Uncharted WatersJerry Kozak,
President/CEO The loss of export markets due to the Great Global Recession of 2008 is the primary cause of the Great Dairy Depression that we are still dealing with. So it’s of great concern when two other new challenges to our export sales present themselves, as they have in 2010. First, by now it’s been widely reported that the European Union is moving ahead with plans to enforce requirements that each U.S. farm producing milk destined to be used in products exported to there – including ingredients like lactose and whey – must not exceed a three month rolling geometric mean somatic cell count of 400,000/ml. That threshold is 350,000 cells below the U.S. standard, but the real issue is that it represents a huge change from the E.U.’s current policy that commingled milk, at the tanker or the plant level, shouldn’t exceed a 400,000 count. Currently, a few farms whose milk runs above 400,000 won’t doom an entire processing run of cheese or whey as long as the whole silo is under that level. In the future, if the E.U. gets its way, one farm, regardless of size, could trigger a much larger problem. NMPF and the U.S. Dairy Export Council are very concerned about both the science and the economics of what the E.U. says it wants to do. First, it’s widely understood that somatic cells are a measure of milk quality, not milk safety. If, as part of a private business relationship, a dairy buyer wants to specify a certain SCC level, that’s one thing. But for the E.U. to suddenly assert that individual farms selling milk to a cheese processor represent a public health concern is not defensible, and without precedent. Recently, NMPF and USDEC asked Margaret Hamburg, the commissioner of the Food and Drug Administration, to work with her colleagues in Washington and counterparts in Europe to rectify the situation. Although the deadline for the E.U.’s proposed action has currently been pushed to Dec. 1st and may well be further delayed – and while the measurement of SCCs would be a rolling average, and offer farms a grace period to comply – the real concern is the lack of any rational basis for this change. In essence, it’s a sneaky and suspect way to block a portion of the $60 million in dairy exports we sold to Europe last year (which doesn’t include the other food products using dairy ingredients such as whey powders). It’s an economic shot across the bow, using the rubric of food safety to fire the gun. And we will use any means necessary as a defense. The second export-related challenge, coincidental in its timing but just as concerning, is an effort by another major customer, China, to block U.S. dairy sales there. Back in April, the Chinese government suddenly announced that China would stop accepting U.S. food-grade dairy products starting in May. Apparently, China felt that the necessary health documentation regarding the acceptability of U.S. dairy products was lacking. Since that initial notice, U.S. officials secured a 30-day extension of the effective implementation of the Chinese ultimatum, but that ran out at the end of May, and as July begins, we are now in uncharted waters, figuratively and literally – ships carrying U.S. dairy products bound for Chinese ports may not be able to sell their wares, depending on whether government customs officials continue to accept the current certification that China now deems insufficient. Again, NMPF has weighed in with trade and agricultural policy officials here in Washington, asking them to rectify this issue. So far, however, a final resolution in favor of our dairy sector has yet to materialize, putting in jeopardy a $150 million per year market. Both these situations are unsettling because they are examples of arbitrary decisions by major customers to cut off our exports, using the flimsiest of reasons to do so. In fact, they may violate the terms of trade agreements which the E.U. and China have agreed to. NMPF is committed to rectifying both of these roadblocks because of the principles involved, and even more, because the economic health of our dairy farmers depends on it. *Anyone is welcome to post comments. Comments must be approved before appearing on the page. All effort will be made to publish every comment, provided that each comment is respectful and directly addresses the issues discussed in the column. Readers are encouraged to respond to the comments of others. Comments |
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