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Global Dairy eBrief
July 23, 2015, Vol. 22, No. 28


TPP meetings start-up in Hawaii
Chief negotiators from Trans-Pacific Partnership (TPP) nations will kick off meetings in Hawaii tomorrow in the run-up to next week’s ministerial session. USTR Michael Froman has held a series of bilateral talks over the last few weeks in an attempt to pave the way to conclude a deal in Hawaii. Froman stated publicly for the first time that the Obama administration is hoping to finalize a TPP pact at this ministerial, although a number of issues still need to be resolved.

Japanese TPP Minister Akira Amari also expressed hope that TPP participants could wrap up the deal next week, saying, “We must make the ministerial meeting in Hawaii the last ministerial to conclude negotiations.” Amari had earlier said he thought the 12 countries had a 70 percent chance of concluding an agreement.

To hear more about TPP and dairy in particular, read USDEC Senior VP Trade Policy Jaime Castaneda’s blog post, TPP Gets Down to Crunch Time, on the U.S. Dairy Exporter Blog. (USDEC staff; Inside U.S. Trade, 7/20/15, 7/15/15; Dow Jones Newswires, 7/10/15)

China dairy imports -23% in June

China imports in June, on a milk-equivalent basis, were down 23 percent from a year earlier. In the first half of the year, imports were down 35 percent. This has pushed back the equivalent of about 458,000 tons of milk per month onto the world market in 2015. WMP imports in June were just 12,381 tons, down 72 percent, bringing year-to-date purchases to 235,518 tons, less than half of what China bought last year. SMP imports in June were 17,598 tons, down 11 percent, while imports of whey products were 46,682 tons, up 16 percent. Partially offsetting lower purchases of dairy ingredients, in the first half of the year, China imports of fluid milk were up 25 percent and imports of infant formula were up 29 percent. (GTIS; USDEC staff)


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

U.S. dairy’s global appeal delivers at IFT 2015
Rising interest in U.S. dairy ingredients clearly showed at the USDEC booth at this year’s IFT Show, July 11-14, in Chicago. The live sampling station served over 1,000 Kimchee-se Pancakes, more than double previous years’ mass samplings. USDEC dairy experts participated in six on-site media interviews and more than 20 one-on-one meetings with end-users and suppliers, showcasing all four new product prototypes developed for IFT: the pancakes, Moofu Meatballs, reduced-sodium BBQ sauce and Chai Protein pudding.

USDEC staff and representatives from the Wisconsin Center for Dairy Research, the Dairy Products Technology Center at Cal Poly, the Institute for Dairy Ingredient Processing at South Dakota State University, Midwest Dairy Association and National Dairy Council, as well as USDEC’s South America office, emphasized the strengths of the U.S. dairy sector and explained how dairy ingredients could deliver on today’s top consumer trends.

We encourage you to read and utilize the information shared at the show throughout the year. It can be found under the “resources” area of the IFT event page here

Who deserves to be Exporter of Year? Nominate your choice now.
Dairy Foods magazine is seeking nominations for the 2015 “Tom Camerlo Exporter of the Year Award.” The recognition is bestowed upon a U.S. company that exhibits exceptional leadership and commitment to the international market. Nominees should demonstrate an active role in driving global dairy demand; industry leadership in advancing U.S. dairy exports; a commitment to export market development; and export sales success.

USDEC member Dairy Farmers of America earned the honor last year. Previous winners include Agri-Mark, Glanbia USA, Leprino Foods, United Dairymen of Arizona, Hilmar Ingredients, Schreiber Foods, Darigold and Davisco International. To nominate your company or another USDEC member as the 2015 “Exporter of the Year,” visit Dairy Foods’ confidential online nomination page here. The nomination deadline is Aug. 5.


EU powder heads to intervention; French farmers get aid
A dairy supplier in Lithuania became the first in the EU to send powder to intervention. The company placed 197 tons into the emergency buying scheme, but Irish Farmers Journal projects that volume would rise to more than 1,000 tons in the coming weeks.

Whether other companies and nations will follow suit is unknown. The Dutch Dairy Board this week lowered its official SMP price to €1,680/ton, €18 below the intervention price, but Dairy Markets reports the activity is unlikely to trigger a stampede just yet. Product may trickle in from Central and Eastern Europe, but large co-ops are likely to keep their options open until at least September.

European farmers are growing increasingly vocal about market conditions and the need for assistance. French dairy and livestock farmers have been the most aggressive and last week ratcheted up protests, blockading major roads and tourist attractions and even vandalizing a supermarket (many blame retailers for low prices). France’s ag ministry this week unveiled a €600-million aid package to assist dairy and livestock farmers hit by falling farmgate prices. (Dairy Markets, 7/22/15; Reuters, 7/22/15; Dairy Industry Newsletter, 7/22/15; TheDairySite, 7/22/15; Irish Farmers Journal, 7/21/15)

New Zealand farmers brace for price drops in face of heavy global stockpiles
EU product is beginning to move into intervention at a time of already high global dairy stocks. New Zealand Finance Minister Bill English said, after returning from a tour of China, that the country has more milk powder on hand than people are estimating—“almost literally a mountain of milk powder in warehouses around China.”

In New Zealand, brokerage firm Forsyth Barr cited anecdotal evidence that Kiwi storage and warehousing facilities “are stocked with Fonterra product.” Forsyth Barr said there was growing concern about the quantity and salability of the inventory and that Fonterra might have to write-down its value.

Analysts said some Fonterra product at the July 15 GlobalDairyTrade (GDT) auction may have gone unsold, and volumes at upcoming auctions are set to rise considerably over the next three months.

New Zealand’s Open Country Dairy slashed NZ$1 off its 2015/16 milk price after last week’s disappointing GDT event (see Global Dairy eBrief, 7/16/15). The co-op will pay NZ$3.65-NZ$3.85/kgMS, which would be the lowest reported payout from a major New Zealand co-op in more than a decade. It admitted that it was taking a more conservative view than many of its competitors, but BNZ economists also lowered their forecast 2015/16 payout from NZ$4.30 to $3.80/kgMS, the second reduction in a week. Fonterra is scheduled to release a revised payout on Aug. 7. (, 7/22/15; Otago Daily Times, 7/21/15;, 7/21/15, 7/20/15;, 7/17/15)

Political progress in Iran, Cuba hints at potential market openings
Political progress this week to lift economic sanctions on Iran and normalize relations with Cuba may not mean immediate sales for U.S. dairy suppliers, but they are positive signs for dairy potential down the road should the détente continue.

In Cuba, the U.S. Interest Section became the new U.S. embassy this past Monday, another advancement in President Obama’s policy of engagement with the nation. Cuba imported $1.9 billion in agricultural products in 2014. About $265 million was dairy, very little of which came from the United States. (For more on potential Cuban opportunity, read USDEC Senior VP Global Marketing Vikki Nicholson’s story on her trip to the island earlier this year on the U.S. Dairy Exporter Blog here.)

For Iran, Congress still needs to approve the deal signed last week by the Middle Eastern nation, the United States, the EU, China and Russia that will see the country curb its nuclear program in exchange for its co-signnatories lifting economic sanctions. Iran then needs to prove it is abiding by the terms of the deal, a process that, if successful, could take six to nine months.

Iran is one of the most populous and prosperous countries in the Middle East, but sanctions have suppressed consumer spending. The lifting of sanctions is expected to fuel demand. The country is familiar with dairy and has been a significant importer in the past, particularly for butterfat, but also feta cheese and smaller volumes of other dairy products. It has purchased more than 50,000 tons of butter in four of the last six years despite sanctions. Its young population has shown an interest in new and packaged foods, and Euromonitor projects Iran will be the 10th largest dairy growth market in the world over 2105-2020.

Despite the uncertainty surrounding the nuclear deal and the lifting of sanctions, USDEC sources indicate EU dairy suppliers are already looking to develop agent and distributor relationships in Iran. (USDEC staff; Euromonitor; Reuters, 7/22/15; Dairy Markets, 7/21/15; Wall Street Journal, 7/20/15)

China overtakes U.S. as world’s largest ice cream market
China surpassed the United States last year to become the largest ice cream market in the world, according to Mintel International research. Chinese ice cream sales rose 90 percent to $11.4 billion from 2008-2014, on volume of 5.9 billion liters. U.S. ice cream sales grew 15 percent over the same period, reaching $11.2 billion and 5.8 billion liters. Mintel expects Chinese ice cream sale to reach 6.3 billion liters in 2015, while U.S. volume and sales remain relatively flat. (, 7/17/15)


Fonterra axes jobs; more cuts expected
Fonterra eliminated 523 jobs as part of a company-wide business review aimed at enhancing the co-op’s long-term sustainability (see Global Dairy eBrief, 6/11/15). Fonterra said the move would save the co-op up to NZ$60 million annually. More job cuts may follow as it proceeds further with the review. (Company reports)

Oceania begins formula shipments to China
Oceania Dairy sent its first test shipments of infant formula to China, where parent Yili Group will market and distribute the product. The formula was made at Oceania’s Glenavy facility in South Canterbury, New Zealand, where Yili is funding a three-year, NZ$400 million expansion (see Global Dairy eBrief, 12/4/14). The project will triple annual raw milk handling capacity to 650,000 tons per year, adding infant formula, UHT milk and lactoferrin capabilities. (Dairy News, 7/21/15)

Mergers and acquisitions
The Netherland’s FrieslandCampina purchased Belgian mozzarella maker Fabrelac. Fabrelac’s plant in Bree, Belgium, has the capacity to manufacture 30,000 tons per year . . . Northern Irish dairies Ballyrashane Co-op and Town of Monaghan Co-op plan to merge. The combined operation, known as LacPatrick, will be the second largest milk processor in Northern Ireland . . . The board of New Zealand’s A2 Milk rejected a buyout offer from Dean Foods and Australia’s Freedom Foods, labeling it not “compelling.” A2 claims other suitors are waiting in the wings. (Company reports; BBC News, 7/22/15; The Age, 7/20/15)

Company news briefs
Yakult Danone India plans to boost output at its Haryana facility by 50 percent this year to 300,000 bottles per day. The company sees demand for its fermented milk drinks rising at least 15 percent per year for the next three years . . . Mondelez International and Vietnam’s Kido Group officially launched Mondelez Kinh Do, a new business unit that combines Mondelez’s global brands with Kido’s regional Kinh Do cake and biscuit labels. The launch follows the Mondelez’s purchase of an 80 percent stake in Kido’s confectionery business. (USDEC Vietnam office;, 7/22/15; Vietnam Investment Review, 7/17/15)

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