Tag: dairy trade
Record Exports Drive U.S. Dairy Demand
By William Loux, Vice President, Global Economic Affairs, NMPF and U.S. Dairy Export Council.
U.S. dairy exports excelled again in 2022, with record shipments further cementing its role as the key demand driver for U.S. milk.
For the third consecutive year, the U.S. dairy industry set a record for the volume of dairy products exported on a milk solids equivalent basis, with the current record now surpassing 2.4 million metric tons — the equivalent of over 40 billion pounds of raw milk, or 18% of the U.S. milk supply.
Perhaps even more impressive, for the fifth time in the last six years, U.S. exports grew by more than domestic consumption. Of that six-year window, 2019 was the only time in that span when exports grew by less than domestic sales. That’s the year the U.S. faced prohibitive retaliatory tariffs on dairy products destined for China. In addition, African Swine Fever was cratering China’s demand for whey products. At the same time, U.S. skim milk powder exporters were facing headwinds from EU intervention storage stocks that began hitting the market at below-market prices in 2019. All this noted, with 2019 being a particularly unique exception, the international market has been the driver of U.S. dairy demand growth for the past six years.
Success can’t be taken for granted
European milk production came on strong at the tail end of 2022 as favorable weather and margins boosted output. Conversely, demand within the European Union bloc has reportedly weakened as consumers feel the squeeze on their wallets, which is causing European wholesale prices to dip. With more supply, weaker internal demand, and low prices, we can expect significantly more competition from Europe in the international market than we did in 2022 when their exports dropped 10% during the first 11 months of the year.
Additionally, the international demand picture remains uncertain. Despite the clear success of U.S. dairy, the world’s collective dairy trade actually dropped 4% in 2022 — primarily on account of China. The world’s largest dairy product-importing nation contracted dairy imports by 21% as the country drew down inventories built in 2021, witnessed a surge in domestic milk supplies, and instituted movement restrictions, all of which damaged dairy consumption and imports.
China’s return to the market in 2023 remains uncertain. The lockdowns have been lifted, but milk production in the country is still growing, and inventories of milk powder reportedly remain heavy. Optimistically, consumption in the country will rebound and stockpiles will be reduced, setting the stage for China’s return as a global buyer in the middle part of the year. But until they do, New Zealand, which exported over 40% of its production to China at its peak, will have plenty of products available for customers elsewhere, meaning increased competition with the United States.
Outside of China, the demand picture will likely be mixed depending on local conditions, but broadly, slower economic growth and inflation are expected to challenge lower-income consumers and push buyers to look for bargains.
Overall, I am forecasting international demand in 2023 to return to growth, but not at a spectacular rate, and with more suppliers competing for business.
Given the expected headwinds this year, industry investment in international markets will be critical to success. To set another record in 2023, the U.S. must continue the work being done to build demand for U.S. dairy products overseas and expand market access in key markets, all while maintaining reliability with international customers by being engaged and responsive.
This column originally appeared in Hoard’s Dairyman Intel on Feb. 21, 2023.
NMPF Statement on Record Dairy Exports
From NMPF President and CEO Jim Mulhern:
“For the third consecutive year, U.S. dairy farmers have proven how their dedication to innovation and sustainability leadership increasingly have made them the world’s provider of choice for nutritious dairy products. In both value and in volume, U.S. sales are at all-time highs, and in 2022, a record percentage of U.S. milk production was exported overseas. This happened despite the headwinds our exporters battled last year, which included supply chain challenges, a lack of new trade agreements to establish more level playing fields abroad, and other barriers to trade that threatened to upend progress.
“Let this be a signal to the world: U.S. dairy farmers are, and will be, a growing force for global nutrition, sustainability and health, as shown by the increasing preference of consumers worldwide for the products they create. We’re excited to see today’s year-end export totals reflect a vision we’ve been pursuing for decades, and we look forward to seeing further progress in the years to come.”
NMPF’s Morris Talks Trade, Canada on Podcast
NMPF and USDEC Senior Vice President for Trade Shawna Morris discusses the need to hold accountable for its trade commitments on the Agriculture of America podcast. Canada’s improper allocations under its Tariff-Rate Quota system is impeding the market access promised U.S. dairy farmers under the USMCA trade agreement, making a legal remedy necessary. The U.S. needs to strongly defend its farmers, Morris said; while farmers are hoping for a fair solution with Canadian compliance, retaliatory tariffs against Canadian products may be necessary, she said.
NMPF Communicates Dairy Priorities to New Ag Trade Representatives, Congratulates Hill Leaders
NMPF and USDEC sent a letter on Jan. 23 to the U.S. Trade Representative’s Chief Agricultural Negotiator Doug McKalip and USDA Under Secretary of Trade and Foreign Agricultural Affairs Alexis Taylor congratulating them on their confirmations and detailing the market access and trade priorities that NMPF is looking to advance in 2023 and beyond.
After many months of delay, Congress finally confirmed McKalip and Taylor at the end of 2022. NMPF and USDEC strongly supported both McKalip and Taylor’s nominations and called on Congress to quickly confirm both nominees throughout the delay. NMPF looks forward to working with Taylor and McKalip to expand market access and push for other dairy priorities.
NMPF and USDEC also sent letters congratulating the new leadership of the House committees responsible for agricultural export promotion efforts and trade policy. The letters to Agriculture Committee Chairman Glenn “GT” Thompson (R-PA) and Ranking Member David Scott (D-GA), and Ways and Means Committee Chairman Jason Smith (R-MO) and Ranking Member Richard Neal (D-MA) relayed NMPF and USDEC’s dairy trade priorities, including increased funding for the Foreign Market Development and Market Access Programs, stronger protections for common names like “parmesan” and “feta,” and a more ambitious approach to tacking barriers to U.S. dairy exports.
NMPF will work closely with both committees to heighten the Congressional focus on agricultural trade issues in the coming year.
December CWT-Assisted Dairy Export Sales Totaled 7.1 Million Pounds
CWT member cooperatives secured 25 contracts in December, adding 7.0 million pounds of American-type cheeses and 37,000 pounds of cream cheese to CWT-assisted sales in 2022. In milk equivalent, this is equal to 65.2 million pounds of milk on a milkfat basis. These products will go to customers in Asia, Central America, the Caribbean and Oceania, and will be shipped from December 2022 through June 2023.
CWT-assisted 2022 dairy product sales contracts year-to-date total 99 million pounds of American-type cheese, 657,000 pounds of butter, 8.8 million pounds of cream cheese and 30.7 million pounds of whole milk powder. This brings the total milk equivalent for the year to 1.223 billion pounds on a milkfat basis.
Exporting dairy products is critical to the viability of dairy farmers and their cooperatives across the country. Whether or not a cooperative is actively engaged in exporting cheese, butter, anhydrous milkfat, cream cheese, or whole milk powder, moving products into world markets is essential. CWT provides a means to move domestic dairy products to overseas markets by helping to overcome U.S. dairy’s trade disadvantages.
The amounts of dairy products and related milk volumes reflect current contracts for delivery, not completed export volumes. CWT will pay export assistance to the bidders only when export and delivery of the product is verified by the submission of the required documentation.
NMPF’s Bjerga on Dairy’s Recent Policy Wins
As the year comes to a close, the National Milk Producers Federation is applauding two recent measures that support the dairy industry. NMPF Senior Vice President of Communications Alan Bjerga spoke with RFD-TV’s own Janet Adkison about how the Growing Climate Solutions Act and Sustains Act benefit dairy farmers, and what USTR’s announcement of a new request for dispute settlement consultations with Canada means for U.S. dairy.
https://www.rfdtv.com/two-recent-measures-from-congress-and-ustr-are-giving-a-boost-to-dairy-farmers
U.S. Dairy Salutes USTR’s Pursuit of Canadian USMCA Compliance
ARLINGTON, VA – The National Milk Producers Federation (NMPF) and U.S. Dairy Export Council (USDEC) commend the U.S. Trade Representative’s announcement today that it is filing a new request for dispute settlement consultations with Canada in order to expand the scope of the second U.S.-Mexico-Canada Agreement (USMCA) dairy dispute to include additional elements necessary to ensure that Canada fully complies with its USMCA obligations.
The initial USMCA dispute panel, launched by the United States in May 2021, found Canada in violation of USMCA’s tariff-rate quota (TRQ) provisions by reserving most of its preferential dairy TRQs for Canadian processors. In March 2022, Canada released its revised approach to USMCA TRQs, which still violated the USMCA, by providing inequitable advantages to Canadian dairy processors and failing to administer TRQs in a manner to ensure full use of TRQs as intended by USMCA. This prompted USTR to request formal consultations with Canada over the measures, the first step in bringing a second case before a USMCA dispute settlement panel.
Today’s actions are the culmination of months of painstaking work to evaluate the strongest basis for the United States’ case and find the best approach to bring Canada into compliance given its persistent violations.
“We thank USTR and USDA for their diligence in working to ensure that American dairy producers have the market access promised under USMCA. NMPF is committed to doing everything it can to support the case,” stated Jim Mulhern, president and CEO of NMPF. “At the end of the day, if Canada continues to flagrantly flout its obligations, the U.S. government has to be ready with retaliatory measures that make the Canadian government reconsider its actions.”
“It is deeply unfortunate that Canada simply refuses to honor the full terms of our agreement,” said Krysta Harden, president and CEO of USDEC. “USMCA is a fair deal that was thoroughly negotiated and agreed to by the Canadian government. The U.S. dairy community is thankful the administration and Congress have taken Canada’s violations seriously and are fighting for full export benefits that the American dairy industry earned.”
November CWT-Assisted Dairy Export Sales Totaled 18.6 Million Pounds
CWT member cooperatives secured 52 contracts in November, adding 6.2 million pounds of American-type cheeses, 348,000 pounds of whole milk powder and 1.2 million pounds of cream cheese to CWT-assisted sales in 2022. In milk equivalent, this is equal to 69 million pounds of milk on a milkfat basis. These products will go to customers in Asia, Central America, the Caribbean, Middle East-North Africa, Oceania and South America, and will be shipped from November through May 2023.
CWT-assisted 2022 dairy product sales contracts year-to-date total 92.1 million pounds of American-type cheese, 657,000 pounds of butter, 8.8 million pounds of cream cheese and 30.7 million pounds of whole milk powder. This brings the total milk equivalent for the year to 1.157 billion pounds on a milkfat basis.
Exporting dairy products is critical to the viability of dairy farmers and their cooperatives across the country. Whether or not a cooperative is actively engaged in exporting cheese, butter, anhydrous milkfat, cream cheese, or whole milk powder, moving products into world markets is essential. CWT provides a means to move domestic dairy products to overseas markets by helping to overcome U.S. dairy’s trade disadvantages.
The amounts of dairy products and related milk volumes reflect current contracts for delivery, not completed export volumes. CWT will pay export assistance to the bidders only when export and delivery of the product is verified by the submission of the required documentation.
NMPF Outlines Export Market Priorities to USTR
NMPF and the U.S. Dairy Export Council (USDEC) submitted comments to the U.S. Trade Representative (USTR) on Oct. 28 in response to the agency’s request for more information on foreign obstacles to trade and investment for its annual National Trade Estimate (NTE) report.
Over the last several years, the U.S. dairy industry has been put at a disadvantage by a lack of ongoing free trade agreement (FTA) negotiations and uneven enforcement of existing agreements. This inaction especially hurts American producers at a time when global demand for dairy products is rising. Given the great importance of exports to the success of the industry, NMPF called for the Administration to negotiate new FTAs and otherwise expand market access for U.S. exporters.
The comments also summarized country-specific barriers that governments around the world are implementing to impede U.S. dairy exports. Those measures include traditional tariffs, the misuse of geographical indications and overly burdensome health and safety regulations that target dairy products. In total, the comments outline trade issues with 37 countries or regions, as well as concerns related to Codex, World Health Organization and World Trade Organization issues.
Through its work with industry partners, NMPF will continue to encourage Congress and the Biden Administration to stand up for U.S. dairy and negotiate trade deals that support American dairy farmers.
NMPF’s Bjerga on the Congressional Elections and Dairy’s Challenges
NMPF Senior Vice President of Communications Alan Bjerga details some of the policy and marketplace challenges U.S. dairy is striving to meet, regardless of the cloudy outcomes of Tuesday’s congressional elections, in an interview with RFD-TV. Opportunities to grow markets via sustainability, an adequate safety net in the upcoming farm bill, and sensible industry regulation all loom in 2023, with dairy well-positioned to make progress.
Live, from the Dairy Bar, it’s NMPF!
NMPF Senior Vice President of Communications Alan Bjerga gives an impromptu tour of the Dairy Bar and the Joint Annual Meeting in Denver. From delicious products to critical information, the Dairy Bar has it all — and the meeting itself resulted in gains for dairy producers, as detailed in this interview with RFD-TV.
