""

Required Report - public distribution

**Date:** 11/17/2003

**GAIN Report Number:** BR3615

BR3615

**Brazil**

**Dairy and Products**

**Annual**

**2003**

**Approved by:**

![](media/image1.wmf)William W. Westman, Agricultural Counselor

U.S. Embassy

**Prepared by:**

Joao F. Silva, Agricultural Specialist

**Report Highlights:**

Post projects an increase in production of milk and milk products in
2004, continued favorable prices to producers, higher exports, and lower
imports of dairy products. A small increase in domestic demand for milk
products should result from increased Government spending on social
programs.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Brasilia \[BR1\]

\[BR\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Commodity Outlook, Fluid Milk 3](#commodity-outlook-fluid-milk)

[Production 3](#production)

[Consumption 4](#consumption)

[Prices 4](#prices)

[Trade 4](#trade)

[Tariff Rate Table 5](#tariff-rate-table)

[Stocks 5](#stocks)

[Policy 5](#policy)

[Commodity Outlook, Cheese 6](#commodity-outlook-cheese)

[Production 6](#production-1)

[Consumption 7](#consumption-1)

[Prices 7](#prices-1)

[Trade 7](#trade-1)

[Tariff Rate Table 7](#tariff-rate-table-1)

[Commodity Outlook, Butter 8](#commodity-outlook-butter)

[Production 8](#production-2)

[Prices 8](#prices-2)

[Tariff Rate Table 8](#tariff-rate-table-2)

[Commodity Outlook, Powdered Milk 9](#commodity-outlook-powdered-milk)

[Production 9](#production-3)

[Consumption 9](#consumption-2)

[Prices 9](#prices-3)

[Trade 10](#trade-2)

[Tariff Rate Table 10](#tariff-rate-table-3)

[Stocks 11](#stocks-1)

[Policy 11](#policy-1)

[Marketing 11](#marketing)

[Tables 12](#tables)

[PSD: Dairy, Milk, Fluid 12](#psd-dairy-milk-fluid)

[Import Trade Matrix, Milk, Fluid 13](#import-trade-matrix-milk-fluid)

[Export Trade Matrix, Milk, Fluid 14](#export-trade-matrix-milk-fluid)

Prices, Dairy, Milk,
Fluid.......................................................................................................................15

PSD: Dairy,
Cheese...............................................................................................................................16

Import Trade Matrix,
Cheese..............................................................................................................17

Export Trade Matrix,
Cheese...............................................................................................................18

PSD: Dairy,
Butter.................................................................................................................................19

Import Trade Matrix,
Butter................................................................................................................20

PSD: Dairy, Dry Whole Milk
Powder..................................................................................................21

Import Trade Matrix, Dry Whole Milk
Powder.................................................................................22

Export Trade Matrix, Dry Whole Milk
Powder................................................................................23

PSD: Dairy, Milk, Nonfat
Dry..............................................................................................................24

Import Trade Matrix, Nonfat
Dry.......................................................................................................25

Export Trade Matrix, Nonfat
Dry........................................................................................................26

# Executive Summary

Despite some improvement in the macro economic indicators, such as a
record trade surplus, declining domestic interest rates, stronger
control over inflation and the public deficit, and Brazil's improved
credit rating by most international rating agencies, the domestic
economic situation remains sluggish with slow economic growth, high
rates of unemployment, and 14 percent decline in the purchasing power of
Brazilian consumers.

This economic scenario has had a mixed impact on the dairy sector in
2003 by reducing consumption of dairy products, mostly cheese, yogurt,
and other frozen dairy desserts, thus reducing demand for fluid milk for
factory use. However, because of a favorable exchange rate in 2003, as
compared to last year, exports of milk products (mostly powdered milk)
are at record levels and demand is also higher for fluid milk for human
consumption as a result of social government programs. This has improved
producer prices in 2003.

The outlook for 2004 calls for a similar scenario, despite stronger
economic growth and positive trends in other economic indicators such
lower unemployment rates and higher consumer income. However, most of
the demand in 2004 is expected to come from government social programs
and exports, which will likely keep returns to producers at favorable
levels. Most trade analysts also expect a less volatile exchange rate in
2004, with the exchange rate varying between R\$2.90 and R\$3.00 per
U.S. dollar. Although during Jan-Oct 2003, the Brazilian currency has
appreciated 19 percent, and is currently stable at around R\$2.90 per
U.S. dollar, the average exchange rate for Jan-Oct 2003 is still 17
percent higher than the same period in 2002.

# Commodity Outlook, Fluid Milk

## Production 

## 

Note: Official milk production data in Brazil does not include
non-commercial and "informally" marketed milk, which represents about 35
percent of total milk production. OAA estimates are based on interviews
with trade and government sources and include both commercial, as well
as non-commercial and informally marketed milk.

Fluid milk production for CY 2004 (Jan-Dec) is forecast to increase to
23 billion liters, up 2 percent from the current year. The increase in
production reflects higher productivity, mostly from large Brazilian
dairies, good weather conditions in the major producing areas, higher
demand for fluid milk from social programs, and continued favorable
prices for milk producers.

Higher productivity is the major factor contributing to increased milk
production in Brazil. The increase is coming mostly from integrated
producers who have the support of large multinational and Brazilian
dairies, such as Nestle, Parmalat, and Itambe. These dairies provide
support to dairy farmers to invest in genetics, nutrition, quality, and
improved management practices. According to the most recent data
available from the 15 largest dairies in Brazil, the number of milk
producers under contract with these dairies dropped by 16 percent to
95,847 producers in 2002 from 114,216 producers in 2001, but the average
productivity of these producers, increased by 24 percent, from 458
liters/day per producer in 2001 to 567 liters/day per producer in 2002.

Brazilian dairy producers are entitled to investment funds from the
national milk development program (Pro-Leite). During the 2003/04
marketing year, the government has allocated US\$35 million to finance
producers to increase productivity through herd improvement, emphasis on
quality, and improved management practices.

Another major production factor is the increasing concentration of milk
production in the industry. In 2003, the 15 largest dairies could
account for nearly 60 percent of total fluid milk production under
federal inspection, an increase of 5 percent from 2002. The
concentration of production among fewer dairies also contributed to
increase concentration among fewer states, with production moving from
traditional milk producing areas in Minas Gerais to new frontier areas
in the Center-West regions of the country.

## Consumption 

Overall consumption of fluid milk is forecast to increase by two percent
in CY 2004. The increase is derived mostly from consumption as fluid
milk use because of higher demand from the government social programs.
The increase in consumption for factory use will rebound in 2004, but at
a lower rate than fluid milk, because of the drop in consumption of some
dairy products, such as yogurt and cheese.

The most recent survey of 124 grocery items purchased by Brazilian
consumers show a change in diet resulting from an average loss of 17
percent in consumer purchasing power for the past 12 months. Within the
dairy sector, yogurt and cheese were the most affected with estimated
drop in consumption of 29 and 23 percent, respectively. The lower demand
for dairy products in general was reflected in the consumption of fluid
milk for factory use in 2003.

According to trade sources, consumption of UHT milk in 2004 iwill reach
nearly 85 percent of total fluid milk consumption in Brazil. The
increase in consumption of UHT is due to several factors, including
greater convenience to consumers, carton packaging (not glass or
plastic), no need for refrigeration, and competitive pricing. Brazilian
supermarkets sell predominantly UHT milk, leaving "C" and "B" type
refrigerated fresh milk to be sold by the traditional mom-and-pop bread
and convenience stores, but at lower volumes.

## 

## Prices

During Jan-Sep 2003 the average price paid to producers in Minas Gerais
for fluid milk (type "C") was R\$0.48 per liter, up 37 percent from
R\$0.35 per liter for the same period in 2002.

The average price of fluid milk (type "C") paid to producers during
Jan-Dec 2002 was R\$0.37 per liter in Minas Gerais (largest dairy state
in Brazil), followed by R\$0.35 per liter in Goias (second largest milk
producer). Assuming the average exchange rate of R\$2.93 per U.S. dollar
in 2002, these prices were respectively US\$0.13 and US\$0.12 per liter.
Average producer prices for milk in 2002 were 16 percent higher compared
to 2001.

## Trade 

Imports of fluid milk, mostly packaged UHT milk sold by companies from
Argentina and Uruguay with commercial interests in Brazil, are expected
to drop in 2003. Trade analysts attribute this drop to two factors: a)
the 17 percent devaluation of the Brazilian currency relative to the
U.S. dollar in 2003, when compared to the average exchange rate in 2002,
and, b) higher domestic fluid milk availability due to stagnant domestic
consumption, mostly for value-added dairy products. The outlook for
imports in 2004 also calls for a continued drop in fluid milk imports.

Brazil exports insignificant quantities of packaged fluid milk, mostly
to Paraguay and the Philippines.

## Tariff Rate Table

+----------------+--------------------+-------------+-----------------+
| Tariff Number  | Product            | Rate (%)    | Other Info      |
|                | Description        |             |                 |
| (HTS)          |                    | \(1\)       |                 |
+----------------+--------------------+-------------+-----------------+
| 0401.10.10     | Milk and Cream,    | 15.5        | Mercosul: Zero  |
|                | UHT                |             |                 |
+----------------+--------------------+-------------+-----------------+
| 0401.10.10     | Milk and Cream,    | 13.5        | Mercosul: Zero  |
|                | UHT                |             |                 |
+----------------+--------------------+-------------+-----------------+

Note: (1) MERCOSUL's Common External Tariff (CXT). Tariffs reflect an
increase of 2.5 percent, per Decreee Number 3,704 of December 27, 2000.
The CXT is applied to all imports other than from MERCOSUL. These
tariffs are assessed on the CIF value of the product.

## Stocks

There are no government stocks of milk or milk products in Brazil.

## Policy 

The new Agricultural and Livestock Plan for the 2003/2004 season
announced in June 2003, by the federal government allocates about
R\$32.5 billion: (US\$11.2 billion for rural credit, of which R\$5.7
billion (US\$1.9 billion) is for investment credit in the sector, up
24.2 percent from 2003. Dairy cattle producers can benefit from the
following investment credit programs, with subsidized interest rates
(8.75 percent per year), to increase productivity and overall milk
production:

a\) PROLEITE. For the first time, the federal government created a
national program specific to finance milk producers. The program is
designed to modernize producer's operations, provide incentives for
cooling milk at the farm, transportation, and sillage. For the 2003/2004
marketing year, the total amount of funds allocated under the PROLEITE
is R\$100 million (US\$35 million), with a loan limit per producer
established at R\$60,000 (US\$21,000).

b\) MODERFROTA. This program is designed to finance farm equipment in
general. Total funds allocated under this program for 2003/2004 are R\$2
billion (US\$870 million), and loan limits vary according to the income
of the producers.

c\) MODERINFRA. This program allows dairy producers to build or rebuild
silos and warehouses on their farms. The program was recently modified
to include irrigation systems. Funds allocated to this program during
2003/2004 are R\$500 million (US\$166 million) and are limited to
R\$100,000 (US\$33,000) per producer.

d\) PROPASTO. This program is designed for pasture improvement and
recently was modified to include soil erosion and conservation of
low-lands. Total funds allocated under this program for 2003/2004 are
R\$600 million (US\$206 million), and are limited to R\$150,000
(US\$52,000) per producer.

Milk producers are also entitled to state dairy development programs
designed to increase productivity through pasture improvement and animal
genetics. State government programs are also developed to assist and
improve social and economic conditions of the small milk producers.
However, the most important state subsidy program to milk producers is
the exemption of the state value-added tax (ICMS) on the sale of milk by
producers and cooperatives. This benefit, however, is only available for
few a states in Brazil, mostly in the center-west and south regions.

In addition to these federal and state programs, milk producers also
benefit from financing programs from large dairies, such as Nestle and
Parmalat, which are specifically designed to increase milk productivity
and quality. These programs are only available for those integrated milk
producers with these respective dairies.

Other major policies affecting the dairy sector in 2003 are:

a\) the new minimum reference price for milk of R\$0.32 or (US\$0.11),
per liter, for the states located in the southeast of Brazil, and
R\$0.30 (US\$0.10), per liter, for other regions. These prices are used
as reference for government loan programs, and do not reflect real
market prices paid to producers, currently around R\$0.45 (US\$0.16),
per liter;

b\) The Ministry of Agriculture, Livestock, and Food Supply (MAPA) also
announced the implementation of the National Program to Increase Milk
Quality and Control (PNQL), which is designed to benefit consumers and
increase exports. This program is also designed to control fraud in milk
production, such as the mixture of whey powder in fluid milk and to curb
production of informal milk.

c\) MAPA also began the enforcement of a federal rule that prohibits the
use of imported powdered milk in social feeding programs financed by the
federal or state governments. In addition, the federal government also
increased surveillance of non-tariff barriers on dairy imports, such as
formal review and registration of foreign processing plant inspection
systems, greater pre inspection of plants in exporting countries,
certificates of origin, laboratory product-quality tests, and product
label registration according to the Brazilian consumer law. Since 2002,
the Brazilian Inspection Department for Products of Animal Origin
(DIPOA) resumed the registration of new U.S. dairy export plants to
export their products to Brazil.

d\) The FOME ZERO (Zero Hunger) program, initially announced as the
major social program of the new federal administration, has been
recently modified to include other social assistance programs. This
program is beginning to provide financial assistance to the poor. Milk
producers expect to benefit from this program in 2004.

# Commodity Outlook, Cheese

## Production 

Note: There are no official statistics on production and consumption of
cheese in Brazil. OAA production estimates for cheese are based on
interviews with trade contacts and also include "informal" cheese
production.

Post forecasts cheese production in CY 2004 to increase by only two
percent due to continued sluggish demand and weak consumer purchasing
power. The increase in demand is coming mostly from the fast-food
industry, since consumers dropped cheese from their list of priority
products. Cheese exports are insignificant and are not expect to
influence supplies.

## 

## Consumption 

Human consumption of fresh cheese is expected to increase only
marginally in 2004 because of the higher domestic prices for cheese
combined with the drop in consumer purchasing power. Most of the
increase in demand will continue to come from the fast-food industry,
institutional, and "specialty" cheeses (Gruyere, Gouda, Cheddar).

## 

## Prices

Average wholesale prices of Brazilian-produced cheese by major types
are:

+-----------------------------------------+----------------------------+
| # Type {#type-1}                        | # US\$/Kilogram            |
+-----------------------------------------+----------------------------+
| Minas (fresh farmer type)               | 2.59                       |
+-----------------------------------------+----------------------------+
| Mozzarella                              | 2.62                       |
+-----------------------------------------+----------------------------+
| Provolone                               | 3.28                       |
+-----------------------------------------+----------------------------+
| Parmesan                                | 3.28                       |
+-----------------------------------------+----------------------------+

Notes: (1) Prices for Sao Paulo market, as of 10/30/2003.

\(2\) Current Exchange Rate: US\$1.00=R\$2.90

## Trade 

Cheese imports are expected to decline significantly in 2003 because of
higher import costs combined with poor domestic demand deriving from the
drop in consumer's purchasing power. Argentina and Uruguay remain as the
main suppliers of cheese to Brazil, basically because of the
preferential tariff treatment deriving from the MERCOSUL Agreement.

Exports of cheese, although insignificant, are expected to continue to
increase in 2004, mostly because of the favorable exchange rate, which
makes the Brazilian product competitive in world markets. However, the
cheese industry is generally not prepared to increase exports because of
the lack of a marketing infrastructure.

## Tariff Rate Table

+--------------+---------------------------+----------+---------------+
| Tariff       | Product Description       | Rate (%) | Other Info    |
| Number       |                           |          |               |
|              |                           |          |               |
| (HTS)        |                           |          |               |
+--------------+---------------------------+----------+---------------+
| 0406.10.10   | Cheese, Mozzarella        | 17.5     | Mercosul: 27% |
+--------------+---------------------------+----------+---------------+
| 0406.10.90   | Cheese, Other             | 17.5     | Mercosul:     |
|              |                           |          | Zero          |
+--------------+---------------------------+----------+---------------+
| 0406.20.00   | Cheese: Grated or         | 17.5     | Mercosul:     |
|              | Powdered                  |          | Zero          |
+--------------+---------------------------+----------+---------------+
| 0406.90.10   | Cheese, with a fat        | 17.5     | Mercosul: 27% |
|              | content less than 36 %,   |          |               |
|              | by weight                 |          |               |
+--------------+---------------------------+----------+---------------+
| 0406.90.20   | Cheese with a fat content | 17.5     | Mercosul: 27% |
|              | superior or equal to 36 % |          |               |
|              | and less than 46%,by      |          |               |
|              | weight                    |          |               |
+--------------+---------------------------+----------+---------------+

Notes:

\(1\) MERCOSUL' s Common External Tariff (CXT). Tariffs reflect the
increase of 2.5 percent, per Decree Number 3,704 of December 27, 2000.
The CXT tariff is applied to all imports other than from MERCOSUL. These
tariffs are assessed on the CIF value of the product;

\(2\) Effective June 1, 2001, these types of cheeses were included on
the \"exception list\" of the Common External Tax (CXT), of the
MERCOSUL, per Resolution 16/01, of the Foreign Trade Chamber (CAMEX),
which altered Annex Two of the Decree Number 3,704 of December 27, 2000.
The 27% tax is charged in addition to the Import Tariff of 18.5 percent
for all imported cheeses, including MERCOSUL members.

# Commodity Outlook, Butter

## Production 

*Note: There are no official statistics on production and consumption of
butter in Brazil. OAA*

*Production estimates for butter are based on interviews with trade
contacts, and also includes "informal" butter production.*

Butter production is projected to increase by 4 percent in CY 2004,
reflecting a small increase in domestic demand and lower imports.
Competition from margarine remains strong, with margarine production
rising to 806,000 metric tons in 2004, up 3 percent from 2003. Imports
are expected to continue to drop next year because of the high cost of
imports due to the devaluation of the Brazilian currency. Uruguay, and
to a lesser extent, Argentina, are the only suppliers of butter to
Brazil.

Post revised butter production for 2003 to reflect a decline in domestic
consumption of nearly 3 percent due to unusually high prices for butter
and competition from margarine.

## Prices

  --------------------------------------------- -------------------------
  Type                                          US\$/kilogram

  Salted                                        2.40

  Unsalted                                      2.10
  --------------------------------------------- -------------------------

Notes: (1) Prices for Sao Paulo market, as of 10/30/03

\(2\) Average Exchange Rate: US\$1.00=R\$2.90

## Tariff Rate Table

+---------------+---------------------+---------------+---------------+
| Tariff Number | Product Description | Rate (%)      | Other Info    |
|               |                     |               |               |
|               |                     | \(1\)         |               |
+---------------+---------------------+---------------+---------------+
| 0405.10.00    | Butter              | 17.5          | Mercosul:     |
|               |                     |               | Zero          |
+---------------+---------------------+---------------+---------------+
| 0405.90.10    | # Butter Oil        | 17.5          | Mercosul:     |
|               |                     |               | Zero          |
+---------------+---------------------+---------------+---------------+

Notes: MERCOSUL's Common External Tariff (CXT). Tariffs reflect the
increase of 2.5 percent, per Decree Number 3,704 of December 27, 2000.
The CXT tariff is applied to all imports other than from MERCOSUL. These
tariffs are assessed on the CIF value of the product.

# Commodity Outlook, Powdered Milk

## Production 

Note: There are no official statistics on production and consumption of
powdered milk in Brazil. OAA estimates for powdered milk production
(nonfat and whole milk) are based on interviews with the trade.

Post forecasts powdered milk production to increase 4 percent in 2004 to
520,000 metric tons, of which 79 percent is whole milk powder (WMP), and
21 percent is nonfat dry milk powder (NDM). The following factors
support higher Brazilian powdered milk production in 2004:

a)  higher import tariffs, devaluation of the Brazilian currency, and
    minimum import prices reduced imports of subsidized powdered milk;

b)  higher exports of powdered milk because of a continued favorable
    exchange rate;

c)  prohibition of the use of imported powdered milk in government's
    social programs;

d)  higher allocation of government funds for social programs at the
    federal and state levels; and,

e)  higher sanitary standards for imported milk;

f)  new credit programs of more than R\$100 million (US\$34 million) by
    the National Bank of Economic and Social Development (BNDES) to
    finance new investments for powdered milk production. This does not
    include private sector capital, which brings total investments up to
    US\$100 million; and,

g)  reported increase of 25 percent in sales of equipment for producing
    powdered milk.

## 

## Consumption 

Domestic consumption of powdered milk in 2003 is expected to decline due
to higher domestic prices for powdered milk combined with the loss of
consumer purchasing power. Post forecasts powdered milk consumption to
recover in 2004 by nearly 2 percent, in view of the prospects for
economic growth, lower unemployment, and higher consumer income. In
addition, during 2003, the federal government is expected to allocate a
significant amount of funds for social programs designed to fight
poverty and hunger.

## 

## Prices

Average wholesale prices of powdered milk, by type, are:

  ------------------------------------------ ----------------------------
  Type                                       US\$/kilogram

  Whole milk powder                          6.00

  Nonfat dry milk powder                     5.00
  ------------------------------------------ ----------------------------

Notes:

(1) Princes for Sao Paulo market, as of 10/30/03.

(2) Average Exchange Rate: US\$1.00=R\$2.90

## Trade

Imports of powder milk (both whole and nonfat) are estimated to decline
by 14 percent in 2004, following a significant drop of nearly 48 percent
estimated for 2003. The significant decline of powdered milk imports in
2003 are the result of higher import duties (after the antidumping
investigation), minimum import prices, and 17 percent devaluation of the
Brazilian currency in 2003.

Argentina and Uruguay are the major suppliers of powdered milk to
Brazil, accounting together for 86 percent of total imports, which is
compised mostly of whole milk powder (83 percent of the total imported).
New Zealand is a minor supplier of powder milk to Brazil, accounting for
nearly 5 percent. The United States is not competitive in the Brazilian
market for powder milk.

Post forecasts exports of powder milk, mostly whole milk, to increase in
2004 by 14 percent due mostly to a favorable exchange rate and new
markets for the Brazilian products. Angola remains as the major
destination for Brazilian powder milk, accounting for nearly 42 percent
of the total. Among the new markets for the Brazilian product are
Trinidad and Tobago and the United States.

## Tariff Rate Table

+--------------+------------------------+------------+----------------+
| Tariff       | Product Description    | Rate (%)   | Other Info     |
| Number       |                        |            |                |
|              |                        |            |                |
| (HTS)        |                        |            |                |
+--------------+------------------------+------------+----------------+
| 0402.21.10   | Whole Milk Powder      | 17.5       | Mercosul: 27%  |
+--------------+------------------------+------------+----------------+
| 0402.21.20   | Nonfat Milk, Powder    | 17.5       | Mercosul: 27%  |
+--------------+------------------------+------------+----------------+
| 0404.10.00   | Whey Powder            | 15.5       | Mercosul: 27%  |
+--------------+------------------------+------------+----------------+

Notes:

(1) MERCOSUL's Common External Tariff (CXT). Tariffs reflect the
    increase of 2.5 percent, per Decree Number 3,704 of December
    27, 2000. The CXT tariff is applied to all imports other than from
    MERCOSUL. These tariffs are assessed on the CIF value of the
    product;

(2) Effective June 1, 2001, milk powder was included in the "exception
    list" of the Common External Tariff (CXT), of the MERCOSUL, per
    Resolution 16/01, of the Foreign Trade Chamber (CAMEX), which
    altered Annex Two of the Decree Number 3.704 of December 27, 2000.
    The 27 percent tax is charged in addition to the import tariff of
    18.5 percent to all markets, including MERCOSUL members.

(3) In addition to the above tariffs, the Brazilian Foreign Trade Board
    (CAMEX) published the final report of their official dumping
    investigation, with the following results:

+---------------------+-----------------------------------+------------+
| Country             | Companies                         | Applied    |
|                     |                                   | Rates (%)  |
+---------------------+-----------------------------------+------------+
| New Zealand         | New Zealand Dairy Board           | 3.9        |
|                     |                                   |            |
|                     | All other companies               | 3.9        |
+---------------------+-----------------------------------+------------+
| European Union      | All companies, except Arla Foods  | 14.8       |
|                     | Ingredients Amba (see note below) |            |
|                     |                                   | 16.9       |
|                     | Cerealin S.A.                     |            |
+---------------------+-----------------------------------+------------+
| Uruguay             | All companies (see note below)    | 16.9       |
+---------------------+-----------------------------------+------------+

> Note: Argentina, and later Uruguay, negotiated with Brazilian
> officials a minimum
>
> export price for powdered milk exports to Brazil. Arla Foods
> Ingredients Amba
>
> from Denmark also negotiated a minimum export price. The minimum price
> was
>
> established at US\$1,900 per metric ton, FOB, and calculated using
> USDA's price list.
>
> \(4\) Effective August 26, 2002, whey powder was included in the
> "exception list" of the Common External Tariff (CXT), of the MERCOSUL,
> per Resolution 21, of the Foreign Trade Chamber (CAMEX), published in
> the Diario Oficial (Brazil's Federal Register) on August 26, 2002. The
> 27 percent tax is charged in addition to the Import Tariff of 15.5
> percent to all markets, including MERCOSUL members.

## Stocks 

There are no official government stocks of powdered milk in Brazil

## Policy 

Please see section under Fluid Milk

## Marketing 

Two important business organizations were formed in Brazil to market
Brazilian powdered milk overseas:

1\) SERLAC. The first Brazilian dairy trading to export Brazilian made
dairy products, mostly powdered milk, under the brand " Brazilian Dairy
Board", following the example of New Zealand. SERLAC includes five major
dairies and cooperatives: Itambe, Confepar, Paulista (CCL), Emare and
Ilpisa. SERLAC is working in the following markets: Algeria, Morocco,
Libya, Middle East, and Latin America. The United States is also a
target market.

2\) DPA. Nestle and Fonterra from New Zealand formed a joint-venture
called Dairy Partners of Americas (DPA), which entered into operation on
January 1, 2003. The company has its headquarters in Brazil, and will
operate in Latin American counties. During 2003, DPA is operating only
in Argentina, Brazil, and Venezuela, expanding later to Chile, Ecuador,
Colombia, and the Caribean Islands. In 2004, DPA plans to initiate sales
to the NAFTA countries. Nestle's seven milk plants in Brazil will
service as the production base for DPA.

# Tables

## PSD: Dairy, Milk, Fluid

+--------------+-------+------+------+------+------+------+-------+
| Brazil       |       |      |      |      |      |      |       |
|              |       |      |      |      |      |      |       |
| Dairy, Milk, |       |      |      |      |      |      |       |
| Fluid        |       |      |      |      |      |      |       |
+--------------+-------+------+------+------+------+------+-------+
|              | 2002  | Rev  | 2003 | Esti | 2004 | Fore | UOM   |
|              |       | ised |      | mate |      | cast |       |
+--------------+-------+------+------+------+------+------+-------+
|              | USDA  | Post | USDA | Post | USDA | Post |       |
|              | Off   | Esti | Offi | Esti | Offi | Esti |       |
|              | icial | mate | cial | mate | cial | mate |       |
|              | \[    | \[N  | \[O  | \[N  | \[O  | \[N  |       |
|              | Old\] | ew\] | ld\] | ew\] | ld\] | ew\] |       |
+--------------+-------+------+------+------+------+------+-------+
| Market Year  |       | 01/  |      | 01/  |      | 01/  | MM    |
| Begin        |       | 2002 |      | 2003 |      | 2004 | /YYYY |
+--------------+-------+------+------+------+------+------+-------+
| Cows In Milk | 15600 | 1    | 1    | 1    | 0    | 1    | (1000 |
|              |       | 5600 | 5300 | 5300 |      | 5200 | HEAD) |
+--------------+-------+------+------+------+------+------+-------+
| Cows Milk    | 22635 | 2    | 2    | 2    | 0    | 2    | (1000 |
| Production   |       | 2635 | 3000 | 2860 |      | 3317 | MT)   |
+--------------+-------+------+------+------+------+------+-------+
| Other Milk   | 0     | 0    | 0    | 0    | 0    | 0    | (1000 |
| Production   |       |      |      |      |      |      | MT)   |
+--------------+-------+------+------+------+------+------+-------+
| TOTAL        | 22635 | 2    | 2    | 2    | 0    | 2    | (1000 |
| Production   |       | 2635 | 3000 | 2860 |      | 3317 | MT)   |
+--------------+-------+------+------+------+------+------+-------+
| Intra EC     | 0     | 0    | 0    | 0    | 0    | 0    | (1000 |
| Imports      |       |      |      |      |      |      | MT)   |
+--------------+-------+------+------+------+------+------+-------+
| Other        | 25    | 28   | 15   | 3    | 0    | 3    | (1000 |
| Imports      |       |      |      |      |      |      | MT)   |
+--------------+-------+------+------+------+------+------+-------+
| TOTAL        | 25    | 28   | 15   | 3    | 0    | 3    | (1000 |
| Imports      |       |      |      |      |      |      | MT)   |
+--------------+-------+------+------+------+------+------+-------+
| TOTAL SUPPLY | 22660 | 2    | 2    | 2    | 0    | 2    | (1000 |
|              |       | 2663 | 3015 | 2863 |      | 3320 | MT)   |
+--------------+-------+------+------+------+------+------+-------+
| Intra EC     | 0     | 0    | 0    | 0    | 0    | 0    | (1000 |
| Exports      |       |      |      |      |      |      | MT)   |
+--------------+-------+------+------+------+------+------+-------+
| Other        | 4     | 4    | 8    | 2    | 0    | 4    | (1000 |
| Exports      |       |      |      |      |      |      | MT)   |
+--------------+-------+------+------+------+------+------+-------+
| TOTAL        | 4     | 4    | 8    | 2    | 0    | 4    | (1000 |
| Exports      |       |      |      |      |      |      | MT)   |
+--------------+-------+------+------+------+------+------+-------+
| Fluid Use    | 12292 | 1    | 1    | 1    | 0    | 1    | (1000 |
| Dom. Consum. |       | 2295 | 2326 | 2391 |      | 2743 | MT)   |
+--------------+-------+------+------+------+------+------+-------+
| Factory Use  | 10218 | 1    | 1    | 1    | 0    | 1    | (1000 |
| Consum.      |       | 0218 | 0571 | 0320 |      | 0423 | MT)   |
+--------------+-------+------+------+------+------+------+-------+
| Feed Use     | 146   | 146  | 110  | 150  | 0    | 150  | (1000 |
| Dom. Consum. |       |      |      |      |      |      | MT)   |
+--------------+-------+------+------+------+------+------+-------+
| TOTAL Dom.   | 22656 | 2    | 2    | 2    | 0    | 2    | (1000 |
| Consumption  |       | 2659 | 3007 | 2861 |      | 3316 | MT)   |
+--------------+-------+------+------+------+------+------+-------+
| TOTAL        | 22660 | 2    | 2    | 2    | 0    | 2    | (1000 |
| DISTRIBUTION |       | 2663 | 3015 | 2863 |      | 3320 | MT)   |
+--------------+-------+------+------+------+------+------+-------+
| Calendar Yr. | 0     | 0    | 0    | 0    | 0    | 0    | (1000 |
| Imp. from    |       |      |      |      |      |      | MT)   |
| U.S.         |       |      |      |      |      |      |       |
+--------------+-------+------+------+------+------+------+-------+
| Calendar Yr. | 0     | 0    | 0    | 0    | 0    | 0    | (1000 |
| Exp. to U.S. |       |      |      |      |      |      | MT)   |
+--------------+-------+------+------+------+------+------+-------+

## Import Trade Matrix, Milk, Fluid

+-------------------+----------------+----------------+----------------+
| Brazil            |                |                |                |
|                   |                |                |                |
| ###### D          |                |                |                |
| airy, Milk, Fluid |                |                |                |
+-------------------+----------------+----------------+----------------+
| Time Period       | Jan-Dec        | Units:         | 1,000 MT       |
+-------------------+----------------+----------------+----------------+
| Imports for:      | 2001           |                | 2002           |
+-------------------+----------------+----------------+----------------+
| U.S.              | 0              | U.S.           | 0              |
+-------------------+----------------+----------------+----------------+
| Others            |                | Others         |                |
+-------------------+----------------+----------------+----------------+
| Argentina         | 6              |                | 9              |
+-------------------+----------------+----------------+----------------+
| Paraguay          | 1              |                | 1              |
+-------------------+----------------+----------------+----------------+
| Uruguay           | 32             |                | 18             |
+-------------------+----------------+----------------+----------------+
|                   |                |                |                |
+-------------------+----------------+----------------+----------------+
|                   |                |                |                |
+-------------------+----------------+----------------+----------------+
|                   |                |                |                |
+-------------------+----------------+----------------+----------------+
|                   |                |                |                |
+-------------------+----------------+----------------+----------------+
|                   |                |                |                |
+-------------------+----------------+----------------+----------------+
|                   |                |                |                |
+-------------------+----------------+----------------+----------------+
|                   |                |                |                |
+-------------------+----------------+----------------+----------------+
| Total for Others  | 39             |                | 28             |
+-------------------+----------------+----------------+----------------+
| Others not Listed | 0              |                | 0              |
+-------------------+----------------+----------------+----------------+
| Grand Total       | 39             |                | 28             |
+-------------------+----------------+----------------+----------------+

## Export Trade Matrix, Milk, Fluid

## 

+------------------+----------------+----------------+----------------+
| **Brazil**       |                |                |                |
|                  |                |                |                |
| ###### **Dair    |                |                |                |
| y, Milk, Fluid** |                |                |                |
+------------------+----------------+----------------+----------------+
| Time Period      | Jan-Dec        | Units:         | 1,000 MT       |
+------------------+----------------+----------------+----------------+
| Exports for:     | 2001           |                | 2002           |
+------------------+----------------+----------------+----------------+
| U.S.             | 0              | U.S.           | 0              |
+------------------+----------------+----------------+----------------+
| Others           |                | Others         |                |
+------------------+----------------+----------------+----------------+
| Paraguay         | 2              |                | 1              |
+------------------+----------------+----------------+----------------+
| Philippines      | 1              |                | 3              |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
| Total for Others | 3              |                | 4              |
+------------------+----------------+----------------+----------------+
| Others not       | 0              |                | 0              |
| Listed           |                |                |                |
+------------------+----------------+----------------+----------------+
| Grand Total      | 3              |                | 4              |
+------------------+----------------+----------------+----------------+

##  

# Pices, Dairy, Milk, Fluid

+----------------+-------------+------------------------+-------------+
| **Brazil**     |             |                        |             |
|                |             |                        |             |
| **Dairy, Milk, |             |                        |             |
| Fluid**        |             |                        |             |
+----------------+-------------+------------------------+-------------+
| Prices in      | Reais       | Reais (R\$)/Liter      |             |
|                | (R\$)/Liter |                        |             |
+----------------+-------------+------------------------+-------------+
| Year           | 2001        | 2002                   | \% Change   |
+----------------+-------------+------------------------+-------------+
| Jan            | 0.29        | 0.29                   | 0%          |
+----------------+-------------+------------------------+-------------+
| Feb            | 0.29        | 0.29                   | 0%          |
+----------------+-------------+------------------------+-------------+
| Mar            | 0.29        | 0.29                   | 0%          |
+----------------+-------------+------------------------+-------------+
| Apr            | 0.3         | 0.31                   | 3%          |
+----------------+-------------+------------------------+-------------+
| May            | 0.31        | 0.33                   | 6%          |
+----------------+-------------+------------------------+-------------+
| Jun            | 0.33        | 0.33                   | 0%          |
+----------------+-------------+------------------------+-------------+
| Jul            | 0.33        | 0.35                   | 6%          |
+----------------+-------------+------------------------+-------------+
| Aug            | 0.32        | 0.37                   | 16%         |
+----------------+-------------+------------------------+-------------+
| Sep            | 0.3         | 0.38                   | 27%         |
+----------------+-------------+------------------------+-------------+
| Oct            | 0.3         | 0.4                    | 33%         |
+----------------+-------------+------------------------+-------------+
| Nov            | 0.29        | 0.41                   | 41%         |
+----------------+-------------+------------------------+-------------+
| Dec            | 0.29        | 0.42                   | 45%         |
+----------------+-------------+------------------------+-------------+
|                |             |                        |             |
+----------------+-------------+------------------------+-------------+
| Exchange Rate  | n/a         | Local Currency/US \$   |             |
+----------------+-------------+------------------------+-------------+
| Date of Quote  | n/a         | MM/DD/YYYY             |             |
+----------------+-------------+------------------------+-------------+
|                |             |                        |             |
+----------------+-------------+------------------------+-------------+
| Notes: Year    |             |                        |             |
| Average        |             |                        |             |
| Exchange Rate: |             |                        |             |
|                |             |                        |             |
| 2001:          |             |                        |             |
| US             |             |                        |             |
| \$1.00=R\$2.25 |             |                        |             |
|                |             |                        |             |
| 2002:          |             |                        |             |
| US             |             |                        |             |
| \$1.00=R\$2.93 |             |                        |             |
|                |             |                        |             |
| Producer       |             |                        |             |
| Price: Milk    |             |                        |             |
| Type \"C\".    |             |                        |             |
+----------------+-------------+------------------------+-------------+

**PSD: Dairy, Cheese**

+------------+------+-------+------+-------+------+-------+---------+
| **Brazil** |      |       |      |       |      |       |         |
|            |      |       |      |       |      |       |         |
| **Dairy,   |      |       |      |       |      |       |         |
| Cheese**   |      |       |      |       |      |       |         |
+------------+------+-------+------+-------+------+-------+---------+
|            | 2002 | Re    | 2003 | Est   | 2004 | For   | UOM     |
|            |      | vised |      | imate |      | ecast |         |
+------------+------+-------+------+-------+------+-------+---------+
|            | USDA | Post  | USDA | Post  | USDA | Post  |         |
|            | Offi | Est   | Offi | Est   | Offi | Est   |         |
|            | cial | imate | cial | imate | cial | imate |         |
|            | \[O  | \[    | \[O  | \[    | \[O  | \[    |         |
|            | ld\] | New\] | ld\] | New\] | ld\] | New\] |         |
+------------+------+-------+------+-------+------+-------+---------+
| **Market   |      | 01    |      | 01    |      | 01    | MM/YYYY |
| Year       |      | /2002 |      | /2003 |      | /2004 |         |
| Begin**    |      |       |      |       |      |       |         |
+------------+------+-------+------+-------+------+-------+---------+
| Beginning  | 0    | 0     | 0    | 0     | 0    | 0     | (1000   |
| Stocks     |      |       |      |       |      |       | MT)     |
+------------+------+-------+------+-------+------+-------+---------+
| Production | 470  | 470   | 480  | 460   | 0    | 470   | (1000   |
|            |      |       |      |       |      |       | MT)     |
+------------+------+-------+------+-------+------+-------+---------+
| Intra EC   | 0    | 0     | 0    | 0     | 0    | 0     | (1000   |
| Imports    |      |       |      |       |      |       | MT)     |
+------------+------+-------+------+-------+------+-------+---------+
| Other      | 10   | 11    | 10   | 6     | 0    | 6     | (1000   |
| Imports    |      |       |      |       |      |       | MT)     |
+------------+------+-------+------+-------+------+-------+---------+
| TOTAL      | 10   | 11    | 10   | 6     | 0    | 6     | (1000   |
| Imports    |      |       |      |       |      |       | MT)     |
+------------+------+-------+------+-------+------+-------+---------+
| TOTAL      | 480  | 481   | 490  | 466   | 0    | 476   | (1000   |
| SUPPLY     |      |       |      |       |      |       | MT)     |
+------------+------+-------+------+-------+------+-------+---------+
| Intra EC   | 0    | 0     | 0    | 0     | 0    | 0     | (1000   |
| Exports    |      |       |      |       |      |       | MT)     |
+------------+------+-------+------+-------+------+-------+---------+
| Other      | 2    | 2     | 4    | 3     | 0    | 4     | (1000   |
| Exports    |      |       |      |       |      |       | MT)     |
+------------+------+-------+------+-------+------+-------+---------+
| TOTAL      | 2    | 2     | 4    | 3     | 0    | 4     | (1000   |
| Exports    |      |       |      |       |      |       | MT)     |
+------------+------+-------+------+-------+------+-------+---------+
| Human Dom. | 478  | 479   | 486  | 463   | 0    | 472   | (1000   |
| C          |      |       |      |       |      |       | MT)     |
| onsumption |      |       |      |       |      |       |         |
+------------+------+-------+------+-------+------+-------+---------+
| Other Use, | 0    | 0     | 0    | 0     | 0    | 0     | (1000   |
| Losses     |      |       |      |       |      |       | MT)     |
+------------+------+-------+------+-------+------+-------+---------+
| Total Dom. | 478  | 479   | 486  | 463   | 0    | 472   | (1000   |
| C          |      |       |      |       |      |       | MT)     |
| onsumption |      |       |      |       |      |       |         |
+------------+------+-------+------+-------+------+-------+---------+
| TOTAL Use  | 480  | 481   | 490  | 466   | 0    | 476   | (1000   |
|            |      |       |      |       |      |       | MT)     |
+------------+------+-------+------+-------+------+-------+---------+
| Ending     | 0    | 0     | 0    | 0     | 0    | 0     | (1000   |
| Stocks     |      |       |      |       |      |       | MT)     |
+------------+------+-------+------+-------+------+-------+---------+
| TOTAL      | 480  | 481   | 490  | 466   | 0    | 476   | (1000   |
| DI         |      |       |      |       |      |       | MT)     |
| STRIBUTION |      |       |      |       |      |       |         |
+------------+------+-------+------+-------+------+-------+---------+
| Calendar   | 0    | 0     | 0    | 0     | 0    | 0     | (1000   |
| Yr. Imp.   |      |       |      |       |      |       | MT)     |
| from U.S.  |      |       |      |       |      |       |         |
+------------+------+-------+------+-------+------+-------+---------+
| Calendar   | 0    | 0     | 0    | 0     | 0    | 0     | (1000   |
| Yr. Exp.   |      |       |      |       |      |       | MT)     |
| to U.S.    |      |       |      |       |      |       |         |
+------------+------+-------+------+-------+------+-------+---------+

**Import Trade Matrix, Cheese**

+------------------------+------------+----------------+--------------+
| Brazil                 |            |                |              |
|                        |            |                |              |
| ###### Dairy, Cheese   |            |                |              |
+------------------------+------------+----------------+--------------+
| Time Period            | Jan-Dec    | Units:         | 1,000 MT     |
+------------------------+------------+----------------+--------------+
| Imports for:           | 2001       |                | 2002         |
+------------------------+------------+----------------+--------------+
| U.S.                   | 0          | U.S.           | 0            |
+------------------------+------------+----------------+--------------+
| Others                 |            | Others         |              |
+------------------------+------------+----------------+--------------+
| Argentina              | 3          |                | 6            |
+------------------------+------------+----------------+--------------+
| Uruguay                | 2          |                | 4            |
+------------------------+------------+----------------+--------------+
|                        |            |                |              |
+------------------------+------------+----------------+--------------+
|                        |            |                |              |
+------------------------+------------+----------------+--------------+
|                        |            |                |              |
+------------------------+------------+----------------+--------------+
|                        |            |                |              |
+------------------------+------------+----------------+--------------+
|                        |            |                |              |
+------------------------+------------+----------------+--------------+
|                        |            |                |              |
+------------------------+------------+----------------+--------------+
|                        |            |                |              |
+------------------------+------------+----------------+--------------+
|                        |            |                |              |
+------------------------+------------+----------------+--------------+
| Total for Others       | 5          |                | 10           |
+------------------------+------------+----------------+--------------+
| Others not Listed      | 3          |                | 1            |
+------------------------+------------+----------------+--------------+
| Grand Total            | 8          |                | 11           |
+------------------------+------------+----------------+--------------+

**Export Trade Matrix, Cheese**

+------------------+----------------+----------------+----------------+
| Brazil           |                |                |                |
|                  |                |                |                |
| Dairy, Cheese    |                |                |                |
+------------------+----------------+----------------+----------------+
| Time Period      | Jan-Dec        | Units:         | 1,000 MT       |
+------------------+----------------+----------------+----------------+
| Exports for:     | 2001           |                | 2002           |
+------------------+----------------+----------------+----------------+
| U.S.             |                | U.S.           |                |
+------------------+----------------+----------------+----------------+
| Others           | 0              | Others         | 0              |
+------------------+----------------+----------------+----------------+
| Argentina        | 2              |                | 1              |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
| Total for Others | 2              |                | 1              |
+------------------+----------------+----------------+----------------+
| Others not       | 0              |                | 1              |
| Listed           |                |                |                |
+------------------+----------------+----------------+----------------+
| Grand Total      | 2              |                | 2              |
+------------------+----------------+----------------+----------------+

**PSD: Dairy, Butter**

+-------------+-------+-------+-------+-------+-------+-------+-------+
| Brazil      |       |       |       |       |       |       |       |
|             |       |       |       |       |       |       |       |
| Dairy,      |       |       |       |       |       |       |       |
| Butter      |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
|             | 2002  | Re    | 2003  | Est   | 2004  | For   | UOM   |
|             |       | vised |       | imate |       | ecast |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
|             | USDA  | Post  | USDA  | Post  | USDA  | Post  |       |
|             | Off   | Est   | Off   | Est   | Off   | Est   |       |
|             | icial | imate | icial | imate | icial | imate |       |
|             | \[    | \[    | \[    | \[    | \[    | \[    |       |
|             | Old\] | New\] | Old\] | New\] | Old\] | New\] |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Market Year |       | 01    |       | 01    |       | 01    | MM    |
| Begin       |       | /2002 |       | /2003 |       | /2004 | /YYYY |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Beginning   | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Stocks      |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Production  | 70    | 70    | 78    | 72    | 0     | 75    | (1000 |
|             |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Intra EC    | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Imports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Other       | 7     | 8     | 2     | 4     | 0     | 2     | (1000 |
| Imports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL       | 7     | 8     | 2     | 4     | 0     | 2     | (1000 |
| Imports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL       | 77    | 78    | 80    | 76    | 0     | 77    | (1000 |
| SUPPLY      |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Intra EC    | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Exports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Other       | 1     | 0     | 2     | 0     | 0     | 0     | (1000 |
| Exports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL       | 1     | 0     | 2     | 0     | 0     | 0     | (1000 |
| Exports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Domestic    | 76    | 78    | 78    | 76    | 0     | 77    | (1000 |
| Consumption |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL Use   | 77    | 78    | 80    | 76    | 0     | 77    | (1000 |
|             |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Ending      | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Stocks      |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL       | 77    | 78    | 80    | 76    | 0     | 77    | (1000 |
| D           |       |       |       |       |       |       | MT)   |
| ISTRIBUTION |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Calendar    | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Yr. Imp.    |       |       |       |       |       |       | MT)   |
| from U.S.   |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Calendar    | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Yr. Exp. to |       |       |       |       |       |       | MT)   |
| U.S.        |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+

**Import Trade Matrix, Butter**

+------------------+----------------+----------------+----------------+
| Brazil           |                |                |                |
|                  |                |                |                |
| Dairy, Butter    |                |                |                |
+------------------+----------------+----------------+----------------+
| Time Period      | Jan-Dec        | Units:         | 1,000 MT       |
+------------------+----------------+----------------+----------------+
| Imports for:     | 2001           |                | 2002           |
+------------------+----------------+----------------+----------------+
| U.S.             | 0              | U.S.           | 0              |
+------------------+----------------+----------------+----------------+
| Others           |                | Others         |                |
+------------------+----------------+----------------+----------------+
| Argentina        | 0              |                | 3              |
+------------------+----------------+----------------+----------------+
| Uruguay          | 1              |                | 5              |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
| Total for Others | 1              |                | 8              |
+------------------+----------------+----------------+----------------+
| Others not       | 0              |                | 0              |
| Listed           |                |                |                |
+------------------+----------------+----------------+----------------+
| Grand Total      | 1              |                | 8              |
+------------------+----------------+----------------+----------------+

**PSD: Dairy, Dry Whole Milk Powder**

+-------------+-------+-------+-------+-------+-------+-------+-------+
| Brazil      |       |       |       |       |       |       |       |
|             |       |       |       |       |       |       |       |
| Dairy, Dry  |       |       |       |       |       |       |       |
| Whole Milk  |       |       |       |       |       |       |       |
| Powder      |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
|             | 2002  | Re    | 2003  | Est   | 2004  | For   | UOM   |
|             |       | vised |       | imate |       | ecast |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
|             | USDA  | Post  | USDA  | Post  | USDA  | Post  |       |
|             | Off   | Est   | Off   | Est   | Off   | Est   |       |
|             | icial | imate | icial | imate | icial | imate |       |
|             | \[    | \[    | \[    | \[    | \[    | \[    |       |
|             | Old\] | New\] | Old\] | New\] | Old\] | New\] |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Market Year |       | 01    |       | 01    |       | 01    | MM    |
| Begin       |       | /2002 |       | /2003 |       | /2004 | /YYYY |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Beginning   | 31    | 0     | 19    | 0     | 0     | 0     | (1000 |
| Stocks      |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Production  | 355   | 355   | 365   | 390   | 0     | 410   | (1000 |
|             |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Intra EC    | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Imports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Other       | 85    | 95    | 75    | 47    | 0     | 40    | (1000 |
| Imports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL       | 85    | 95    | 75    | 47    | 0     | 40    | (1000 |
| Imports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL       | 471   | 450   | 459   | 437   | 0     | 450   | (1000 |
| SUPPLY      |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Intra EC    | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Exports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Other       | 2     | 24    | 2     | 27    | 0     | 30    | (1000 |
| Exports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL       | 2     | 24    | 2     | 27    | 0     | 30    | (1000 |
| Exports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Human Dom.  | 450   | 426   | 457   | 410   | 0     | 420   | (1000 |
| Consumption |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Other Use,  | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Losses      |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Total Dom.  | 450   | 426   | 457   | 410   | 0     | 420   | (1000 |
| Consumption |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL Use   | 452   | 450   | 459   | 437   | 0     | 450   | (1000 |
|             |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Ending      | 19    | 0     | 0     | 0     | 0     | 0     | (1000 |
| Stocks      |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL       | 471   | 450   | 459   | 437   | 0     | 450   | (1000 |
| D           |       |       |       |       |       |       | MT)   |
| ISTRIBUTION |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Calendar    | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Yr. Imp.    |       |       |       |       |       |       | MT)   |
| from U.S.   |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Calendar    | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Yr. Exp. to |       |       |       |       |       |       | MT)   |
| U.S.        |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
|             |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+

**Import Trade Matrix, Dry Whole Milk Powder**

+-----------------+----------------+---------------+-----------------+---+
| **Brazil**      |                |               |                 |   |
|                 |                |               |                 |   |
| **Dairy, Dry    |                |               |                 |   |
| Whole Milk      |                |               |                 |   |
| Powder**        |                |               |                 |   |
+-----------------+----------------+---------------+-----------------+---+
| Time Period     | Jan-Dec        | Units:        | 1,000 MT        |   |
+-----------------+----------------+---------------+-----------------+---+
| Imports for:    | 2001           |               | 2002            |   |
+-----------------+----------------+---------------+-----------------+---+
| U.S.            | 0              | U.S.          | 0               |   |
+-----------------+----------------+---------------+-----------------+---+
| Others          |                | Others        |                 |   |
+-----------------+----------------+---------------+-----------------+---+
| Argentina       | 32             |               | 60              |   |
+-----------------+----------------+---------------+-----------------+---+
| New Zealand     | 0              |               | 4               |   |
+-----------------+----------------+---------------+-----------------+---+
| Uruguay         | 5              |               | 25              |   |
+-----------------+----------------+---------------+-----------------+---+
|                 |                |               |                 |   |
+-----------------+----------------+---------------+-----------------+---+
|                 |                |               |                 |   |
+-----------------+----------------+---------------+-----------------+---+
|                 |                |               |                 |   |
+-----------------+----------------+---------------+-----------------+---+
|                 |                |               |                 |   |
+-----------------+----------------+---------------+-----------------+---+
|                 |                |               |                 |   |
+-----------------+----------------+---------------+-----------------+---+
|                 |                |               |                 |   |
+-----------------+----------------+---------------+-----------------+---+
|                 |                |               |                 |   |
+-----------------+----------------+---------------+-----------------+---+
| Total for       | 37             |               | 89              |   |
| Others          |                |               |                 |   |
+-----------------+----------------+---------------+-----------------+---+
| Others not      | 4              |               | 6               |   |
| Listed          |                |               |                 |   |
+-----------------+----------------+---------------+-----------------+---+
| Grand Total     | 41             |               | 95              |   |
+-----------------+----------------+---------------+-----------------+---+

**Export Trade Matrix, Dry Whole Milk Powder**

  ----------------- ----------------- ----------------- -----------------
  Time Period       Jan-Dec           Units:            1,000 MT

  Exports for:      2001                                2002

  U.S.              0                 U.S.              0

  Others                              Others            

  Angola            5                                   10

  Trinidad Tobago   1                                   4

                                                        

                                                        

                                                        

                                                        

                                                        

                                                        

                                                        

                                                        

  Total for Others  6                                   14

  Others not Listed 1                                   10

  Grand Total       7                                   24
  ----------------- ----------------- ----------------- -----------------

**PSD: Dairy, Milk, Nonfat Dry**

+-------------+-------+-------+-------+-------+-------+-------+-------+
| Brazil      |       |       |       |       |       |       |       |
|             |       |       |       |       |       |       |       |
| Dairy,      |       |       |       |       |       |       |       |
| Milk,       |       |       |       |       |       |       |       |
| Nonfat Dry  |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
|             | 2002  | Re    | 2003  | Est   | 2004  | For   | UOM   |
|             |       | vised |       | imate |       | ecast |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
|             | USDA  | Post  | USDA  | Post  | USDA  | Post  |       |
|             | Off   | Est   | Off   | Est   | Off   | Est   |       |
|             | icial | imate | icial | imate | icial | imate |       |
|             | \[    | \[    | \[    | \[    | \[    | \[    |       |
|             | Old\] | New\] | Old\] | New\] | Old\] | New\] |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Market Year |       | 01    |       | 01    |       | 01    | MM    |
| Begin       |       | /2002 |       | /2003 |       | /2004 | /YYYY |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Beginning   | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Stocks      |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Production  | 107   | 107   | 108   | 108   | 0     | 110   | (1000 |
|             |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Intra EC    | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Imports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Other       | 16    | 19    | 16    | 12    | 0     | 11    | (1000 |
| Imports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL       | 16    | 19    | 16    | 12    | 0     | 11    | (1000 |
| Imports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL       | 123   | 126   | 124   | 120   | 0     | 121   | (1000 |
| SUPPLY      |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Intra EC    | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Exports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Other       | 3     | 3     | 3     | 1     | 0     | 2     | (1000 |
| Exports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL       | 3     | 3     | 3     | 1     | 0     | 2     | (1000 |
| Exports     |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Human Dom.  | 120   | 123   | 121   | 119   | 0     | 119   | (1000 |
| Consumption |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Other Use,  | 0     | 0     | 0     | 0     | 0     |       | (1000 |
| Losses      |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Total Dom.  | 120   | 123   | 121   | 119   | 0     | 119   | (1000 |
| Consumption |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL Use   | 123   | 126   | 124   | 120   | 0     | 121   | (1000 |
|             |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Ending      | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Stocks      |       |       |       |       |       |       | MT)   |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| TOTAL       | 123   | 126   | 124   | 120   | 0     | 121   | (1000 |
| D           |       |       |       |       |       |       | MT)   |
| ISTRIBUTION |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Calendar    | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Yr. Imp.    |       |       |       |       |       |       | MT)   |
| from U.S.   |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+
| Calendar    | 0     | 0     | 0     | 0     | 0     | 0     | (1000 |
| Yr. Exp. to |       |       |       |       |       |       | MT)   |
| U.S.        |       |       |       |       |       |       |       |
+-------------+-------+-------+-------+-------+-------+-------+-------+

**Import Trade Matrix, Nonfat dry**

+------------------+----------------+----------------+----------------+
| Brazil           |                |                |                |
|                  |                |                |                |
| Dairy, Milk,     |                |                |                |
| Nonfat Dry       |                |                |                |
+------------------+----------------+----------------+----------------+
| Time Period      | Jan-Dec        | Units:         | 1,000 MT       |
+------------------+----------------+----------------+----------------+
| Imports for:     | 2001           |                | 2002           |
+------------------+----------------+----------------+----------------+
| U.S.             | 0              | U.S.           | 0              |
+------------------+----------------+----------------+----------------+
| Others           |                | Others         |                |
+------------------+----------------+----------------+----------------+
| Argentina        | 8              |                | 6              |
+------------------+----------------+----------------+----------------+
| New Zealand      | 1              |                | 1              |
+------------------+----------------+----------------+----------------+
| Uruguay          | 1              |                | 10             |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
|                  |                |                |                |
+------------------+----------------+----------------+----------------+
| Total for Others | 10             |                | 17             |
+------------------+----------------+----------------+----------------+
| Others not       | 2              |                | 2              |
| Listed           |                |                |                |
+------------------+----------------+----------------+----------------+
| Grand Total      | 12             |                | 19             |
+------------------+----------------+----------------+----------------+

**Export Trade Matrix, Nonfat Dry**

+-----------------+-----------------+-----------------+-----------------+
| Brazil          |                 |                 |                 |
|                 |                 |                 |                 |
| Dairy, Milk,    |                 |                 |                 |
| Nonfat Dry      |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Time Period     | Jan-Dec         | Units:          | 1,000 MT        |
+-----------------+-----------------+-----------------+-----------------+
| Exports for:    | 2001            |                 | 2002            |
+-----------------+-----------------+-----------------+-----------------+
| U.S.            | 0               | U.S.            | 0               |
+-----------------+-----------------+-----------------+-----------------+
| Others          |                 | Others          |                 |
+-----------------+-----------------+-----------------+-----------------+
| Algeria         | 0               |                 | 3               |
+-----------------+-----------------+-----------------+-----------------+
|                 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
|                 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
|                 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
|                 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
|                 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
|                 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
|                 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
|                 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
|                 |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Total for       | 0               |                 | 3               |
| Others          |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Others not      | 0               |                 | 0               |
| Listed          |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Grand Total     | 0               |                 | 3               |
+-----------------+-----------------+-----------------+-----------------+