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Global Dairy Market PerspectivesPresented by World Perspectives, Inc.
Conference for Uruguay’s Dairy IndustrySponsored by the
Embassy of the United States of America
Montevideo, UruguaySeptember 30, 2003
… Providing Market and Policy Analysis
Intelligence Reports Feed Grains, Sugar, Trade Policy, and Dairy Trade Updates
Customized Consulting Projects Covering all aspects of the agriculture and food sector
A Weekly report On Trade and Policy Issues in the Dairy Sector.
CONTENTS:
1.U.S. Dairy Industry Strategy2.Competitors Respond3.Congress Adds Heat4.Geographic Indicators
SAMPLE C
OPY
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)
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)
New ZealandAustralia
Western Europe USA
High Low High Low Current
WDM 1850 1600 2000 1625 2389
Cheese 1650 2100 NA NA 3203
Butter 1500 1100 1700 1250 2342Utilization/Demand remains steady to strong globally; reform in Canada (and EU) keeps world market prices firm
Whole Milk Powder (Jan 02-Jul 03)
Non-Fat Dry Milk (Jan 02 - Jul 03)
Butter (Jan 02 – Jul 03)
Cheese (40 lbs blocks of cheddar) (Jan 02-Jul 03)
Highly volatile markets – 50 pct fluctuation in price
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” marketOTHER:
OTHER: packaging, labeling, testing, inspection, mandatory shelf life requirements, recipe and manufacturing declaration, standards of identity
North AmericaUSA – 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 EastJapan/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
EU: High in-quota tariffs, licensing rules; $1 bln in export subsidies; wants to impose new and stricter “geographical indicators”
South AmericaBrazil – 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 CollapseDraft 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
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?
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
COMMODITY
WDM
NDM
Butter
Cheese
NICHE
Whey
Lactose
Ice Cream
Concentrates
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)
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 CreamGrowing 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 “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)
Cheeses of the World (cut to your order!!!)
Chevre De Belley $11.99Blue D'Auvergne (France) $ 7.99Caerphilly Wales $ 6.99Huntsman (England) $ 9.99Kashkaval $ 7.99Morbier (France) $ 7.99Parmesan Reggiano (Italy) $12.99Parrano Cheese (Dutch) $11.95Port Salut (France) $17.99Saint Andre - Triple Cream (France) $12.98Saint Nectare (France) $ 9.49Taleggio (Italy) $13.95Tilsit (Danish) $ 8.49
Avg retail price:
$10.83 USD
Uruguay: US Strategy
Cheese HTS Code
Action/Goal
Italian Type 0404.10.54 1,200 ton increase
Swiss/Emmethal
0406.10.64 600 ton quota
Swiss/Emmethal
0406.10.68 600 ton quota
Gouda/Edam 0406.10.44 1,000 ton quota
Cheese Powder 0406.10.30 1,000 ton quota
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, …
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
http://www.worldperspectives.com