We encourage exporters to expedite any shipments currently planned and make certificate requests in advance of the potential market closure. USDEC will continue to monitor the situation. If you have any questions, please contact Matt McKnight (mmcknight@usdec.org) or Mitch Bowling (mbowling@usdec.org) at 703-528-3049.
House passes bill to repeal COOL; legislation heads to Senate
On Wednesday, the House overwhelmingly passed a bill to repeal country of origin labeling (COOL) requirements for certain meat products (see Global Dairy eBrief, 5/21/15). The legislation now heads to the Senate, where members remain divided over its fate. Some are seeking a compromise system that would provide a means for consumers to know where a food originates while still meeting international trade obligations.
USDEC has supported the legislation to repeal certain provisions of COOL in order to avoid WTO-sanctioned retaliation against U.S. exports from Mexico and Canada, our No. 1 and No. 3 dairy export markets, respectively. We are pleased to see the House take action so quickly and urge the Senate to swiftly move to bring the United States into compliance with our international obligations and ensure that U.S. exports are not subject to additional, punitive tariffs.
Canada is reportedly seeking to impose more than C$3 billion in retaliatory measures (about US$2.4 billion) while Mexico is seeking more then US$650 million. A special WTO Dispute Settlement Body is slated to meet June 17 to consider the request and begin the process of determining the authorized levels of retaliation for each country. The USTR’s office called the retaliation amounts “substantially inflated” and said it would object to the request at that meeting. Canada has included some dairy tariff lines on its draft list of potential target products; Mexico has not yet released a list of intended retaliation targets. (USDEC staff; Dairy Herd Management, 6/11/15; Wall Street Journal, 6/10/15)
Stop by the USDEC booth at IFT to sample dairy ingredient innovations
This year’s IFT show is around the corner. Since we all know how busy the event can get, we’ve set aside 30-minute slots each morning before the show floor opens to talk to USDEC members at the USDEC booth about the resources we are sharing with customers and sample some of the latest savory prototypes made with dairy ingredients. This year’s roster of new products includes:
- Savory Kimchee-se Pancakes, which put a global twist on a classic Korean dish using pepper jack cheese, MPC-70 and whey permeate.
- Moofu Meatballs, a protein-rich meat alternative based on acidified skim milk plus an extra boost of WPC-80. They are served with a reduced-sodium BBQ sauce made with whey permeate.
- Chai Protein Pudding, which aims for satiety through a high protein content delivered by dairy ingredients like MPI and micellar casein.
This year’s IFT show takes place July 12-14 at Chicago’s McCormick Place South. We are taking reservations on a first-come, first-serve basis. To reserve your time, please contact John Klees at jklees@usdec.org or 703-528-3049.
If you haven’t already registered for IFT, USDEC is offering a free pass (a $350 value) for the 2015 IFT Food Exhibit and keynote session (scientific sessions are not included). Contact John Klees for details.
New Zealand dominates ALIC butter tenders
New Zealand won the vast majority of the available volume at Agriculture and Livestock Industries Corp. (ALIC) butter tenders held this week in Japan. Kiwi suppliers secured 89 percent (3,900 tons) of the available 4,400 tons at two June 9 general tenders for butter and 1,513.2 tons of 2,100 tons available at a June 11 SBS butter tender. Argentina and the Netherlands split the remaining 500 tons of the general tender, while Germany and France took 462.8 tons and 24 tons, respectively, of the SBS event.
Five more tenders are slated as follows:
- June 16: SBS tender for 1,800 tons of butter.
- June 23: SBS tender for 200 tons of butteroil.
- June 23: SBS tender for 330 tons of dairy spread.
- June 25: SBS tender for 1,800 tons of butter.
- June 30: SBS tender for 2,000 tons of whey. (USDEC Japan office)
MARKET CONDITIONS
Monsoons arrive in India amid reduced expectations; El Niño strengthening
Monsoon rains arrived in southern India on June 5, a couple days later than expected, amid new projections of reduced intensity. Just days earlier, the India Meteorological Department lowered its monsoon forecast for the second time this year (see Global Dairy eBrief, 4/30/15) to reflect rising confidence in the strength of this year’s El Niño weather pattern. The agency expects 88 percent of normal rainfall, down from 93 percent estimate made in April.
Australia’s Bureau of Meteorology reports that this year’s El Niño is displaying signs reminiscent of the 1997/98 event, which was the strongest on record. (Bloomberg, 6/9/15; Wall Street Journal, 6/5/15; Agrimoney.com, 6/2/15)
NZ slashes interest rate; NZD tumbles
The Royal Bank of New Zealand unexpectedly slashed its official cash rate, sending the New Zealand dollar to a two-year low. The bank cited weakness in dairy markets and rising oil prices in making the change and noted that further cuts might be down the road. Although the weaker New Zealand dollar will boost Kiwi dairy supplier profitability, it is too early to assume that it will feed through into a higher farmgate milk price or increased production. (BusinessDesk, 6/11/15; Agrimoney.com, 6/11/15)
GDT proposes operational revisions, begins comment period
GlobalDairyTrade (GDT) unveiled four proposals aimed at strengthening the independence, transparency and liquidity of the auction platform (see Global Dairy eBrief, 5/28/15). GDT management proposed: 1) establishing an oversight board to align international best practices for exchanges and trading platforms; 2) enhancing seller forecast statements by allowing sellers to provide additional information and explain atypical changes; 3) make additional GDT data available by subscription; and 4) create deeper liquidity pools of supply and demand by aggregating product groups.
Click here for details of the proposals. GDT is collecting comments via an anonymous and confidential survey. To participate, click here. Surveys must be completed by the end of June. (GDT; Dairy Trader, 6/9/15)
COMPANY NEWS
Job cuts to accompany Fonterra business review
Fonterra Co-operative Group CEO Theo Spierings said the company would slash hundreds of head-office and support-function jobs as part of a company-wide business review (see Global Dairy eBrief, 6/4/15). Spierings said the review and job losses were not simply cost-cutting measures but part of a broader effort to align the company with best global practices. He called it a business “re-set” to operate in today’s volatile global market.
In fact, the co-op plans to increase the number of personnel employed in overseas marketing and sales. “We need more people driving the top line in-market . . . actually rolling up their sleeves and selling,” he said.
The move aligns with KPMG’s recently released “Agribusiness Agenda.” The New Zealand arm of the global accounting and advisory firm suggested New Zealand dairy processors were investing too heavily in capacity when they should be investing in assets that “enable companies to get closer to their ultimate consumer.”
Although KPMG offered multiple scenarios for Fonterra’s future, most showed the co-op’s share of the New Zealand milk supply slipping from current levels of 86 percent to 70 percent or less over the next 10 years as outside investors ramped up activity in the Kiwi dairy sector. Spierings claimed the co-op’s current member level was stable. (Wall Street Journal, 6/10/15; Dairy Trader, 6/10/15; BusinessDesk, 6/10/15; Otago Daily Times, 6/10/15)
More job cuts in Europe
Fonterra isn’t the only major global dairy supplier to announce jobs cuts this week. Finland’s Valio sliced 326 jobs due largely to Russian import restrictions. Dutch dairy processor FrieslandCampina plans to eliminate as many as 375 jobs at its Beilen, Netherlands, infant nutrition and ingredient facility and Leeuwarden, Netherlands, condensed milk plant over the next three years as part of a drive to increase efficiency and reduce costs. Leeuwarden manufactures for export markets in Africa, Asia and the Middle East. (Company reports; DairyReporter.com, 6/8/15)
Mergers and acquisitions
FrieslandCampina paid €180 million for an additional 13 percent stake in its Nigerian subsidiary FrieslandCampina WAMCO Nigeria, raising its total share of the company to nearly 68 percent . . . China’s Bright Dairy & Food is looking to raise nearly $1.5 billion to buy the 78 percent stake in Israel’s Tnuva that is owned by its parent Bright Food Group . . . China’s Yili Group is reportedly looking to form a partnership with Guiyang Sanlian Dairy, the largest dairy processor in Guizhou Province, a region where Yili has no manufacturing operations . . . Australia’s Camperdown Dairy International bought the first of an estimated six farms it needs to supply a planned WMP and infant formula plant in Camperdown, New South Wales. The facility will reportedly produce 60,000 tons of infant formula and 40,000 tons of WMP annually. Company officials say 60 percent of estimated output has already been presold . . . Denver’s WhiteWave Foods purchased Canadian plant-based food and supplement firm Vega. (USDEC China office; Company reports; Denver Post, 6/10/15; Reuters, 6/9/15; The Standard, 6/3/15)
Company news briefs
Nestlé invested $16 million to expand ice cream processing and storage capacity at its facilities in Tianjin and Guangzhou, China . . . U.S. food chain Five Guys Burgers and Fries opened its first Middle Eastern outlet last month in Dubai . . . UK-based PizzaExpress acquired its UAE franchise operation from Jordana Restaurants. The company hopes to double its UAE outlets to 14 over the next five years. (USDEC Middle East office; Company reports)
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