Dave Juday Mvd Sept 30

Slide3: 

A Weekly report On Trade and Policy Issues in the Dairy Sector. CONTENTS: U.S. Dairy Industry Strategy Competitors Respond Congress Adds Heat Geographic Indicators SAMPLE COPY

Market and Trade Developments: 

Market and Trade Developments Aggregate milk production in 2003 is about one-half percent above 2002 US$ has depreciated against major exporters 13 pct vs EU€ 17 pct vs AU$ 19 pct vs NZ$ WTO settled a case against Canada’s export pricing; could reduce Canada’s exports WTO Cancun Ministerial failure; trade barriers persist €

Production Snapshot (25 Sept): 

Production Snapshot (25 Sept) NZ – milk production up 5 pct seasonally; forecast to be up 2-3 pct annually AU – drought recovery is helping milk supplies; forecast up about 1 pct annually EU – milk production is down, heat wave affected production, feed availability, milk composition US – milk production is up over 2002, but tailing off after first half of 2003; herd liquidation with strong beef prices. Product processing is up with milk production.

Utilization Snapshot (25 Sept)2003 FOB Export Prices ($USD/MT): 

Utilization Snapshot (25 Sept) 2003 FOB Export Prices ($USD/MT) Utilization/Demand remains steady to strong globally; reform in Canada (and EU) keeps world market prices firm

Whole Milk Powder (Jan 02-Jul 03): 

Whole Milk Powder (Jan 02-Jul 03)

Non-Fat Dry Milk (Jan 02 - Jul 03): 

Non-Fat Dry Milk (Jan 02 - Jul 03)

Butter (Jan 02 – Jul 03): 

Butter (Jan 02 – Jul 03)

Cheese (40 lbs blocks of cheddar) (Jan 02-Jul 03): 

Cheese (40 lbs blocks of cheddar) (Jan 02-Jul 03)

Slide11: 

Highly volatile markets – 50 pct fluctuation in price

GLOBAL DAIRY TRADE BARRIERS: 

GLOBAL DAIRY TRADE BARRIERS GLOBAL DAIRY TRADE BARRIERS TARIFFS: 40-90 pct avg; can be 300 pct TRQ’s & Subsidies: prohibitive over quota rate; administration of TRQ; “dump” market OTHER: OTHER: packaging, labeling, testing, inspection, mandatory shelf life requirements, recipe and manufacturing declaration, standards of identity

North America: 

North America USA – TRQ’s domestic support = gross overproduction of NDM, minimum prices per class, standards of identity Canada – TRQ’s,with over quota tariffs, until recently two-tiered pricing Mexico – growing market; preferential treatment via NAFTA hurts 3rd parties

Asia, Middle East: 

Asia, Middle East Japan/Korea: growth market for cheese and ice cream; non-tariff barriers Taiwan: fairly open; imports all but fluid milk Israel: cheese TRQ admin problems; high over quota tarifs Iraq: WDM potential (compete w/ US DEIP) India: market closed; (imagine potential)

Europe: 

Europe EU: High in-quota tariffs, licensing rules; $1 bln in export subsidies; wants to impose new and stricter “geographical indicators”

South America: 

South America Brazil – new federal payments (US$75 mln) to improve productivity of cows; maintaining anti-dumping duties on powder; UHT market, but fluid milk consumption is down Colombia: 97 pct tariffs Venezuela: import licensing Chile: FTA with US Argentina: Uruguay largest export supplier; Argentina actually dropped import duties in 2002, but no purchase power and imposes export taxes

WTO: Cancun Collapse : 

WTO: Cancun Collapse Draft Text (#2) Product specific AMS caps; Eliminate some export subsidies; Review Green Box; Special and Differential Global Dairy Alliance Include dairy reform WTO round End export subsidies, market barriers, and production subsidies EU’s “GI” Plan The EU plan would extend GI’s beyond TRIPS register which effects cheese, e.g. feta, parmesan, cheddar, brie Also add quality descriptions, e.g. double cream, aged) G21 Countries Refused to budge on market access and facilitation issues

GAINS FROM TRADE: 

GLOBAL DAIRY TRADE BARRIERS GAINS FROM TRADE PRICES: export prices increase 18-40 pct for most products; 40 pct for cheese URUGUAY: could see 84 pct increase in value of cheese exports; 15 pct increase elsewhere NICHE: certain niche products can and are exported without trade agreements; in fact lack of agreements sometimes define the product and market

WTO: Cancun Fallout,What’s Next?: 

WTO: Cancun Fallout,What’s Next? Fallout is still being calculated Brazil will not open to ag imports - Ricardo Ferreira, rep of GDA/ALG US likely to pursue even FTA’s Keep pressure on Brazil Facilitation/Transparency

TWO TYPES OF DAIRY EXPORTS: 

TWO TYPES OF DAIRY EXPORTS COMMODITY WDM NDM Butter Cheese NICHE Whey Lactose Ice Cream Concentrates

TWO TYPES OF DAIRY EXPORTS: 

TWO TYPES OF DAIRY EXPORTS COMMODITY Highly volatile, low margin, fungible standard products; markets distorted by subsidies and barriers NICHE Defined by high value, or tariff avoidance; market often defined by regulation and barriers; not a lot of value to producers; significant current trade

Milk Protein Concentrates (MPC): 

Milk Protein Concentrates (MPC) MPCs, casein and caseinates – if 40 pct protein, there is no TRQ Not a direct replacement for NDM, but if no price support for NDM, MPC’s wouldn’t be marketable The ITC will release its report by May 14, 2004

Ice Cream: 

Ice Cream Growing export product: US ships 40 million gallons totaling $USD80-100 mln per year Japan, United Kingdom, Mexico, Canada, Hong Kong are top 5 importers US Standard of Identity using whey for ice cream Artificial sweeteners in ice cream due to Atkin’s diet

US Dietary Guidelines: 

US Dietary Guidelines US “Food Pyramid” – average diet should have 22 percent more dairy Most would be low fat products – yogurt, low fat cheese Revised in 2005, new focus on weight loss properties of dairy calcium

Specialty Cheese PricesWashington, DC, USA (week of 22 Sep): 

Specialty Cheese Prices Washington, DC, USA (week of 22 Sep) Cheeses of the World (cut to your order!!!) Chevre De Belley $11.99 Blue D'Auvergne (France) $ 7.99 Caerphilly Wales $ 6.99 Huntsman (England) $ 9.99 Kashkaval $ 7.99 Morbier (France) $ 7.99 Parmesan Reggiano (Italy) $12.99 Parrano Cheese (Dutch) $11.95 Port Salut (France) $17.99 Saint Andre - Triple Cream (France) $12.98 Saint Nectare (France) $ 9.49 Taleggio (Italy) $13.95 Tilsit (Danish) $ 8.49 Avg retail price: $10.83 USD

Uruguay: US Strategy: 

Uruguay: US Strategy

Uruguay: Regulatory Strategy: 

Uruguay: Regulatory Strategy FMD – cheese, ice cream, butter, butter oil, and chocolate milk Harmonize regulatory structures – Chile sets precedent with US Chile FTA: industry wants to use the USDA, Agricultural Marketing Service list of Dairy Plants Surveyed and Approved for USDA Grading, and t he FDA’s Interstate Milk Shippers List for Grade A Dairy Plants Industry Association plays a key role, …

Slide28: 

Asociación Internacional de Productos Lácteos (International Dairy Foods Association) Éstos serán sus beneficios específicos como miembro internacional de la IDFA: Oportunidades para relacionarse Acceso al personal de la IDFA Acceso a los documentos exclusivos para miembros del sitio web de la IDFA Recibirá publicaciones de cortesía (En inglés) Seminarios educativos Investigación de mercado Comunicaciones y relaciones públicas

Slide29: 

http://www.worldperspectives.com