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15 nations sign RCEP deal; U.S. stakeholders eye trade barriers

November 20, 2020

WASHINGTON — The Regional Comprehensive Economic Partnership (RCEP), which will be the world’s largest free trade agreement once implemented, was signed this week by 15 Indo-Pacific countries, including the 10 members of the Association of Southeast Asian Nations (ASEAN) as well as Australia, China, Japan, South Korea and New Zealand.

When finalized, some of the benefits for the countries in the RCEP agreement include: a single set of trade and investment rules across the entire RCEP region for accessing preferential tariffs, improved mechanisms for tackling non-tariff barriers, a common set of rules on intellectual property, rules on e-commerce to make it easier for businesses to trade online, and overall more streamlined trade opportunities.

RCEP has been under negotiation for eight years. India withdrew from the negotiations last year and did not sign this week’s agreement, though a fast-track process for India’s accession has been established should it wish to rejoin RCEP in the future.
“This agreement may have taken eight years to negotiate, but it could not have come at a more important time given the scale of global economic and trade uncertainty,” says Australian Trade Minister Simon Birmingham. “Economic cooperation of this scale sends a strong signal that our region is committed to the principles of open trade for the post COVID-19 recovery, just as we advanced them during the previous years of strong economic growth.”

According to China’s Ministry of Commerce, the signing of the RCEP agreement “is a new milestone for East Asian economic integration,” and the total population, economic volume and trade of the 15 RCEP members account for about 30% of global trade.
“This will strongly support the free trade and multilateral trading system, promote international cooperation against COVID-19, keep the regional industrial chain and supply chain stable, and boost regional and global economic recovery and development,” China’s Ministry of Commerce says.

In other global trade news, the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) last week released an executive summary of their analysis of global trade barriers that are hampering U.S. dairy sales overseas to help guide work of the incoming administration and other policymakers. To read the executive summary, visit https://www.nmpf.org/wp-content/uploads/2020/11/Executive-Summary_National-Trade-Estimate-Dairy-Barriers-Overview-111220_Final.pdf.

A detailed analysis was submitted late last month to the U.S. Trade Representative’s (USTR) office as part of USTR’s annual call for input to inform its National Trade Estimate Report on Foreign Trade Barriers. The submission included nearly 40 pages worth of various challenges and opportunities facing U.S. dairy exports in more than 30 foreign markets.

“Exports are essential to the economic survival of our industry, and it is important U.S. trade negotiators fully understand all of the trade-distorting tricks used to keep high-quality U.S. dairy products out of global markets,” says Tom Vilsack, president and CEO of USDEC. “The USTR has worked hard to address many of these barriers, and USDEC members have benefited from our broad approach to handling issues ranging from trade policy to regulatory hurdles. We stand ready to continue our work alongside USTR and USDA to address these and future trade barriers.”

USDEC notes more than $6 billion of dairy products were exported in 2019, accounting for 15% of all U.S. milk production, with more potential to serve consumers overseas and create dairy jobs in the United States.

“Our comments to the USTR provide a road map for dozens of opportunities to create a more level and consistent global playing field for the U.S. dairy sector,” says Jim Mulhern, president and CEO of NMPF. “The best avenue to stamp out many of these trade tactics that disadvantage American-made dairy products is to strongly convey the message that foreign restrictions on U.S. agriculture must end and that new trade agreements that dismantle trade barriers and put America’s dairy industry on a level playing field are necessary.”

The industry’s submission dedicated the most attention to key markets where trade barriers are limiting U.S. market access, including China and Europe. Foreign countries use policies including high tariffs, retaliatory duties, geographical indications, import licensing and unscientific health requirements to keep U.S. goods at bay, USDEC and NMPF say. The submission also focused on the importance of enforcing existing free-trade agreements, particularly the United States-Mexico-Canada Agreement.

NMPF and USDEC say the United States should prioritize trade deals most likely to yield net positive benefits for dairy and agriculture, such as with the United Kingdom and key Asian markets, including those in Southeast Asia.

The International Dairy Foods Association (IDFA) also submitted comments last month to USTR regarding the National Trade Estimate Report on Foreign Trade Barriers. IDFA notes that in recent years, more and more countries have erected obstacles and barriers to U.S. dairy exports, hurting dairy processors and other businesses that rely on U.S. dairy exports for jobs and wages.

“For example, IDFA remains disappointed in a variety of Canadian trade barriers that may violate the U.S.-Mexico-Canada Agreement (USMCA), including policies that prevent building branded U.S. businesses in Canada, limiting TRQ fill rates to very low quantities, and — most egregiously — creating a new milk class to replace Class 7 (Class 4(a)), which effectively recreates the trade-distorting effects of Class 7 that were central to the USMCA negotiation,” says Becky Rasdall, vice president for trade policy and international affairs, IDFA.

“In addition, IDFA is deeply concerned with the European Union’s efforts to protect their dairy industry with a flawed public intervention stocks programs that buys up European milk powder, holds it in government warehouses and releases it onto the global market, depressing prices and limiting competition for U.S. dairy exports,” Rasdall adds. “IDFA offered a variety of comments and detailed examples on other trade distorting practices by Mexico, Russia, India and Kenya, among others, and appeals to USTR and the U.S. federal government for assistance in resolving these longstanding barriers that have limited U.S. dairy’s growth and potential.”

CMN


ADPI webinars highlight dairy ingredients testing, visibility

November 20, 2020

By Trina La Susa

MADISON, Wis. — While sampling and testing dairy ingredients is a small facet of quality assurance, it has a direct impact on a company’s overall bottom line and can help to mitigate downstream risks, such as recalls. An aseptic sampling plan is foundational for proactive control, says Brett Roeller, director of national accounts at QualiTru Sampling Systems.

Roeller, along with Dino Demirovic Holmquist, vice president of business development at Eurofins DQCI, recently led a webinar on “Sampling and Testing Dairy Products,” sponsored by Eurofins and QualiTru and hosted by the American Dairy Products Institute (ADPI).

“When a sample is taken, it is sent to a certified laboratory and the results are then forwarded on to the quality control department. The quality control department then reports the results to the operations team, and logistics is then notified whether or not they will be taking product out,” Roeller says. “Marketing and advertising staff then handle downstream decisions in terms of messaging, and executive decisions are made off of that.”

The quality systems for dairy and cultured ingredients, Hazard Analysis Critical Control Points (HACCP) and/or Safe Quality Food (SQF) systems, have frameworks where samples are taken with time, location and unique numeric identifications so that issues can be tracked and traced, according to Roeller. He adds that sample temperature controls need to be put in place as well as sample security and integrity controls to prevent tampering. For the calibration and testing laboratories, he adds that an International Organization for Standardization (ISO) certified 17025 lab or A2LA level laboratory analysis is recommended.

“The key to controlling and to better risk management is a documented quality system, a certified lab like Eurofins and aseptic samples that are representative of the actual product itself,” Roeller says.

Each sample taken needs to be representative, a subset of a population that adequately replicates the characteristics of the larger group, as well as aseptic and free from contamination caused by harmful bacteria, viruses or other microorganisms, he notes.

“For lot verification, a representative sample is a sample pulled over the entire time of the production run,” Roeller says. “In a 12-hour production run, the sample needs to be a continuous pull of everything that went into that run, and it needs to have every component — it can’t be a snapshot sample. It needs to be a continual, representative pull because bacteria are not homogenous, they clump up, they stick to butterfat and do all sorts of funny things.”

Roeller adds that the laboratory analysis only is as good as the sample it receives, and downstream decision-making hinges on the integrity of the sample. For successful aseptic sampling and sample handling, he says companies need to use aseptic technique; personal protective equipment like gloves, shoes and hair nets, along with a hygiene plan; temperature controls while carrying a sample; and unique identifiers for samples with date, time and location information.

“A take-home message that I would like to emphasize is to never do a sample test or analysis unless you know what to do with the result,” Holmquist says. “If you don’t have a specific reason for using the analysis information — like an upcoming audit or a certification requirement — you might be better off not doing it.”

Companies always must have a plan for result outcomes, Holmquist says. For example, he says chemistry analysis results will give different percentages of fat, protein, lactose or whey protein concentrate where companies might have certain criteria the ingredient sample needs to be within a certain level or threshold for compliance, whereas a microbiological analysis can be done to determine detection, identification or enumeration of microorganisms.

Holmquist notes that it also is important to remember the analysis results are a picture of how the results were a certain amount of days back since it may take a few days for lab results to be returned. Following the results, he adds that companies should have a clear action plan to achieve continuous improvement or how to “fire fight” a source of contamination.

• Supply chain traceability

Today, there also is technology available to qualify dairy ingredient consistency and performance, and to find ways to identify and source suppliers and dairy ingredients more easily without paper forms, data uncertainty and manual processes. To revolutionize information exchange across the dairy ingredients supply chain, TraceGains offers a supplier compliance, quality management and new product development cloud platform that helps dairy, food, supplement and consumer product good companies deliver on brand promises, says Robert Hudson, vice president of compliance systems, TraceGains.

“The first challenge really is that in the world of supply chain management, there’s the fact that no matter who you are and what sector of the food and beverage industry that you’re in, 80% of the data that defines your products — what you’re going to put into a formulation to make the finished product and where you are going to send it to — lives outside the four walls of your organization,” Hudson says.

Hudson, who has been with Trace Gains since its inception in 2008 and has three decades of expertise in supply chain management, laboratory and enterprise resource planning (ERP) software systems used in food, beverage and other process industries, expanded on the challenges and opportunities ahead for dairy ingredient producers and buyers during a Nov. 5 webinar on “Supply Chain Visibility and Dairy Ingredients,” hosted by ADPI.

Some of the current supply chain challenges for ADPI members exist within sourcing such as supplier qualification in regards to quality and safety compliance, as well as receiving consistent quality materials that will not affect the manufacturing process, according to Hudson.

“After supplier qualifications, Hudson says dairy ingredients companies look to material compliance where there are material specifications, transportation and receiving, lot quality and safety, lot-by-lot safety and corrective actions designed to catch problems before they enter the manufacturing process.

“ADPI’s mission is really to help drive the utilization of dairy ingredients such as whey products and others into the market for their health benefits and other benefits to downstream food processors and consumers. Having customer service and getting that documentation to the customer and eliminating response times is a major factor,” Hudson says.

He notes TraceGains delivers cloud-based supplier compliance, quality management and new product development software solutions to dairy, food, supplement and consumer packaged goods companies. Hudson says the TraceGains Intelligent Network platform can help improve the supply chain for the dairy products by connecting customers and suppliers over a common network to seamlessly share data and drive collaboration, as well as extract data from all documents required by product development, labeling, purchasing, quality and regulatory. Making supplier connections is as easy as adding friends on a social network, he adds.

More than 35,000 supplier locations are available for manufacturers and brand owners to source and qualify new vendors, procure ingredients, build and reformulate recipes, negotiate ingredient specifications and automatically collect supporting documentation from a growing library.

Hudson adds that TraceGains’ network uses PostOnce Technology, a patented technology where a supplier can post information about materials such as referential documents like a kosher certificate or form or questionnaire that a supplier requests.

“This technology called PostOnce allows a supplier basically to just post it once and that document will flow automatically to as many customers that are looking for that particular document, and the network drives all of this,” he says.

Hudson notes that to prevent food safety issues and supply chain disruptions, TraceGains Smart Alerts are available to monitor threats and regulatory risks throughout the supply chain in real-time. The system transforms big data into user-friendly, actionable insights for fast risk management by providing automatic alerts for ingredients, items and formulas as well as daily updates on new and emerging threats, refusals, incidents, alerts and recalls, he says.

Overall, Hudson says TraceGains’ established network gives dairy ingredient manufactures and brand owners thousands of suppliers to choose from to procure products and accelerate product renovation and development with faster vendor and product sourcing and approvals.

CMN


October U.S. milk production up 2.3% from one year earlier

November 20, 2020

WASHINGTON — Milk production in the 24 major milk-producing states in October totaled 17.73 billion pounds, up 2.5% from October 2019, according to data released this week by USDA’s National Agricultural Statistics Service (NASS). For the entire United States, October milk production was estimated at 18.56 billion pounds, up 2.3% from October 2019. (All figures are rounded. Please see CMN’s Milk Production chart.)

September’s revised production for the 24 major states totaled 17.20 billion pounds, a decrease of 5 million pounds or less than 0.1% from last month’s preliminary production estimate.

October production per cow in the 24 major states averaged 1,997 pounds, up 35 pounds from October 2019 and up 56 pounds from a month earlier. For the entire United States, production per cow in October is estimated at 1,977 pounds, 37 pounds higher than October of last year and 57 pounds higher than a month earlier.

NASS reports the number of milk cows on farms in the 24 major states was 8.88 million head in October, up 62,000 head from October 2019 and up 17,000 head from the previous month. In the entire United States, there were an estimated 9.39 million milk cows in October, 43,000 cows more than a year earlier and 14,000 more than in September.

California led the nation’s milk production in October with 3.39 billion pounds of milk, up 1.2% from a year earlier. Wisconsin followed with 2.59 billion pounds of milk produced in October, up 1.7% from October 2019.

CMN



Arla Foods seeks to elevate Havarti in retail, private label, foodservice

BASKING RIDGE, N.J. — The mild, creamy and approachable Havarti might not be as well-known to U.S. consumers as staples like Cheddar, Mozzarella or even Gouda. However, Arla Foods — a leading manufacturer and provider of the Danish-style specialty cheese — is changing that by growing its domestic and imported Havarti among more mainstream U.S. consumers.

“We’re really trying to build our brand awareness and cheese awareness in Havarti,” says Arla Foods Senior Associate Insights and Brand Manager Joshua Rosen. “Some people may be unfamiliar with Havarti. It’s a creamy, buttery, approachable cheese that is perfect for melting. We’re educating consumers about Havarti cheese to help increase our customers’ sales.”

Arla Foods has held its philosophy of producing natural, healthy and high-quality dairy products dating back to the 1880s when the cooperative was formed by dairy farmers in Denmark and Sweden. Now one of the largest global dairy companies, Arla Foods is owned by more than 9,700 dairy farmers with production facilities and distribution all over the world.

In 2006, Arla purchased Hollandtown Dairy in Kaukauna, Wisconsin, where it produces Havarti using its traditional Danish recipes. In addition to Havarti, Arla also produces Gouda, Edam, Fontina and Muenster at its 110,000-square-foot Hollandtown plant. All of the milk for these cheeses is rBST-free and sourced from 24 farmers located within a 25-mile radius of the Hollandtown plant, which processes between 770,000 and 1 million pounds of milk each day. Arla’s cheeses boast “No artificial flavors, preservatives or hormones used” and “No GMO ingredients.”

The Wisconsin-made cheeses are sold at club stores under the Arla brand, while the company’s Castello brand features mostly imported varieties such as Havarti, Blue and Feta sold at national retailers.

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CME cheese prices continue to fall, drop below $2 per pound

November 13, 2020

By Alyssa Mitchell

MADISON, Wis. — Cheddar prices at the Chicago Mercantile Exchange (CME) continued to decline steadily this week, with prices dipping below $2 per pound.

CME Cheddar block and barrel prices began to decline last week, with the barrel price falling 21.25 cents from its Oct. 30 settling price, while Cheddar blocks fell 44 cents in the week-to-week comparison. (See “Spot cheese market drops as buyers step back, milk production remains strong, analysts say” in last week’s issue of Cheese Market News).

This week, the Cheddar barrel price has plummeted 70.75 cents and the block price has dropped 42.5 cents from Nov. 6.
The declines come as little surprise to market analysts, who have anticipated a price correction following the easing of support lent by government intervention programs.

“I think primarily the impacts that we’ve been seeing in terms of the volatility in cheese has been based off government intervention, like the Farmers to Families Food Box Program, says Catherine de Ronde​, vice president, economics and legislative affairs for Agri-Mark, Andover, Massachusetts.

De Ronde says with the upcoming change in administration, it’s uncertain whether assistance like the food box program will continue or if the government may return to more traditional forms of support.

In addition, improving unemployment numbers and news of a potential COVID-19 vaccine may mean less incentive for additional government intervention, she adds.

Seasonal declines in the cheese price also are typical for this time of year, notes Dave Kurzawski, senior broker with StoneX, Chicago.

“The weakness may have come a little on the earlier side, but it’s unusual to see seasonal weakness around this time of year,” Kurzawski says.

“What is unusual,” Kurzawski adds, “is the pervasive market belief that after such a wild year as 2020 has been, the markets are likely to somehow regain their more normal, seasonal, pre-pandemic price movements heading into year end.

“I’d bet against that,” he says. “Buying ought to continue to come in waves. Price weakness in this type of environment is a good thing. It gives buyers a chance to get something bought.”

USDA’s Dairy Market News says Midwestern cheese producers are reporting a notable slowdown in orders this week, with the impetus being the market price drops from last week, which have continued into this week.

“Producers say customers are simply waiting for the bottom to begin purchasing anything more than necessary loads,” Dairy Market News says.

Sara Dorland, managing partner with Ceres Dairy Risk Management, Seattle, notes that last week reflected the largest single-week decline for CME cheese on record — but prices still are high.

“Ahead of Thanksgiving, prices could be reluctant to fall quickly, as evidenced by futures increasing despite unchanged to lower spot markets,” Dorland says. “Prices will eventually trend lower, but it could take longer given the point in the season. Price declines could pick up in December should foodservice demand remain lackluster and government buying programs subside.”

The CME butter market also continues to average lower compared to earlier this year, facing pressure from increased inventories and a loss in foodservice demand.

“Butter markets have suffered from oversupply this year — something that has been absent from recent history,” Dorland says. “COVID-19 has negatively impacted foodservice demand, and that has taken a toll on butter.”

However, Dairy Market News this week reports butter is moving strongly in holiday orders, particularly into retail grocers, even though supplies are far from short.

Kurzawski says while butter demand looks good, supply still is expected to keep a lid on butter prices through the fourth quarter.

“No matter how bearish the market chatter is lately, that market is not falling right now — it’s sideways,” he says. “That tells me the market is quite happy to trade in the mid-$1.40s, and that might just be as ‘weak’ as the market gets for the balance of this year.”

De Ronde agrees she does not anticipate much price movement for butter in the fourth quarter.

“Even with retail booming, we have some capacity limitations that are going to limit us from taking advantage from the boost we could see,” she says. “When I look at butter from a historical perspective, it can take awhile for the inventories to get back to normal, and additional months for the prices to correct. I think we’re looking at a minimum of about 14 months before we get back to a more supportive price, and even then, I don’t think we’ll get above $2. It’s just hard for that market to find any support right now.”

Meanwhile, the nonfat dry milk (NDM) market continues to trend upward, with the CME NDM spot price settling at $1.0875 per pound today. Analysts say support for that market primarily stems from global demand and exports.

“Two words: global demand,” Kurzawski says. “That’s the key driver of the NDM price. NDM doesn’t have much of a U.S. domestic story following strong disappearance in August and September. Milk production is largely intact in the U.S., though I am concerned about those producers who get paid principally from the Class IV market. For now, government direct payments this year have stemmed some bit of the tide in the massive Class III/IV spreads. So, this leaves us with growing global demand for protein. And although that demand seems to ebb and flow lately, the powder markets will likely be well-supported through year end at least.”

CMN


Dairy weighs in on priorities under Biden administration

November 13, 2020

By Rena Archwamety

WASHINGTON — Coronavirus response, international trade and immigration are some of the key issues U.S. ag and dairy industry leaders are eyeing as President-elect Joe Biden prepares to enter the White House in January.

The National Milk Producers Federation (NMPF) on Monday congratulated Biden and members of the upcoming Congress for their election victories, pledging to work for bipartisan solutions to challenges faced in agriculture and in the nation.

“Congratulations to President-elect Biden and the incoming members of the 117th Congress, who will have a lot of work to do in this country, from legislating to building common ground,” says Jim Mulhern, president and CEO, NMPF. “Dairy is ready to do its part and work with the administration and Congress to face difficult problems successfully, in the bipartisan spirit we have always practiced and believed in.”

NMPF says it is committed to working with both major political parties for sound, consensus-based public policy. Paul Bleiberg, NMPF’s senior vice president, government relations, notes that the Biden team has spoken favorably about agriculture and that NMPF has engaged in ag stakeholder calls prior to the election, though there have not been many phone calls or meetings after the election.

“We expect that will ramp up in the next few weeks,” Bleiberg says. “We’re certainly keeping an ear to the ground to get a sense of who might emerge as Cabinet nominees.”

Bleiberg also notes that U.S. Dairy Export Council (USDEC) President and CEO Tom Vilsack, who was ag secretary under the Obama administration, has been talking with the Biden team for a while about dairy industry priorities.

“It’s been very positive that he’s been doing that. There will be a lot of the same issues we looked at before,” Bleiberg says. “My sense is that the biggest priority in the early months is further COVID-19 action. Congress could possibly pass a bill by the end of the year, but if not, they will work something out early in the new year. This will continue to be an area of importance for us, actions from product purchases to support prices, dairy donations and making payments as equitable as possible.”

Agricultural labor reform also will continue to be important for the dairy industry, Bleiberg says, including renewing the H-2A program and obtaining more certainty over the current status of ag workers.

“The House passed a bill a year ago in December, and the Senate was starting to take it up early this year. A lot of key players in both chambers are back,” he says. “This will be connected to broader immigration politics. A lot of members of both parties want the ag worker issue to be resolved. That will be a priority for us.”

USDEC expects to see more of a shift to a multilateral approach to trying to address trade issues, says Shawna Morris, vice president of trade policy, USDEC.

“Which areas of the trade agenda get priority and how balanced that portfolio of sector issues is will likely hinge on who’s selected to lead USTR,” Morris says. “An area that we hope will get attention will be the pursuit of trade agreements with the right partners, an urgent goal not just for dairy but for the wider U.S. ag sector.”

Bleiberg says a new Biden administration could be expected to take a different approach to trade as it looks to resolve issues with China, build market access opportunities with other countries like Japan and the United Kingdom, and continue implementing the U.S.-Mexico-Canada Agreement.

“The old administration relied on tariffs, and the new administration may not, from what has been reported,” he says. “We don’t know what it will look like so far as players, but we can expect some sort of shift of methodology.”

Bleiberg adds that congressional Republicans, while supportive of President Trump, had expressed concerns with the approach he took on some aspects of trade.

“It’s possible if the Biden administration takes a different approach, it could overlap with congressional Republicans — in 2015, Republicans gave Obama the Trade Promotion Authority (TPA), which comes up for renewal next year. If the end goal is to get trade agreements reached, that could be common ground for legislation,” Bleiberg says. “The current administration preferred bilateral agreements, but both parties in the past have preferred multilateral. That may have some impact on how policy plays out and could be an area where there is collaboration.”

When it comes to China, Morris notes that retaliatory tariffs continue to pose serious concerns for the dairy industry and its ability to further expand its market share there, and it remains unclear what the Biden administration may do on this front.

“The most likely shift is that we may see more focus placed on working to build an international coalition approach to dealing with China to try to create a dynamic where more countries are aligned with us on tackling the most non-ag China-related issues that have long posed concerns for the U.S. and others,” she says.

Morris says another area that USDEC hopes will be a focus is enforcement of trade agreements.

“There’s board bipartisan support for ensuring that we get the full benefit of the bargains we strike, and this is a critical area for dairy in particular,” she says. “We have not yet initiated trade-focused discussions with the incoming administration but look forward to outlining our industry’s priorities for trade to them to help with the transition process.”

If Congress remains divided as expected, Bleiberg notes that there will need to be significant bipartisan work to move these issues forward — something the dairy industry is hopeful for.

“Biden has a long history of bipartisan work. He and (current Senate Majority Leader) Mitch McConnell have a long history of cutting bipartisan deals,” Bleiberg says. “We’d like to see a desire on both party fronts to do that — find common ground on some issues that have languished for a while, and perhaps we will see some of them get dealt with.”

CMN


USDA raises milk production, cheese price forecasts in report

November 13, 2020

WASHINGTON — USDA this week raised its milk production forecasts for 2020 and 2021 in its latest World Agricultural Supply and Demand Estimates report released Tuesday.

The milk production forecasts for 2020 and 2021 are raised from the previous month on stronger growth in milk per cow and higher expected dairy cow inventory, USDA says. Milk production now is forecast to reach 222.5 billion pounds in 2020, up 200 million pounds from last month’s forecast, and 225.9 billion pounds in 2021, up 400 million pounds from last month’s forecast.

The 2020 fat basis import forecast is raised on recent trade data and higher expected imports of cheese and butterfat products in the fourth quarter. This strength is expected to carry into 2021 supporting a higher 2021 fat basis import forecast, USDA says. The fat basis export forecast for 2020 also is raised on higher expected exports of cheese and butterfat; no change is made to the 2021 fat basis export forecast.

The skim-solids basis import forecast for 2020 is reduced on lower imports of lowfat milk powders, while the 2021 import forecast is reduced on lower imports of a number of dairy products, USDA says. The 2020 and 2021 skim-solids basis export forecasts are raised on stronger expected sales of skim milk powder.

Cheese, nonfat dry milk (NDM) and whey price forecasts for 2020 are raised from last month on strength in demand, with cheese prices expected to average $1.965 per pound, NDM $1.040 per pound and whey $0.355 per pound, USDA says.

The butter price forecast for 2020 is reduced on current and expected continued weakness in prices, now forecast to average $1.585 per pound. The 2020 Class III price forecast is raised to $18.55 per hundredweight on higher prices for cheese and whey, while the Class IV price forecast is unchanged from last month at $13.50 as the higher NDM price offsets the lower butter price, USDA says. The 2020 all-milk price forecast is raised to $18.25 per hundredweight.

For 2021, cheese, NDM and whey price forecasts are raised on continued strength in demand, averaging $1.825, $1.055 and $0.365 per pound, respectively. The butter price forecast is reduced to $1.685 on lower expected prices through the first part of the year.

The 2021 Class III price forecast is raised to $17.25 per hundredweight on higher forecast prices for cheese and whey, USDA says. The Class IV price forecast is reduced to $14.00 as the lowered butter price more than offsets the increase in NDM, while the all-milk price forecast for 2021 is raised to $17.70 per hundredweight.

CMN


Sustainability, convenience drive new package designs

November 6, 2020

By Trina La Susa

MADISON, Wis. — For the majority of the year, cheese and dairy companies have focused on supply chain safety and protective, hygienic packaging as well as keeping shelves stocked for consumers during the COVID-19 pandemic. The industry has adapted to the standards of the “new normal,” and looking to 2021, brands are focusing on consumer trends to develop new cheese and dairy packaging designs that stand out from their competition on the shelf.

While packaging takes time to evolve, growing consumer interest in convenience and sustainability, as well as a greater focus by brands on product appearance and freshness, are changing the cheese and dairy packaging landscape. Consumers are expecting more from brands — not just in the products they offer — but in the visual appeal, function and different formats of packaging.

“As we emerge from the COVID-19 crisis, we are seeing a similar trend that we did with the Great Recession in 2008 as consumers are looking for increased value. This is evidenced by strong performance and consumer preference in private label brands, which has grown consistently in share over the past 10-plus years and now is enhanced by the pandemic,” says John Kearny, marketing director of dairy, Amcor Flexibles North America, Oshkosh, Wisconsin. “We also have seen strong performance in natural and premium cheeses as more consumers are preparing meals at home. This creates an opportunity for differentiation with packaging that showcases the natural and fresh aspect of the product.”

As consumers continue to look for wholesome foods like cheese and dairy, packaging and labeling that spotlights the quality of the product will continue to perform well at retail, Kearny says.

He points to finishing technologies, such as Amcor’s AmPlify, that create a more premium-looking package on the store shelf. For example, by emulating the look and feel of parchment, the brand can evoke the experience of the packaging used at a conventional deli counter, he adds.

“We also continue to see strong performance of tray-style packages paired with Amcor’s convenience features, EZ Peel or EZ Peel Reseal. These packages offer easy-open technology, don’t get crushed or lost in the refrigerator and in some cases are reclosable, eliminating the need for a zipper bag,” Kearny says.

Kearny notes that in addition to creating convenience packaging for consumers, Amcor produces recycle-ready films with its AmPrima portfolio. Paving a path for more sustainable options, Kearny says the company has pledged to offer a recycle-ready package for all product lines by 2025.

“Changing the design of a package is a serious decision for any company, as they are essentially changing the billboard for their brand. When done strategically, it can enhance a brand’s story and promise. It creates a great opportunity to convert new shoppers into repeat buyers and to make existing consumers feel confident in their purchase decision,” Kearny says. “As many retailers have made a pledge to shift to recycle-ready packaging by 2025, this presents an opportunity for nearly every brand on the shelf to target new customers by utilizing more sustainable films.”

• Sustainability

As eco-conscious buyers continue to grow, several brands in the dairy aisle are not only seeking recyclable packaging solutions but also sustainable packaging made with alternative or renewable materials, reduced packaging materials or an element of recycled content.

“Overall, sustainability is going to be the main driver for dairy packaging in 2021,” says Simon Hermans, director of sales and marketing, Südpack Oak Creek Corp., Oak Creek, Wisconsin. “Of course, we’re also going to see tendencies of further disruptions on the shelves through new formats or through using or applying different varnishes or haptic lacquers to packages that provide sensory effects to the consumer.”

To support its customers in choosing the right sustainable film packaging material, Südpack allows North American customers the choice between using renewable resources, reducing materials or adding recycled content to the material. Südpack also is the first company in the world that has launched a high-barrier, flexible film packaging for cheese products using a chemically recycled virgin-grade resin material for food contact approved quality, the company says. Hermans says since the packaging launched this past year, the company has seen increased interest from the dairy industry in chemical recycling that creates flexible packaging derived from plastic waste.

Plastic products made from chemically recycled material can be recycled again after use. The more often chemical recycling is performed (with material that already has been chemically recycled), the more carbon dioxide (CO2) is saved that otherwise would have been produced in the refining of crude oil as a resource and the incineration of the plastics after one use. Chemical recycling also contributes to closing loops and reducing greenhouse gases in the packaging industry, Hermans says.

Südpack recently formed a joint venture with RECENSO, a specialist in the implementation of systems for resource recovery based in Remscheid, Germany, to establish its own chemical recycling as a complementary technology to mechanical recycling, which has not been suitable for processing laminated films in the packaging industry.

The collaboration aims to convert production-related reusable materials into high-quality pyrolysis oil on an industrial scale. The produced pyrolysis oil will be supplied to the plastics industry as raw material for producing high-quality, virgin-grade quality granules. The goal is to use this material for producing product packaging in industries with quality and hygiene standards, such as the dairy, food and medical product industries.

“If brands truly want to achieve the sustainability goals that they have set, I believe that especially the material side of packaging offers quite a bit of room for improvement in the dairy aisle,” Hermans says. “While cows cannot produce less CO2, brands instead can look at the way that they distribute, transport and pack the raw material that the cow produces. We come in to help with packaging and processing, where we are offering groundbreaking technologies that are commercially available.”

• Convenience

Dairy packaging in general is shifting to smaller portions, including single-serve and on-the-go formats for dairy products such as yogurt and cottage cheese, which shoppers can more easily consume as snacks or with lunch. Consumer convenience remains one of the main drivers in new package design, according to Hugh Crouch, product manager of Harpak-ULMA Packaging LLC.

“Consumers want smaller portions with easy-to-open, pre-sliced and ready-to-serve formats,” Crouch says. “The consumer has less time these days to slice and deal with the bulk packages of yesterday. The new package designs have to always consider sustainability, another growing trend the consumer desires.”

Brands look to offer new designs where the consumer can recognize the convenience and ease of use. The trending packages are grab-and-go for consumers to stack in the refrigerator for easy access, along with dairy packaging that has easy-open and reclose capabilities, he says.

Headquartered in Taunton, Massachusetts, Harpak-ULMA offers a wide range of cheese and dairy packaging solutions across all of its product lines, such as high-speed flow packs in paper-poly films, PaperSeal pre-formed trays with 80% plastic reduction, formable paper packages and in-line tray forming using recyclable polyethylene terephthalate (PET) films. Crouch notes that in the flow pack or flow wrapping product line, the company is moving toward offering easy-open and reseal solutions with zipper, and peel with reseal. With a flow wrapper, he notes that brands can streamline product packaging while reducing the labor for loading that other packaging systems require today.

“Harpak-ULMA has one of the widest offerings of solutions from thermoforming tray sealing and flow wrapping,” Crouch says. “We can offer package design from concept to final product for our customers. Our use of Rockwell Automation controls allows us to offer smart-connected machines to the customer for better management of productivity and efficiency.”

In the current environment, the trend in at-home meal preparation has increased dramatically, and consumers are expected to become more adventurous as at-home meal preparation continues, according to Nathan Klettlinger, market segment manager, food packaging, ProAmpac, Cincinnati, Ohio.

“As consumers grow to enjoy at-home meal preparation, we think sustainable packaging alternatives along with packaging convenience, such as re-close features, will play an increasingly important role in purchasing criteria,” Klettlinger says. “Also, new packaging formats such as flexible pouches and enhanced graphics are becoming important to brands to ensure their products stand out on the shelf and in the refrigerator case.”

Klettlinger adds the number of specialty cheeses and shredded cheese blends could continue to increase, similar to the popularity of Hispanic cheese realized in 2019. To help the dairy industry adapt to convenient design as well as achieve its sustainable goals, ProAmpac introduced ProActive Recyclable R-1000 film designed for high-speed form/fill/seal applications, available in both high- and standard-barrier formats. Klettlinger says the high-barrier version works well for high-speed retail shredded cheese applications because of its high-oxygen barrier, heat resistance and very low seal-initiation temperature.

“Giving the consumer a recycle-ready package with convenient features could lock in a new generation of cheese consumers,” Klettlinger says. “Cheese is rich with nutrients, vitamins and protein — conveying that message while supplying it in an earth-friendly package will be a big win with conscious consumers. Brand owners that can convey this health-conscious and sustainable message to consumers in reliable packaging will be at the forefront of an up-and-coming trend in cheese and dairy packaging.”

From the introduction of MAKR, ProAmpac’s virtual, three-dimensional packaging design configurator, to the opening of its new Collaboration and Innovation Center (CIC), Klettlinger says ProAmpac is positioned to help dairy processors with packaging solutions.

“We are extremely excited about the new 25,000-square-foot collaboration space set to open in the spring of 2021 at our Rochester, New York, facility,” Klettlinger says. “The CIC will be a center for development, prototyping and rapid evaluation of new packaging including line fill rate testing. This will help dairy processors get their best package design, with unmatched speed to market.”

Dairy processors can determine effective packaging for their specific products by soliciting input from packaging machinery and film suppliers as well as consumers. The packaging industry will continue to invest in the future of dairy to enhance packaging capabilities, leverage new technologies and innovation, and deliver meaningful expertise and insights to customers.

CMN


Koch Separation acquires RELCO to expand its scope and offerings

November 6, 2020

WILMINGTON, Mass. — Koch Separation Solutions (KSS), a global leader in separation technology, Thursday announced the acquisition of RELCO, a top provider of process technologies for the dairy and food industries.

“The acquisition of RELCO marks an important step in KSS’ transformation to become an integrated solutions provider, delivering superior value to existing and new customers,” says Manny Singh, president of KSS. “We believe that separation challenges in the dairy, food and other industries are complex and rarely solved with one technology. The acquisition of RELCO adds complementary evaporation and drying technologies to the existing membrane and ion exchange offering of KSS.”

RELCO, established in 1982, provides cutting-edge processing technology to the dairy industry, including cheese systems, evaporators, drying systems, powder handling systems and after-market solutions. RELCO serves more than 500 cheese and dairy plants around the world and manages projects for both small and large cheese and dairy producers.

“I founded this company almost four decades ago offering only sanitary welding services and came to realize the greater need for custom-designed and engineered systems in the dairy market,” says Loren Corle, founder and owner, RELCO. “Since then, I have proudly watched RELCO grow and evolve its technologies to ensure that we are always the first call when customers are faced with a challenge. I am thrilled that KSS shares that same mentality and desire to work collaboratively with their customers to develop strong, long-lasting relationships.”

KSS notes the acquisition of RELCO expands its scope of capabilities, allowing customers greater choice and flexibility in selecting separation technologies best suited for their unique operations. The addition of RELCO’s proven thermal technology enhances KSS’ overall solutions offering to better serve its dairy, food and beverage customers, the company adds.

KSS, a Koch Engineered Solutions company with more than half a century worth of experience, pioneered the development of sanitary spiral-wound membranes commonly used today. KSS says it seeks to drive technological innovation to meet market needs through the vertical integration of KSS’ advanced membrane filtration and ion exchange capabilities with RELCO’s proven evaporation, spray-drying and crystallization processes.

RELCO will retain its name and operations as a fully-owned subsidiary of KSS, as RELCO President Mark
Litchfield continues to lead the company into expanded opportunities through this partnership.

“Our plan is to look for synergies and opportunities between the companies,” Litchfield says. “This will add some products to our portfolio and bring some new innovations that will be unique to RELCO and KSS, while existing products will be available as they were previously.”

He notes growing demand for larger projects, and now with membrane system capabilities and more financial resources, RELCO will be able to offer new options to its customers. The partnership with KSS also adds more overseas offices to bring it closer to its customers and opens up new opportunities for innovation.

“Koch as a company is very much into collaborative innovation. That means developing new processes in combination with customers and also with universities and research centers,” Litchfield says. “Given larger resources and a significant expansion of the product range, we can provide more opportunities for that collaborative innovation.”

Lichfield adds that KSS offers ideal growth conditions for an innovative and quality-focused company like RELCO to expand.

“To be acquired by a company as successful and respected as KSS is a vindication of our vision, the dedication of our teams and the relationships we have developed,” Litchfield says. “This acquisition will allow us to offer integrated and innovative membrane filtration and ion exchange systems with our solutions targeting value addition, energy efficiency and waste minimalization.”

CMN


September cheese production up 1.1% from one year earlier

November 6, 2020

WASHINGTON — U.S. cheese production in September totaled 1.092 billion pounds, up 1.1% from September 2019’s 1.081 billion pounds, according to data released this week by USDA’s National Agricultural Statistics Service (NASS). (All figures are rounded. Please see CMN’s Dairy Production chart.) September’s total was up 0.6% from August’s 1.085 billion pounds or up 4.0% on an average daily basis.

Italian-type cheese production in September totaled 462.8 million pounds, down 1.7% from September 2019. Production of Mozzarella, the largest component of Italian-type cheese production, totaled 365.8 million pounds in September, down 2.6% from a year earlier.

American-type cheese production in September totaled 432.5 million pounds, up 4.0% from September 2019. Production of Cheddar, the largest component of American-type cheese, totaled 306.1 million pounds in September, up 7.7% from last year.

Wisconsin was the leading cheese-producing state with 276.4 million pounds produced in September, down 1.4% from the previous year. California produced the second most cheese in September at 192.8 million pounds, down 5.4% from a year earlier.

U.S. production of butter totaled 152.1 million pounds in September, up 5.4% from September 2019. September U.S. butter production was up 0.3% from August’s 151.6 million pounds, and up 3.7% on an average daily basis. California led the nation in butter production with 48.5 million pounds in September, up 9.6% from a year earlier.

CMN


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Today's Cheese Spot Trading
Nov. 25, 2020


Barrels: $1.4225 (+2 1/4)
Blocks: $1.6800 (NC)


Click here for more market activity
Cheese Production
U.S. Total Sept.
1.092 bil. lbs.


Milk Production
U.S. Total Oct.
18.560 bil. lbs.

Guest Columnist

Cheese, dairy may boost immunity

Tammy Anderson-Wise, Dairy Council of California

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