NMPF and USDEC Senior Vice President for Trade Shawna Morris discusses the latest round of conflict between the United States and Canada over over U.S. dairy access to that market. Morris praised the U.S. government’s willingness to take on Canada again after already winning on dispute before a USMCA dispute resolution panel. Morris speaks in an interview on RFD-TV.
By Shawna Morris, Senior Vice President for Trade, NMPF and U.S. Dairy Export Council.
The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) are proud to be the voice of defending the American dairy industry and promoting dairy exports in Washington D.C. and around the world. Looking back at this past year of trade policy, American dairy producers and the entire industry have much to be proud of.
U.S. dairy exports are on track for another record year in both value and volume — despite a lack of new market access, protectionist actions in key markets, and ongoing supply chain challenges.
Working with the government to help U.S. dairy thrive
The record export numbers are happening despite high costs and unreliable shipping networks that are still causing headaches for the industry more than two years after the global COVID-19 outbreak first snarled supply chains.
NMPF and USDEC have led the way in working with the U.S. government to address the concerns. In June, President Biden signed the Ocean Shipping Reform Act into law. Championed by NMPF and USDEC, the legislation limits ocean carriers’ ability to deny exports and charge unreasonable fees, clearing a significant hurdle for dairy exporters.
Elsewhere, the EU’s abuse of geographical indication rules continues to threaten U.S. producers’ access to foreign markets for common-name cheeses like “Parmesan” and “Feta.” In collaboration with the Consortium for Common Food Names (CCFN), NMPF and USDEC have pushed the U.S. government to proactively defend the rights of U.S. cheesemakers and fought the court battles necessary to advance this effort.
That work resulted in a key win last January, when a U.S. District Court ruled in our favor that “Gruyere” cheese can be produced anywhere – not just in France or Switzerland. This landmark victory again proved that common names are widely understood to refer to types of food, regardless of where they are produced.
Holding Canada responsible
The U.S.-Mexico-Canada Agreement (USMCA) provided a much-needed update to trade rules. NMPF and USDEC supported it as a deal that would increase exports and boost farm gate milk prices.
Unfortunately, Canada hasn’t held up its end of the bargain. By reserving most of its dairy tariff rate quotas (TRQs) for Canadian processors and directly impairing American exporters’ ability to access the Canadian market, it’s clearly a break of the USMCA’s TRQ provisions that allow market access.
NMPF and USDEC successfully advocated for last year’s initiation of the first-ever USMCA dispute settlement process. The United States won the initial case in January, but upon Canadian refusal to comply with the ruling, NMPF and USDEC prompted the U.S. government to pursue a second dispute panel, resulting in the U.S. seeking formal consultations with Canada in May. The organizations have urged a strong response on behalf of wronged U.S. dairy industry members to ensure that America’s dairy sector receives the full export benefits promised under the agreement.
Strengthening relationships in Latin America
NMPF and USDEC finalized partnerships with the Chilean National Federation of Producers (Fedeleche) and Rural Society of Argentina this year that will advance shared policy priorities internationally. Far more than just agreements on paper, these relationships set a foundation to confront emerging threats, both in key export markets and in international standard-setting bodies to ward off anti-trade and anti-dairy policies.
These examples are just a slice of the trade policy issues that touched the U.S. dairy industry in 2022, but each highlights the great potential of the American dairy industry to grow worldwide and shows the need for the U.S. government to work with us to get there. Looking to 2023 and beyond, NMPF and USDEC are looking forward to ensuring that exports keep growing in volume and in value, supporting the bottom line of dairy farmers, manufacturers, and workers throughout the country.
This column originally appeared in Hoard’s Dairyman Intel on Dec. 26, 2022.
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
By Stephen Cain, Director of Research and Economic Analysis, NMPF.
Outside of cheese, China is the number one importer of essentially every major dairy product. Globally, the world’s most populated country purchases 27% of all traded dairy products on a milk solids basis. China accounts for roughly 20% of all U.S. dairy exports and nearly half of all U.S. dry whey exports.
All of this makes China an unquestionably important market; yet, over the last year, Chinese demand has been down significantly. Chinese milk solids imports over the last 12 months are down 16%, and they’re heavily down in skim milk powder (-20%), dry whey (-17%), and whole milk powder (-24%). Two key pieces that have led to the pullback are high stockpiles and COVID-19 lockdowns.
Following the onset of the pandemic and wanting to ensure adequate supplies on hand, China built up some impressive stocks, especially in skim milk power and dry whey. From mid-2020 through mid-2021, Chinese milk solids imports climbed 32% over the preceding 12 months. For the same time period, skim milk powder and dry whey imports rose 32% and 50%, respectively.
This high purchase volume outpaced demand and led to stock build up. These high stocks, coupled with then-high global prices, led China to pull back from the global market and instead work down its stockpiles. That largely kept Chinese purchasing depressed over the past year. Encouragingly, stocks are now approaching more normal levels, which supports China returning to the market, especially for skim milk powder and dry whey.
More COVID-19 lockdowns throughout China are also plaguing demand. While the rest of the world moves on from the pandemic and reverts to pre-COVID-19 life, China seems to be charging in the opposite direction. The zero-COVID policy in China has led to extreme measures in the country, with huge swaths of the population being locked down as the country continues its losing battle against the disease.
Earlier this year, Shanghai, the largest city in China with roughly 25 million residents, was put in lockdown for two consecutive months. Since then, lockdowns have only increased in number and severity, with some estimates as of late October stating there were more than 200 million people affected by lockdowns nationwide.
While many agree China relaxing its zero-COVID approach would be beneficial, rising cases in the country suggest that’s unlikely to occur. The country is facing the highest rate of new cases since the start of the pandemic, which means lockdowns and tough restrictions are only going to become more commonplace. That’s hitting dairy demand. Restaurants and the food service sector are hugely important to dairy consumption in China, but that consumption avenue is being restricted as consumers are increasingly unable to leave their homes. Until lockdowns and restrictions ease, Chinese dairy demand will continue to be challenged.
Dairy is only one part of a Chinese economy that’s facing headwinds. A limited gross domestic product (GDP) growth outlook, a teetering real estate sector, and depressed, COVID-19-driven demand from lockdowns are creating a challenged economic outlook. The 2022 GDP forecast is estimated at 3.2%, which would make for one of the worst performances in nearly half a century; 2023 looks only slightly better, with forecast growth of around 4.4%.
Similarly, Chinese dairy demand in 2023 is likely to see similar sluggish growth. Despite the melancholy economic outlook and lockdown projections, Chinese imports in 2023 will likely be up, but not at substantial volumes, and certainly not same at the growth rate we saw in 2021. As stocks are depleted and domestically produced products (which are largely more expensive than imports) fail to meet demand, China will have to return to the global market. The biggest swing factor, though, remains COVID-19 lockdowns. If China doubles down on lockdowns, demand will likely continue to be depressed and imports will be challenged. Should they ease, China will certainly need product, and greater imports will follow — and that would be good news for U.S. exporters.
This column originally appeared in Hoard’s Dairyman Intel on Nov. 28, 2022.
CWT member cooperatives secured 39 contracts in October, adding five million pounds of American-type cheeses and 77,000 pounds of cream cheese to CWT-assisted sales in 2022. In milk equivalent, this is equal to 47 million pounds of milk on a milkfat basis. These products will go to customers in Asia, Central America, Europe and Middle East-North Africa, and will be shipped from October through April 2022.
CWT-assisted 2022 dairy product sales contracts year-to-date total 86.1 million pounds of American-type cheese, 657,000 pounds of butter, 7.6 million pounds of cream cheese and 30.3 million pounds of whole milk powder. This brings the total milk equivalent for the year to 1.090 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 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.
CWT member cooperatives secured 62 contracts in September, adding 11 million pounds of American-type cheeses, 198,000 pounds of butter and 403,000 pounds of cream cheese to CWT-assisted sales in 2022. In milk equivalent, this is equal to 113 million pounds of milk on a milkfat basis. These products will go to customers in Asia, Central America, Middle East-North Africa, South America and Oceania and will be shipped from September 2022 through March 2023.
CWT-assisted 2022 dairy product sales contracts year-to-date total 81.1 million pounds of American-type cheese, 657,000 pounds of butter, 7.5 million pounds of cream cheese and 30.3 million pounds of whole milk powder. This brings the total milk equivalent for the year to 1.044 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 and USDEC ramped up outreach efforts to Congress and the administration last month on the need to improve freight transportation services to prevent significant economic difficulties and ensure that American farmers can continue to feed the world.
In detailed comments to the Federal Maritime Commission (FMC) submitted on Sept. 14, NMPF and USDEC asked the agency to declare the current cargo congestion and inadequate oceans freight transportation service an emergency situation.
The comments emphasized results from a survey of NMPF and USDEC members which noted ongoing problems in export shipping despite the implementation of key provisions of the Ocean Shipping Reform Act this summer. For instance, 65 percent of survey respondents indicated that unreasonable detention and demurrage fees continue to be a challenge; more than half have had recent experiences with cancelled sailings; and a massive 92 percent responded that they continue to experience cancelled or rolled vessel bookings.
Based on those survey results and additional reports of logistical issues elsewhere, NMPF and USDEC urged the FMC to require ocean carriers and terminal operators to provide to shippers, rail carriers and other parties advanced scheduling, storage and other information that would greatly improve on-time shipping. The Federation encouraged the FMC to update its metrics for determining emergency situations in the future.
Additionally, ahead of a rail labor agreement reported Sept. 15, NMPF met with the administration and signed onto a Sept. 8 letter to Congressional leadership urging federal action if negotiations failed to prevent a lockout or strike. Ensuring that rail access remains available to deliver input supplies to dairy farms and finished products from plant to port has been a critical NMPF priority over the past few months.
NMPF will continue to press Congress and the administration, as well as private sector actors, to help address the lingering challenges in the dairy export supply chain.
The National Milk Producers Federation (NMPF), U.S. Dairy Export Council (USDEC) and the Chilean Federacion Nacional de Productores de Leche (Fedeleche) today finalized an agreement that will facilitate better sharing of knowledge and information and foster collaboration as the three groups advocate for science-based standards and guidelines in agricultural trade policy across the world.
The memorandum of understanding (MOU) establishes a set of objectives that will guide cooperation in supporting common policy priorities in international forums. The collaboration lasts through 2024 and includes a strong focus on establishing events, seminars and conferences to improve mutual understanding on issues such as sustainability, food systems and global trade.
“Dairy producers in the United States and Chile share many of the same values and policy priorities, and will benefit greatly from this partnership,” said Jim Mulhern, president and CEO of NMPF. “We’re excited to work alongside USDEC and Fedeleche to proactively set commonsense food and ag policy.”
“We are delighted at this opportunity to strengthen our relationship with Chilean agricultural producers,” said Krysta Harden, president and CEO of USDEC. “Through this agreement, we are in a better position to ensure that international trade and regulatory policy is reasonable, fair and based in science.”
“At Fedeleche, we value free trade based on clear and fair rules. We are looking forward to working with the American dairy sector to achieve structural reforms that counter the protectionism that we encounter so frequently,” said Marcos Winkler Mayer, president of the Fedeleche. “We celebrate this partnership and are in a better place to serve American and Chilean agriculture and dairy when we work together.”
The MOU between NMPF, USDEC and Fedeleche complements an agreement signed earlier this year with Sociedad Rural Argentina, which provides USDEC and NMPF with an additional avenue to communicate and engage with stakeholders in Latin America.
Highlights
NMPF’s work to expand export market opportunities for U.S. dairy products has helped support a record $4.8 billion in dairy exports in the first half of 2022, a year-over-year increase of 27 percent. NMPF collaborates with the U.S. Dairy Export Council (USDEC) to advance NMPF member interests.
President and CEO Jim Mulhern joined President Biden at the White House in June to welcome the signing of the Ocean Shipping Reform Act (OSRA) into law. The legislation, aimed at easing the port congestion plaguing dairy and other exporters, caps NMPF and USDEC’s year-long efforts to help shape and advance the bill in Congress.
In addition to new protections for dairy exporters, including limits on fees incurred outside of exporters’ control, the new law directs the Federal Maritime Commission to draft additional regulations to ensure ocean carriers are not unduly refusing to transport U.S. exports. NMPF has also pressed the administration for measures to expand shipping equipment availability and iron out logistics challenges, including securing key port pop-up sites to facilitate the processing of shipping containers.
NMPF and USDEC also continue to be vocal advocates for free trade agreements that lower barriers for dairy exports, with the Biden Administration heeding NMPF’s calls to ensure existing deals are strongly enforced. Part of this year’s effort included successfully securing U.S. government support for a second dispute settlement panel over Canada’s refusal to expand dairy market access in accordance with its U.S.-Mexico-Canada Agreement commitments.
Additional efforts have focused on Mexico and Central and South America as protectionist sentiments continue to surge from Mexico to Chile. NMPF has focused on ensuring existing market access opportunities are preserved in the face of regulatory changes and anti-trade policies.
In Mexico, after deep engagement from NMPF and USDEC, new Mexican milk powder regulations were implemented on July 8 in a manner that allowed trade to keep flowing. The trade policy team also helped ensure that Panama’s appeals to shirk its dairy market access FTA obligations were rejected by the U.S. government and to push back against anti-import sentiment in Colombia, Chile, Peru, Ecuador, and other key regional markets. As additional countries retreat inward and embrace protectionist stances toward trade, NMPF strives to ensure counterproductive policies that would limit the ability of consumers to access U.S. dairy products are met with strong opposition.
The Ocean Shipping Reform Act is now law, but much more is needed to ensure reliable exports of U.S. dairy products to the overseas markets that represent the industry’s future, said Tony Rice, trade policy manager for NMPF and the U.S. Dairy Export Council, in a Dairy Defined podcast released today.
“Our international customers demand U.S. dairy products,” said Rice. “Our competitors, mostly the EU and New Zealand, they’ve shown that they’re not going to be able to keep pace in the coming years. So it makes all the more important that these supply chain issues get ironed out, and hopefully sooner rather than later.”
Rice explains the complexities of the challenges facing U.S. port traffic, why additional public policy changes are essential, and how NMPF is leading agriculture’s efforts for change. The full podcast is here. You can also find the podcast on Apple Podcasts, Spotify, Google Podcasts and Amazon Music. A transcript is also available below. Broadcast outlets may use the MP3 file below. Please attribute information to NMPF.
Sheryl Meshke, co-president and CEO of Associated Milk Producers Inc. and a member of NMPF’s board of directors, told a Senate subcommittee on June 9 that the U.S. government must pursue additional market access opportunities and address export supply-chain delays in order for the U.S. dairy industry to keep up with its global competitors.
“In pursuing exports, the U.S. dairy industry faces experienced and well-established competitors who have been exceptionally active with free trade agreements,” Meshke told the Senate Agriculture Committee’s Subcommittee on Commodities, Risk Management, and Trade. “The U.S. needs to get back in the game and craft an approach to pursuing comprehensive trade agreements.”
Meshke also emphasized the importance of enforcing existing trade agreements, particularly U.S. dairy export access to the Canadian market under the U.S.-Mexico-Canada Agreement.
American dairy risks losing its competitiveness, as the global playing field slowly tilts against the United States due to competitors’ trade agreements with key dairy importing markets, Meshke noted in her testimony. She also said U.S. trade negotiators need to target priority markets for expanded access, including Southeast Asia, Japan, China, the Middle East and the United Kingdom.
Meshke also emphasized the importance of combating non-tariff trade barriers, particularly the European Union’s (EU) aggressive efforts to confiscate food and beverage names in global markets by abusing geographical indications systems. She urged a strong defense of common food names: “We can’t wait any longer for the U.S. government to proactively defend the use of common food and beverage names against aggressive global efforts by the EU to restrict the use of generic terms we rely on.”
“As Sheryl outlined so well, we are now seeing dairy consumption grow at exceptional rates in many markets around the world,” said Jim Mulhern, president and CEO of NMPF. “The U.S. dairy industry is well-positioned to meet the expanding global demand for sustainably produced dairy products. But to seize those opportunities, we must take a leadership role along with like-minded countries – advancing policies and crafting trade agreements that can deliver real benefits for dairy farmers.”
