# Presentation: 380256

## Slide 1

| Global Dairy Market Perspectives
Presented by World Perspectives, Inc.

Conference for Uruguay’s Dairy Industry
Sponsored by the 
Embassy of the United States of America |
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Montevideo, Uruguay
September 30, 2003 |
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## Slide 2

| ... Providing Market and Policy Analysis

         Intelligence Reports
            Feed Grains, Sugar, Trade Policy, and Dairy Trade Updates

         Customized Consulting Projects
            Covering all aspects of the agriculture and food sector |
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## SAMPLE COPY

**A Weekly report On Trade and Policy Issues in the Dairy Sector.**
**CONTENTS:****	****	****	****	**
- U.S. Dairy Industry Strategy
- Competitors Respond
- Congress Adds Heat
- Geographic Indicators

## Market and Trade Developments

- Aggregate milk production in 2003 is about one-half percent above 2002
- US$ has depreciated against major exporters
- 		13 pct vs EU€
- 		17 pct vs AU$
- 		19 pct vs NZ$
- WTO settled a case against Canada’s export pricing; could reduce Canada’s exports
- WTO Cancun Ministerial failure; trade barriers persist

- €

## Production Snapshot (25 Sept)

- NZ – milk production up 5 pct seasonally; forecast to be up 2-3 pct annually
- AU – drought recovery is helping milk supplies; forecast up about 1 pct annually
- EU – milk production is down, heat wave affected production, feed availability, milk composition
- US – milk production is up over 2002, but tailing off after first half of 2003; herd liquidation with strong beef prices.  Product processing is up with milk production.

## Utilization Snapshot (25 Sept)2003 FOB Export Prices ($USD/MT)

|  | 
New Zealand
Australia |  | 
Western Europe |  | 

USA |
| --- | --- | --- | --- | --- | --- |
|  | 

High | 

Low | 

High | 

Low | 

Current  |
| 

WDM | 
1850  | 
1600 | 
2000 | 
1625 | 
2389 |
| 

Cheese | 
1650 | 
2100 | 
NA | 
NA | 
3203 |
| 

Butter | 
1500 | 
1100 | 
1700 | 
1250 | 
2342 |

*Utilization/Demand remains steady to strong globally; reform in Canada (and EU) keeps world market prices firm*

## Whole Milk Powder (Jan 02-Jul 03)

## Non-Fat Dry Milk (Jan 02 - Jul 03)

## Butter (Jan 02 – Jul 03)

## Cheese (40 lbs blocks of cheddar) (Jan 02-Jul 03)

## Highly volatile markets – 50 pct fluctuation in price

_*Highly volatile markets – 50 pct fluctuation in price*_

## GLOBAL DAIRY TRADE BARRIERS

**GLOBAL DAIRY TRADE BARRIERS**

**GLOBAL DAIRY TRADE BARRIERS**

**TARIFFS: 40-90 pct avg; can be 300 pct **

**TRQ’s & Subsidies: prohibitive over quota rate; administration of TRQ; “dump” market**

**OTHER: **

**OTHER: packaging, labeling, testing, inspection, mandatory shelf life requirements, recipe and manufacturing declaration, standards of identity**

## North America

**USA**** – TRQ’s domestic support = gross overproduction of NDM, minimum prices per class, standards of identity**
**Canada**** – TRQ’s,with over quota tariffs, until recently two-tiered pricing**
**Mexico**** – growing market; preferential treatment via NAFTA hurts 3****rd**** parties **

## Asia, Middle East

- Japan/Korea: growth market for cheese and ice cream; non-tariff barriers
- Taiwan: fairly open; imports all but fluid milk
- Israel: cheese TRQ admin problems; high over quota tarifs
- Iraq: WDM potential (compete w/ US DEIP)
- India: market closed; (imagine potential)

## Europe

- EU:  High in-quota tariffs, licensing rules; $1 bln in export subsidies; wants to impose new and stricter “*geographical indicators*”

## South America

- Brazil – new federal payments (US$75 mln) to improve productivity of cows; maintaining anti-dumping duties on powder; UHT market, but fluid milk consumption is down
- Colombia: 97 pct tariffs
- Venezuela: import licensing
- Chile: FTA with US
- Argentina: Uruguay largest export supplier; Argentina actually dropped import duties in 2002, but no purchase power and imposes export taxes

## WTO: Cancun Collapse	

- _Draft Text (#2)_
- Product specific AMS caps;
- Eliminate some export subsidies;
- Review Green Box;
- Special and Differential

-  _Global Dairy Alliance_
- Include dairy reform WTO round
- End export subsidies, market barriers, and production subsidies

- _EU’s “GI” Plan_
- The EU plan would extend GI’s beyond TRIPS register which effects cheese, e.g. feta, parmesan, cheddar, brie
- Also add quality descriptions, e.g. double cream, aged)

- _G21 Countries_
- Refused to budge on market access and facilitation issues

## GAINS FROM TRADE

**GLOBAL DAIRY TRADE BARRIERS**

**GAINS FROM TRADE**

**PRICES: *****export***** prices increase 18-40 pct for most products; 40 pct for cheese**
**URUGUAY: could see 84 pct increase in value of cheese exports; 15 pct increase elsewhere**

**NICHE: certain niche products can and are exported without trade agreements; in fact lack of agreements sometimes define the product and market**

## WTO: Cancun Fallout,What’s Next?

- Fallout is still being calculated
- Brazil will not open to ag imports - Ricardo Ferreira, rep of GDA/ALG
- US likely to pursue even FTA’s
- Keep pressure on Brazil
- Facilitation/Transparency

## TWO TYPES OF DAIRY EXPORTS

**TWO TYPES OF DAIRY EXPORTS**

- _COMMODITY_
- WDM
- NDM
- Butter
- Cheese

- _NICHE_
- Whey
- Lactose
- Ice Cream
- Concentrates

## TWO TYPES OF DAIRY EXPORTS

**TWO TYPES OF DAIRY EXPORTS**

- _COMMODITY_
- Highly volatile, low margin, fungible standard products; markets distorted  by subsidies and barriers

- _NICHE_
- Defined by high value, or tariff avoidance; market often defined by regulation and barriers; not a lot of value to producers; significant current trade

## Milk Protein Concentrates (MPC)

- MPCs, casein and caseinates – if 40 pct protein, there is no TRQ
- Not a direct replacement for NDM, but if no price support for NDM, MPC’s wouldn’t be marketable
- The ITC will release its report by May 14, 2004

## Ice Cream

- Growing export product: US ships 40 million gallons totaling $USD80-100 mln per year
- Japan, United Kingdom, Mexico, Canada, Hong Kong are top 5 importers
- US Standard of Identity using whey for ice cream
- Artificial sweeteners in ice cream due to Atkin’s diet

## US Dietary Guidelines

- US “Food Pyramid” – average diet should have 22 percent more dairy
- Most would be low fat products – yogurt, low fat cheese
- Revised in 2005, new focus on weight loss properties of dairy calcium

## Specialty Cheese PricesWashington, DC, USA  (week of 22 Sep)

***Cheeses of the World (cut to your order!!!)***

- Chevre De Belley 				$11.99
- Blue D'Auvergne (France)			$ 7.99
- Caerphilly Wales				$ 6.99
- Huntsman (England)			$ 9.99
- Kashkaval					$ 7.99
- Morbier (France)				$ 7.99
- Parmesan Reggiano (Italy)		$12.99
- Parrano Cheese (Dutch)			$11.95
- Port Salut (France)				$17.99
- Saint Andre - Triple Cream (France)	$12.98
- Saint Nectare (France)			$ 9.49
- Taleggio (Italy)				$13.95
- Tilsit (Danish)				$ 8.49

- Avg retail price:
- $10.83 USD

## Uruguay: US Strategy

| Cheese | HTS Code | Action/Goal |
| --- | --- | --- |
| Italian Type | 0404.10.54 | 1,200 ton increase |
| Swiss/Emmethal | 0406.10.64 | 600 ton quota |
| Swiss/Emmethal | 0406.10.68 | 600 ton quota |
| Gouda/Edam | 0406.10.44 | 1,000 ton quota |
| Cheese Powder | 0406.10.30 | 1,000 ton quota |

## Uruguay: Regulatory Strategy

- FMD – cheese, ice cream, butter, butter oil, and chocolate milk
- Harmonize regulatory structures – Chile sets precedent with US Chile FTA: industry wants to use the USDA, Agricultural Marketing Service list of _Dairy Plants Surveyed and Approved for USDA Grading_, and t he FDA’s _Interstate Milk Shippers List for Grade A Dairy Plants_
- Industry Association plays a key role, ...

## Asociación Internacional de Productos Lácteos (International Dairy Foods Association) 

**Asociación Internacional de Productos Lácteos (International Dairy Foods Association)**
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**Oportunidades para relacionarse**
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