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Global Dairy eBrief
Oct. 16, 2015, Vol. 22, No. 40


Jury still out on TPP; USDA releases select market access details
While the United States has yet to publish the full text of the Trans-Pacific Partnership (TPP), bits and pieces of the deal released by member governments are starting to shed light on the dairy provisions.

“We clearly didn’t get all that we wanted, but we granted far, far less than what New Zealand was pressing for with all its diplomatic efforts,” said USDEC President Tom Suber during his opening remarks at this week’s USDEC Board of Directors and Annual Membership Meeting in Chicago.

It was not for lack of effort. “We exhausted all resources to bring a big package from all countries, including Japan and Canada, and USDEC was pivotal in ensuring that the industry didn't find itself in a uncompetitive situation due to the desires of New Zealand,” said USDEC Senior VP Jaime Castaneda.

Suber noted the inherent difficulty involved when two of the most protected dairy markets in the world—Canada and Japan—are engaged in free trade negotiations with the largest dairy trader, New Zealand, harkening back to the Uruguay Round and former Colorado dairyman and USDEC Chairman Tom Camerlo.

“The whole TPP exercise underscores what Tom Camerlo was trying to do 20 years ago. He watched the Uruguay Round develop when the U.S. dairy issue got traded away. He saw long term where exports could go, but he also saw a robust defense would be needed for those times when the U.S. dairy industry would become a chip in a high-stakes poker game. This is what we are living through right now.”


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

Camerlo saw that addressing such challenges would require a rare unity between processors and producers—“recognition that we are all in this together in terms of what we are trying to build in export growth,” Suber noted. Through USDEC, he and others sought to build that unity.

This TPP outcome was made possible only due to extensive efforts between USDEC and NMPF to construct unified objectives and aggressively support them throughout negotiations.

“The strategy of pursuit of a balanced outcome in TPP was a well-constructed argument that did calibrate our ambition against the other partners in the treaty,” said Suber. “It was also a logical thesis that, most importantly, gained the support of congressional Republicans and Democrats, alike.”

Details trickle in
In more precise terms of outcome, Alexis Taylor, deputy under secretary, Farm and Foreign Agricultural Services, USDA, offered some of the details on dairy tariff rate quotas and quota expansion agreed upon for Canada and Japan, as well as dairy access granted by the United States to Australia and New Zealand. For a USDA fact sheet showing those numbers as well as further particulars on TPP dairy provisions, click here.

Outside of market access provisions and due in large part to the efforts of USDEC, the deal also includes important sanitary and phytosanitary measures and geographic indications provisions. The full text of the agreement will be thousands of pages long, much of it highly technical writing.

“The jury is still out,” noted Castaneda. “We are waiting to see every single detail. We are going to do a diligent job of looking at all the specific details in a very unbiased and objective way and come up with a clear assessment on whether what resulted is acceptable.”

Clear assessment of current market
Outside of TPP, current market conditions was the second hottest topic at this year’s board meeting. Today’s challenges should not be too much of a surprise, noted Suber. The Globalization Report authored by Bain & Co. for the Innovation Center for U.S. Dairy predicted a more intensely competitive dairy environment six years ago. The report clearly stated that the United States had a finite window of opportunity to better equip itself to compete globally before the squeeze of surging demand against constrained supply brought forth new milk.

While the authors might have been off on the source of that milk (predicting low-cost producers like Belarus and Brazil rather than the EU), it nonetheless has flowed and competition has tightened. The window of opportunity is closing on easy market access gains, but the structural changes driving worldwide demand are still in place.

“The world’s growing middle class will continue to drive dairy demand and export growth, but the narrow supply/demand balance means we will have less sure-fire, almost default opportunities for U.S. success that existed when the EU constrained its own growth,” said Suber. “However, we are in such a better position than 20 years ago when we exported 5 percent of our production, half of which was subsidized by the government. We have a totally different, more positive set of assets today. But despite the progress, the hard work really starts now. We are in a more competitive environment, which means we will have to bear down to compete—commercially, regulatory and politically.”

For more insights from the board meeting on the global business climate, dairy market outlook, Mexican opportunities and the USDEC cheese and ingredient committee sessions, keep an eye on the U.S. Dairy Exporter Blog over the next few weeks. To sign up for the blog and have these and other informative dairy market intelligence sent directly to your inbox, click here.

Board takes action on elections, business plan
Board elections capped off the meeting. Members reelected Paul Rovey as chairman, Harold Howrigan as vice chairman and Tom Gallagher as secretary/treasurer. In addition, they chose two at-large members for the Operating Committee: Tara Russell, Idaho Milk Products Inc., and Jen Pino-Gallagher, Wisconsin Department of Agriculture, Trade and Consumer Protection. Andrei Mikhalevsky, California Dairies, and Jeff Vandel, James Farrell & Co., enter the second year of two-year terms on the Operating Committee.

Chairman Rovey also named leaders for four committees.

  • Cheese & Consumer Products: Last year’s vice chair Mark Wustenberg, Tillamook County Creamery Association, takes over as chair; Bob Ekstrom, BelGioioso Cheese Inc., becomes the new vice chair.
  • Global Ingredients: Last year’s vice chair Gabriel Sevilla, Proliant Dairy Ingredients, takes over as chair; Hoyt Huffman, DairyAmerica, becomes the new vice chair.
  • Trade Policy: incumbents Sue Taylor, Leprino Foods, and John Wilson, Dairy Farmers of America, remain as chair and vice-chair, respectively.
  • Finance: incumbents Tom Gallagher, DMI, and Harold Howrigan, DMI, remain chair and vice-chair, respectively.

Board members also approved the 2016-2018 business plan, which serves as the blueprint for USDEC programs, activities and budgets for the coming year. The organization would like to extend thanks to all the members for their valuable input. To download the committee reports from the meeting, as well as select additional presentations, click here.

USDEC calls for action on Russian access
USDEC and NMPF submitted joint comments to the USTR’s Office calling for action to prepare for the eventual reopening of the Russian market. USTR had solicited comments on Russia’s WTO implementation.

USDEC and NMPF cited Russia’s facility listing requirements as a violation of its WTO accession agreement and noted that its embargo on EU and U.S. dairy suppliers “appears to be in violation of its WTO commitments.” Because of the facility list requirement, even if Russia lifted the embargo, U.S. suppliers would still be denied entry.

Until the United States acts to remove the Russian listing requirements, such as by pursuing a WTO case, we must find a way to live with them, the comments note. The document urges U.S. government authorities to begin work on plant list in preparation for when the ban is ultimately lifted. “We cannot afford to be in a position in the future where our key competitors regain access to the Russian market while the United States remains shut out,” the comments conclude. To view the full two-page letter to USTR, click here. (USDEC staff)

Welcome new members!
USDEC is pleased to welcome three new members: processor Franklin Foods, Delray Beach, Fla.; trading company Mirasco Inc., Atlanta; and allied member HPL-Apollo LLC, Los Angeles. Board representatives are Jill Gutknecht, export sales manager at Franklin Foods; Sami Rizk, president of Mirasco; and Ivo Skorin, COO at HPL-Apollo.

New Zealand makes arrest in 1080 case
New Zealand Police arrested a 60-year old businessman and charged him with two counts of blackmail in relation to threats made earlier this year to poison New Zealand infant formula with a pesticide known as 1080 (see Global Dairy eBrief, 3/15/15). Fonterra Co-operative Group and Federated Farmers received letters demanding the government outlaw 1080, which is used to control rodents and other pests such as possums, rats and stoats. Charges allege the motive was financial gain rather than concern for wildlife as originally suspected—the accused reportedly developed an alternative poison to 1080. (BusinessDay, 10/12/15) resources to optimize
USDEC held the "Export Supply Chain Best Practices Forum" on Wednesday, Oct. 14, in Chicago, a day before the USDEC Board of Directors and Annual Membership Meeting. We have created a web page with online resources from the Forum and other sources to help you optimize your dairy export supply chain. It is

New: Three Essential Strategies to Optimize Your Export Supply Chain
A new USDEC Executive Brief, “Three Essential Strategies to Optimize Your Dairy Export Supply Chain,” distills an in-depth USDEC research report on international supply-chain best practices into three concise, practical takeaways to improve your company’s supply-chain efficiency—and your bottom line.


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Panama Canal expects April opening despite setback
The administrator for the Panama Canal expects the expanded locks to open by April as scheduled despite cracks in one of the new walls. He added that he could not provide a more specific date until contractors installed steel reinforcements on the wall. Labor disputes and other issues already caused developers to push back the opening date three times from the original estimate of August 2014. (Wall Street Journal, 10/12/15)


Company news briefs
New Zealand’s A2 Milk issued shares for institutional investors to raise more than NZ$40 million (about US$27 million) to help fund domestic and international expansion plans, with a focus on China, the UK and the United States . . . Fonterra opened four instructional kitchens in China to teach chefs from bakeries, cafes and pizzerias how to incorporate dairy into their recipes. (Sydney Morning Herald, 10/8/15; Reuters, 9/24/15)

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:

  • Milk production from the top 5 suppliers was up approximately 1.3 percent in August.
  • Australia’s exports of SMP (+39 percent) and cheese (+27 percent) were up significantly from a year ago.
  • EU exports of milk powder, cheese, butterfat and whey in August were estimated to be up 14 percent from last year.
  • Price and currency graphs are updated as well.

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

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