing studies that show it would impose steep additional costs on small and medium-sized food producers and consumers. However, earlier this year, the Commission approved a draft decree from France calling for country-of-origin labeling on lightly processed dairy and meat products.

In expressing its concerns about the Transatlantic Trade and Investment Partnership (T-TIP), USDEC has cited country-of-origin labeling on dairy products and their ingredients as yet another EU non-scientifically backed non-tariff barrier to trade. (USDEC staff;, 6/2/16;, 5/31/16)

New Zealand takes 38 percent of ALIC SMP tender
New Zealand secured the biggest slice of Japan’s Agriculture and Livestock Industries Corp. (ALIC) June 9 SMP tender, taking 756.4 tons (or 38 percent) of the total 2,000 tons up for bid (1,000 tons Special A Grade and 1,000 tons A Grade). Australia (375 tons), Belgium (350 tons), Finland (300 tons), Germany (170.6 tons) and France (48 tons) divvied up the remainder. The average price for Special A Grade was ¥295,674/ton (about US$2,763/ton) and the average price for A Grade was ¥295,674/ton (about US$2,597/ton).

Remaining tender dates are as follows:

  • June 21, SBS tender for 2,000 tons of butter.
  • June 23, SBS tender for 200 tons of butteroil.
  • June 23, SBS tender for 330 tons of dairy spread.
  • June 28, SBS tender for 2,000 tons of butter.
  • June 30, SBS tender for 500 tons of sweetened condensed milk.
  • July 5, SBS tender for 2,000 tons of whey and modified whey.

USDEC has compiled a document detailing specifications for each product category. To download that document, click here. (USDEC Japan office)

Free seminar offers insights on defending common food name
On June 21 at the Chicago Marriott O’Hare, the U.S. Patent and Trademark Office (USPTO) and the Consortium for Common Food Names (CCFN) will hold a free one-day seminar aimed at helping U.S. food processors defend their use of common food names. The event will outline the relationship between trademarks and common names, explore the complexities of intellectual property systems, and review the tools available to protect product names and safeguard sales. To view the full agenda, click here. To register, click here. For more information, contact CCFN at



Australian dairy farmers hit by floods
Floods brought by heavy rains caused extensive damage to dairy farms in Tasmania and New South Wales, ravaging pastures, destroying farm buildings and equipment, and killing hundreds of cows. Officials are still working to determine the full extent of the damage. (The Australian Dairyfarmer, 6/8/16; The Weekly Times, 6/7/16)

Monsoon arrives in India with no time to spare
Monsoon rains arrived on India’s southern coast on June 7, just a day later than scheduled. This year, the India Meteorological Department is predicting an above-normal monsoon for the first time since 1998.

Parts of India are dealing with severe drought after two straight significantly subpar monsoon seasons in 2014 and 2015. Conditions were beginning to impact milk output. The key milk producing states of Maharashtra, Gujarat, Uttar Pradesh and Rajasthan have been suffering through a scarcity of water and fodder since January, with milk procurement rates falling 20-50 percent over four months, a far sharper decline than normal. (India Meteorological Department; Reuters, 6/8/16; DNA, 6/8/16The Hindu Business Line, 5/20/16)



EU, Philippines hold first round of trade talks
The EU and the Philippines held their first round of negotiations toward a bilateral FTA in Brussels in late May. The initial meeting focused on defining their respective expectations and approaches to talks, including geographical indications (GIs). The European Commission reported that GI talks were “mainly exploratory” at this stage, but also noted that it expects the ultimate deal to be consistent with previous bilateral FTAs, leaving little doubt that the bloc will take the same aggressive GI position it regularly takes. USDEC is closely monitoring negotiations. (USDEC staff; European Commission)



Three co-ops plan new cheese plant in Michigan
Foremost Farms, Dairy Farmers of America and Michigan Milk Producers Association are exploring joint ownership of a major cheese processing plant in Michigan. The companies cite rising milk output in Michigan coupled with insufficient processing capacity in the region, as well as the state’s geographic advantages to serve both U.S. and export markets, as the impetus for the venture. The facility would manufacture up to 100,000 tons of American-style cheese annually. Foremost said no decision has been made on whether the partnership would build a new facility or retrofit an existing operation. (Company reports; Brownfield Ag News, 6/2/16)

FrieslandCampina looks to make Thailand an export hub
FrieslandCampina plans to make Thailand its export hub in Southeast Asia. CEO Roelof Joosten said the nation was particularly well-placed to serve emerging markets like Cambodia, Laos, Myanmar and Vietnam. Asia accounts for about 40 percent of FrieslandCampina’s total revenue, and Joosten said he expects that to rise to 50 percent over the next five years. (The Nation, 6/8/16)

Food Union begins construction in China
Latvia’s Food Union began construction on two dairy manufacturing plants in China at a total estimated cost of €200 million (about US$227 million). The company revealed few details about the facilities, other than noting that it expected to open them in 2017 and that cheese was one of the products it planned to make. Although it is a full line dairy processor, Food Union’s major product is ice cream, which the company began exporting to China in spring 2015. (The Baltic Course, 6/3/16; Baltic News Service, 4/26/16)

Fonterra farmers increasingly go digital
Fonterra Co-operative Group’s member farmers are increasingly migrating to mobile apps to run their businesses and connect with the co-op. Fonterra reports 13,000 unique downloads of its three apps and estimates the number of users has doubled over the past year, as farmers seek to take advantage of technologies that create efficiencies and, therefore, improve margins and competitiveness. The apps are: On Farm (which provides information on milk production, quality and collection times); My Co-op (which provides company news); and Monthly Plant Check (a pilot app that digitizes a process formerly governed by a weighty manual). (Company reports)

Mergers, acquisitions and joint ventures
Israeli investment firm Green Lantern Group acquired a 49 percent stake in Israel’s fourth largest dairy processor Gad Dairy, with an eye to expand the business in Europe and the United States . . . Lino Saputo Jr. said Saputo is looking for a cheese acquisition in Brazil “that would allow us to become a consolidator” in the nation’s highly fragmented cheese market . . . The ownership of Kuwait Food Co. (Americana) scrapped plans to sell a majority stake in the company to a Gulf-based consortium (see Global Dairy eBrief, 2/18/16). (USDEC Middle East office; Globes, 6/8/16; Financial Post, 6/2/16; Reuters, 6/2/16)

Company news briefs
Fonterra officially opened its slice-on-slice cheese expansion at its Eltham, North Island, facility. Eltham’s total capacity is 90,000 tons of cheese per year. The plant’s recent expansions are part of the co-op’s strategy to diversify and reduce dependency on WMP and capture growth opportunities in the cheese space . . . Mondelez International broke ground on a new global research, development and quality site in Poland. The facility, expected to open in the first quarter of 2017, will support new product development and technologies for the company’s many confectionery brands. (Company reports;, 6/8/16)

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