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PRESS/68
26February 1997
CHEESE ISBRIGHT SPOT INWORLD DAIRY TRADE,
SAYS WTO SECRETARIAT REPORT
World prices forcheese remained firmin1996 incontrast tolower prices formilkpowders
andbutter. Cheese production continued itsworld-wide upward trendwhile theEuropean Communities,
Australia andNewZealand consolidated theirroleastheworld 'sleading cheese exporters.
These areamong thefindings contained intheWTO 'ssecond annual report1ontheinternational
dairy products market, published today. Thereport reviews thesituation intheworld dairy market
in1995 andthefirsthalfof1996. Highlights include:
- In1996, theprospects areforanincrease inworld milkproduction, driven byfurther expansion
indeveloping countries andOceania (Australia andNewZealand). Milkproduction isexpected
tostabilize intheCommonwealth ofIndependent States (CIS) andEastern Europe. Atthefarm
level, thereappears tobeatendency forthenumber ofmilkproducers todecrease while average
dairy herdsizeisincreasing. Thedairy processing industry tends tobecome more andmore
concentrated.
- World production ofskimmed milkpowder declined in1995while production ofwhole milk
powderincreased.Worldexportsofbothpowdersincreased.InJanuary1996,stocksofskimmed
milkpower intheEuropean Communities andtheUnited States werelow.Prices werestrong
during thefirstthreequarters of1995, reflecting tighter supplies, butdipped inthelastquarter
oftheyearandinthebeginning of1996 asdemand slackened.
97-0829 MORE
1TheWorld Market forDairy Products 1996 -Second Annual Report inEnglish isavailable
from theWTO Secretariat, Centre William Rappard, 154ruedeLausanne, 1211 Geneva 21,
Switzerland. Price: SwF15.-TheFrench andSpanish editions willbeavailable soon.PRESS/68
Page2/3
- World production ofbutter andbutter oilincreased marginally in1995, ending along-
termdownward trend. Exports ofbutter andbutter oilrecovered in1995asdemand,
particularly fromtheRussian Federation, theNearandtheFarEast, wasstrong. By
theendof1995, highprices andlowstocks were keyfeatures oftheworld butter
market. However, prices decreased inthefirsthalfof1996 duetoweaker demand.
- Cheese production continued itsworld-wide upward trend. Production ofcheese is
expanding morerapidly thanmilkproduction which reflects aprogressive shifttowards
theproduction ofvalue-added products. World cheese trade alsoincreased in1995.
Price increases forcheese during 1995werelesspronounced when compared toother
dairy products. However, incontrast toprices ofmilkpowders andbutterfat, cheese
prices haveremained firmin1996 asdemand from major imports hasbeenstrong.
Regarding trade policies, theWTO report notes thatfrom early 1995 tomid-1996, export
restitutions forselected cheeses intheEuropean Communities werecutsubstantially insuccessive steps.
IntheUnited States, anewlaw(theFederal Agricultural Improvement andReform orFAIR Act)was
approved inApril 1996. TheFAIR Actfunds theUSDairy Export Incentive Program uptothelimits
imposed bytheUSexport subsidy reduction commitments under theWTO Agreement onAgriculture.
Note toEditors:
TheInternational Dairy Agreement entered intoeffect on1January 1995. Itreplaces the
International Dairy Arrangement, which hadoperated since 1980. AsofJanuary 1997, thefollowing
wereparties totheInternational Dairy Agreement: Argentina, Bulgaria, theEuropean Community (15),
Japan, NewZealand, Norway, Romania, Switzerland andUruguay.
Theprimary objectives oftheAgreement aretoadvance theexpansion andliberalization of
world trade indairy products under asstable aspossible market conditions, onthebasis ofmutual
benefit toexporting andimporting countries, andtofurther economic andsocial development in
developing countries. Inadopting theseobjectives, theeconomic importance ofmilkanddairyproducts
tomany countries wasrecognized, aswellastheneedtoavoid surpluses andshortages andtomaintain
prices atanequitable level. AnInternational Dairy Council andaCommittee onCertain MilkProducts
havebeenestablished toadminister theAgreement. Previously three Protocols wereannexed tothe
International Dairy Arrangement; under theInternational Dairy Agreement thesehavebeencombined
intoasingle Annex onCertain Milk Products. ThisAnnex establishes minimum export prices for
skimmed milkpowder, whole milkpowder, buttermilk powder, anhydrous milkfat,butter andcheese.
TheInternational Dairy Council, on17October 1995, noted thatlimited membership inthe
Agreement, andinparticular theabsence ofsome major dairy exporting countries, made theoperation
oftheminimum priceprovisions untenable. Itdecided tosuspend minimum prices foralldairyproducts
from 18October 1995 until31December 1997. TheCommittee onCertain Milk Products, whose
work wasrelated directly totheimplementation oftheminimum prices, wasalsosuspended until31
December 1997. Asseveral parties expressed doubts about thecontinued usefulness ofthecurrent
Agreement inviewoftheUruguay Round results, atitsmeeting on17September 1996, theCouncil
invited theChairperson toundertake informal consultations onthefuture oftheAgreement.
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