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Global Dairy eBrief
Sept. 10, 2015, Volume 24, Issue 35


EU proposes support package; details forthcoming

The European Union proposed a relief package of €500 million ($558 million) in emergency funds to help dairy and pig farmers weather the slump in prices, as thousands from the sector blocked roads into central Brussels with tractors and burning bales of hay to draw attention to the crisis. However, an increase in dairy intervention price levels – as many had asked for – was not part of the package.

An estimated two-thirds of the relief will go to the dairy sector, taken from 2014/15 super-levy collections. The two main aspects of the relief program for dairy are direct payments to farmers and higher aid levels for private storage. Direct payments will be distributed through each member state, with particular focus on those most affected, though details on how this dispersal will be handled have yet to be worked out. To help stabilize the market, the Commission will provide increased support for Private Storage Aid (PSA) for SMP and cheese, as well as implementing new procedures to ensure product is stored for the appropriate time to relieve supply pressure.

The Commission also proposed a number of other measures: increasing the promotion budget for dairy and pigmeat; strengthening the Milk Market Observatory to provide better market information; driving export demand through trade missions and tackling non-tariff barriers; providing dairy products to Europe’s refugees and schools; and establishing a new high level group to address supply chain issues such as risk management.


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

Member states will continue discussing the proposals at a Special Committee on Agriculture meeting in Brussels tomorrow and next week at the Informal Agriculture Council meeting in Luxembourg.

Ahead of more details on implementation, immediate reaction in Europe was mixed, with some farm and government leaders questioning how the purse would be divvied up among 28 countries and expressing disappointment over the failure to raise the intervention price.

Separately, French Prime Minister Manuel Valls announced a series of new measures he said would provide up to 3 billion euros ($3.3 billion) to farmers in France to invest in modernizing production over the next three years. (European Commission; Dairy Markets, 9/8/15; Wall St. Journal, 9/7/15, 9/3/15)

Colombia market remains open

A threatened closure of the Colombian market (see Global Dairy eBrief, 9/3/15) has been averted, following consultations between the U.S. and Colombian governments, supported by USDEC facilitation. As advised in a USDEC Member Alert issued Sept. 8 (click here to read it), U.S. dairy plants should continue to register through the Colombian Institute for Agriculture and Livestock (ICA). Additionally, exporters are encouraged to verify the status of their existing registrations with ICA on their website, as plants with an expiration date of Sept. 12, 2015, will need to re-register.

See Volume 2 of the USDEC Export Guide for more information and a link to the ICA database. For questions, contact Sandra Benson ( or 703-528-3049.

USDEC board meeting: Market outlook session looks for evidence of recovery

In his annual review of market conditions, Tim Hunt, Rabobank’s global dairy strategist, investigates the causes of the current market crash, how it differs from previous downturns and what clues to follow to take us to recovery. He’ll follow the trail from supply overproduction in 2013-14 to China and Russia’s import reversal last summer to the heavy inventories we still see today.

In this highly anticipated session, dubbed “Forensics of a Crash,” Tim and USDEC’s Marc Beck also will help members understand what this down cycle means for the medium-term outlook, as well as important implications for U.S. exporters.

Nearly 90 dairy industry executives have registered for the meeting so far (a list of registered attendees is available here). Visit the USDEC website here for links to register yourself, download the preliminary agenda, learn about the Export Supply Chain Best Practices Forum that precedes the meeting on Oct. 14 and book a room at the Swissôtel. NOTE: The discount hotel rate for the event ends Sept. 14.


Saudi Arabia and Egypt boost ties

Egypt and Saudi Arabia – two of the largest dairy importers in the Middle East/North Africa region – have signed the “Cairo Declaration,” an agreement designed to increase military, economic, and cultural cooperation between the two countries. Both sides will also increase mutual investments in the energy, electricity, and transport sectors and have promised to strengthen economic integration via joint cultural and media projects. As part of the declaration, Riyadh and Cairo have agreed to work together to create a joint Arab military force. They will also begin the process of formally defining maritime borders between both countries along the Red Sea.

Furthermore, they signed a new three-year customs agreement expected to facilitate the growing commerce cycle between both countries. The Egyptian Customs Authority is waiting for the parliament’s approval in order to apply the agreement, which fights customs’ violations that negatively affect political, financial and social interests for both countries. (USDEC Middle East office)

Chinese e-commerce giants plan major push into rural areas
Chinese e-commerce giants have built a business out of sales to China’s booming urban centers. But faced with slowing growth and worries about recent economic indicators, two of China’s largest e-commerce companies are making a major push to service China’s 600 million rural residents—giving U.S. dairy suppliers more reasons to explore online sales channels.

Alibaba Group and are hiring an “army” of delivery drivers and investing in trucks and systems to efficiently transport products to customers in 100,000 country villages by the end of the decade. Alibaba is spending more than $1.5 billion over the next 3-5 years to build 1,000 county-level distribution centers and 100,000 village-level drop-off points (it has 63 such centers and 1,800 village-level drop-off points today).

Many villages are just discovering online shopping and growth rates are skyrocketing. In 2014, 77 million rural dwellers shopped online, a 41 percent gain over the previous year, outpacing the 17 percent gain in urban online purchasing. Income in rural regions is also rising faster than urban income, although it is starting at a much lower base. (Wall Street Journal, 8/31/15)


WTO ag chair passes to another Kiwi ambassador

World Trade Organization agriculture negotiators elected New Zealand Ambassador Vangelis Vitalis as the new chairman of the Doha Round ag talks. Ambassador Vitalis is the ninth chairman of the agriculture negotiations since talks began in March 2000 and the fifth since the talks were brought into the Doha Round in 2001.

Vitalis will preside over the next ministerial conference in Nairobi, Kenya, in December, where negotiators hope to narrow gaps left over from last year’s ministerial in Bali. (WTO, 9/8/15)


Fonterra opens Indonesia blending plant, updates NZ production forecast

Fonterra opened a US$24 million blending and packing plant in West Java, Indonesia, its first manufacturing facility in the country. The plant has the capacity to package about 16,000 tons per year of Anmum infant formula, Anlene nutritional milk, and Anchor Boneeto high-calcium milk to meet growing demand for nutritional products.

Separately, Fonterra maintained its New Zealand milk volume forecast for 2015/16 at 2-3 percent lower than last season. The company said, however, that there was evidence farmers were already pulling back on production through increased culling and lower use of feed supplements, which could lead to a further downward revision later in the year. (Company reports)

New plant in development in Oman

Developers are building a new dairy plant near Muscat, Oman, that will produce 50,000 liters of long-life milk, yogurt and laban per day when operational in mid-2016. The plant is a joint venture funded 40 percent by private equity and 60 percent bank financing. The company will target the domestic market, which currently imports 85 percent of its dairy needs, as well as exports to Uganda and Tanzania. According to the developers, the finished product will be made in part with whole milk powder imported from the United States and New Zealand. The company says food demand in the GCC is expected to double to $52 billion in the next five years, and more than a third of the processed food industry is dairy and juice. (USDEC Middle East office)

Data Updates on

Have you checked out the interactive charts of market and trade data on the USDEC website? Key metrics like milk production, exports and imports and prices are updated regularly. This week we learned:

  • Australia milk production in July was up 5.4 percent from a year ago. (DairyAustralia also posted revised monthly milk production figures back to 2009.)
  • In July, Australia’s exports of milk powder, cheese, butterfat and whey were up 8 percent from last year. Argentina’s exports were down 30 percent.
  • In June, Mexico’s imports of milk powder, cheese, butterfat and whey were up 6 percent from last year. In the first half of the year, cheese imports were up 30 percent. Russia’s imports of cheese in June (excluding purchases from Belarus) were down 83 percent from a year ago and butterfat imports were off 81 percent.
  • Price and currency graphs are updated as well.

To browse the full Market Data section of, click here.

From the U.S. Dairy Exporter Blog