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‘Insulated’ domestic market buoys cheese, butter prices

July 31, 2015

By Alyssa Mitchell

MADISON, Wis. — Cheese and butter prices at the Chicago Mercantile Exchange (CME) continued to climb this week as they have for most of July in a market strongly supported by domestic demand.

“I know some people think, or hope, cheese and butter prices will drop given where global markets are, but the fact is, U.S. cheese and butter markets are largely insulated from global markets,” says Michael McCully, owner of the McCully Group LLC, Chicago.

McCully notes that with both products having less than 10 percent of their production exported, stronger domestic demand can make up for lost export sales in the face of lower global prices.
In addition, cheese production capacity is relatively tight, so there is not the physical ability to make too much excess cheese, he adds.

CME Cheddar barrels averaged $1.6395 per pound last week, an increase of 2.75 cents over the previous week, and this week climbed to $1.71 Thursday before settling at $1.6975 today. Cheddar blocks were up 2 cents last week to average $1.6680 per pound and were up to $1.7475 to close out this week.

Phil Plourd, president of Blimling and Associates Inc., Madison, Wisconsin, says that while there has been some volatility in the cheese market, which is unnerving, the market has been range-bound for awhile, with $1.60 at the bottom and $1.75-$1.80 at the top.

“We believe the overall trend is going to be lower as global market forces continue to weigh on U.S. affairs, but that does not mean we will not see noise within the range as the trend unfolds,” he says.
A shift in domestic demand may be coming, though. USDA’s Dairy Market News last week said there is “increasing discussion about whether private cheese holdings are nearing a point where end users and cut/wrap operations may slow purchasing.”

Mike North, president of Commodity Risk Management Group, Platteville, Wisconsin, says he is hearing the same thing, noting private inventory is reaching comfortable levels and allowing product to become more available.

“Consequently, domestic buyers are becoming more willing to allow prices to soften as we work toward closing the gap with international offerings,” he says.

Plourd notes that for more than six months, the market has been so much about the “carry trade” — a forward pricing structure rewarding storage.

“At some point, though, the cupboards are full,” he says, noting last week’s Cold Storage report suggested as much, with the biggest May-June increase in stocks since 2004 and an 8-percent surplus versus last year.

“As marketers pull cheese from storage for processing or packaging, they require less product from day-to-day suppliers,” Plourd says. “Our contacts suggest that demand from cut-and-wrap operators has slowed some, pushing product back on manufacturers.”

However, weakening milk components also are a factor.

According to Dairy Market News, while most cheese plants are receiving the milk volumes they want, contracted milk volumes and components are declining in most locations, which is increasingly being noted and reflected in manufacturing decisions.

“Surplus milk supplies are getting tighter and less price favorable,” Dairy Market News says.
Meanwhile, extra spot milk contracted beginning Aug. 1 is tending toward 50 cents above Class, and that premium price is expected to increase in the near term, Dairy Market News adds.

“Many manufacturers have taken note, and the view forward is already shifting from dealing with copious milk volumes, to dealing with much tighter milk supplies,” Dairy Market News says. “Some manufacturers are now hesitating to agree to sell additional cheese to regular contract customers through the later part of 2015 because the manufacturers are not certain they can obtain enough milk to deliver the cheese volumes in a few months.”

Dairy Market News notes these manufacturers expect to be impacted by declines in milk production as well as the expected August increased demand for school food programs, which will leave them with insufficient milk supplies to increase contracted deliveries.

“To the extent that some surplus milk remains available, other plants are now more cautious about accepting it unless the resulting near-term cheese production has sales commitments. This is a change from recent weeks when manufacturers felt more confident in readily accepting discounted surplus milk, believing that if they made cheese, it would sell. Occasional cheese buyers must work harder to find available cheese from manufacturers, due to an increasing focus on satisfying regular customers as milk supplies tighten,” Dairy Market News says.

Dairy Market News note the market tone remains strong for butter.

“Churning is active even as ice cream production continues to pull heavily on cream supplies,” Dairy Market News says. “There are some butter producers that prefer to sell available cream instead of churning. Some manufacturers are reporting butter sales are increasing. Due to the tightness in cream supplies, some butter producers are delaying orders and diverting milk into cheese.”

CME butter has moved around the $1.90-per-pound mark throughout the month. Butter averaged $1.8835 last week, closing at $1.9550 per pound July 24. While butter lost some traction early this week, it closed out the week just under $2 at $1.99.

“Like cheese, butter seems to be stuck in a range of $1.80s-$1.90s,” McCully says. “With stocks back above last year’s levels, the market has paid more attention to weak butter output in California and strong cream demand.”

He adds that while butter can reach $2 per pound, it likely won’t last there for long.

“Like cheese, imports of butter and anhydrous milkfat are expected to continue given the price differential between U.S. and global prices. That will limit any sustained upside move in prices,” he says.

Plourd says while he’s learned to “never say never” in dairy markets — especially butter — he thinks the market’s ability to occasionally rally says more about lingering nervousness from last year than it does about any major shortages this year.

“USDA says we had 28 percent more butter in storage in June 2015 compared to June 2014. Trade dynamics favor imports rather than exports,” he says. “A lot of butter has been put up in the carry trade. Unless we see a brutally hot August unfold, the market has probably already seen its highs for 2015.”
Meanwhile, continued weakness in U.S. nonfat dry milk (NDM) more closely reflects the global dairy picture. CME NDM has been at multi-decade lows near $0.70, McCully notes. NDM this week fell to $0.6975 per pound as of Thursday and rose back to $0.70 today.

“Essentially, as the world continues to be oversupplied with milk powder, adding to our own supplies will not be a popular choice for manufacturers who have the opportunity to direct milk toward other products,” North says. “As milk moves toward products with the greatest return, growing supply of that product will likely cause added pressure on that market. CME prices will reflect that.”

Whether the domestic support for cheese and butter will keep it afloat in the long term is also uncertain.
“The U.S. powder market is fully experiencing the global market reality,” Plourd says, noting the contrast with CME butter and Cheddar priced high above global counterparts.

“Though the process has been slow and though the dairy markets are always capable of surprises, we continue to believe that the U.S. will not be able to slip the global market noose,” he says.

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Senators urge trade reps to increase dairy market access

July 31, 2015

WASHINGTON — As trade ministers meet in Maui, Hawaii, this week to work toward a conclusion of the Trans Pacific Partnership (TPP) negotiations, members of Congress continue to push for expanded market access for U.S. dairy products.

Senate Finance Committee Chairman Orrin Hatch, R-Utah, and Ranking Member Ron Wyden, D-Ore., sent a letter July 24 to Gary Doer, Canada’s ambassador to the United States, saying that if Canada is not willing to allow more dairy trade as a result of the TPP, it risks being left out of the agreement.

Canada’s ability to “commit to significant and commercially meaningful market access for all remaining agricultural products, including dairy, will have a significant impact on Congress’ view of the final agreement,” the letter says. “In fact, our support for a final TPP agreement that includes Canada is contingent on Canada’s ability to meet the TPP’s high standards.”

The letter echoes a similar appeal to Doer earlier this month by 21 members of the U.S. House of Representatives. (See “Lawmakers push for dairy market access in Canada” in the July 17, 2015, issue of Cheese Market News.)

The International Dairy Foods Association (IDFA), which is seeking market access for all dairy products across all tariff lines in the TPP, praised Hatch and Wyden for calling on Canada to engage on dairy market-access negotiations during this week’s talks.

“We thank the senators for their support on gaining the best deals for the U.S. dairy industry in this agreement,” says Connie Tipton, president and CEO, IDFA. “Now is the time for Canada to come to the table with a commercially meaningful offer on dairy.”

The National Milk Producers Federation (NMPF) and U.S. Dairy Export Council (USDEC) say the Senate letter to Doer reinforces the message that a vital element to achieving a balanced outcome in the TPP negotiations is increased access to Canada’s dairy market. The two groups are advocating for significant increases in access to the Canadian and Japanese dairy markets as well as ultimately a balance between these new export gains and any new access to the U.S. market granted to New Zealand.

“Sens. Hatch and Wyden are to be commended for adding their strong voices to the demand that Canada get serious about meeting this agreement’s market access obligations,” says Jim Mulhern, president and CEO, NMPF. “Canada’s highly protected dairy market is one of the final issues in the TPP, and so far it’s negotiators have refused to live up to their commitment to satisfactorily address it.”

USDEC President Tom Suber adds, “We fully agree with this clear congressional message that if Canada is looking for a pass on the type of tough decisions that all other TPP countries are being asked to make, it is better to move TPP ahead without them. Our dairy industry is willing to do its part, but Canada needs to do the same if it wants to be part of this agreement.”

NMPF and USDEC also thanked a group of 22 senators who, led by Dianne Feinstein, D-Calif., and Mike Crapo, R-Idaho, sent a July 24 letter to U.S. Trade Representative Michael Froman urging him to help secure significant market access benefits for U.S. dairy in TPP negotiations. In addition to underscoring the importance of achieving these export gains, the letter also pointed out the need to avoid an imbalanced outcome that would grant more access to competitors than the U.S. would gain into Canada and Japan.

“We applaud this Senate message recognizing that a final Pacific Rim trade agreement must deliver significant access for U.S. dairy exports, as well as ultimately achieve positive results for U.S. dairy producers by ensuring that any additional New Zealand access to U.S. dairy markets is not higher than the market opening we expect to see from Canada and Japan,” Mulhern says.

Suber also expressed appreciation on behalf of USDEC for the Senate’s message regarding market access goals.

“The U.S. dairy industry has worked tirelessly for years to help ensure that the final TPP agreement results in strong market access gains in this important region of the world,” Suber says. “We appreciate this Senate message about the importance of staying the course on market access goals to ensure that this deal creates a positive result that producers and processors can strongly support.”

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FAS report forecasts stiff competition for exporters

July 31, 2015

WASHINGTON — As global markets adjust to lower dairy product prices, transmitted to farmers as lower milk prices, milk production forecasts for a number of countries have been scaled back in a recent “Dairy: World Markets and Trade” report from USDA’s Foreign Agricultural Service (FAS).

The biannual report includes data on U.S. and global trade, production, consumption and stocks, as well as analysis of developments affecting world trade in dairy products. Last December, when the last report was released, FAS forecasted U.S. milk production would reach 96.3 million metric tons in 2015, up from 93.5 million metric tons in 2014. Now, FAS forecasts 2015 U.S. milk production will reach 94.7 million metric tons.

In New Zealand, FAS forecasts milk production for 2015 now will decline 1 percent from 2014 to total 21.7 million metric tons. Australia and the European Union (EU) are expected to keep pace with earlier forecasts for 2015 milk production with 9.8 and 147.0 million metric tons, respectively, as milk output for Australia this year through May is running 3 percent ahead in comparison to the same period last year, FAS notes. Meanwhile, Argentina’s milk production forecast is revised down from December to 10.7 million metric tons in 2015.

This brings the forecast for total 2015 milk production for major exporters to 283.4 million metric tons, down from December’s forecast of 286.9 million metric tons but up from 2014’s total of 282.7 million metric tons, FAS says.

In addition, FAS notes the factors that initially precipitated the decline in global dairy prices remain present: Chinese import demand for whole milk powder (WMP) remains anemic, the Russian important ban on dairy products from major producers has been extended to August 2016 and the U.S. dollar remains relatively strong.

Meanwhile, the U.S. cheese export forecast is revised up by 6 percent to 368,000 metric tons as shipments to such markets as Mexico and South Korea have been stronger than anticipated, FAS says. Despite this revision, cheese shipments in 2015 will be slightly — 1,000 metric tons — below 2014 levels as U.S. exporters face stiff competition from the EU and Oceania.

Continued strengthening of the U.S. dollar also will hamper the competitiveness of U.S. cheese exporters, FAS adds.

In the EU, the cheese output forecast for 2015 is cut marginally as output through April is lagging slightly behind the same period last year, FAS says. Consequently, cheese production in 2015 is expected to remain virtually unchanged from 2014.

EU shipments of cheese through April were 12 percent behind last year’s pace; therefore, the export forecast was revised down to 700,000 metric tons, a decrease of 3 percent from 2014, FAS says.

FAS notes the recent extension of the Russian ban on imports of dairy products from a number of major producers is undoubtedly having an impact, but EU exporters have been partially offsetting the impact by successfully expanding into other markets such as the United States, Switzerland, Japan and Algeria. U.S. imports of cheese from the EU through May 2015 are up 24 percent compared to the same period last year, FAS says.

In New Zealand, exports of cheese through May on a monthly year-on-year basis are up 22 percent, supported by particularly strong sales to Asian markets, FAS notes.

U.S. exports of butter have dropped off sharply in 2015, trailing last year’s pace by 74 percent when comparing January-May shipments periods, FAS says, noting a major part of this is due to the strength of the domestic market that has kept the average monthly Chicago Mercantile Exchange butter prices above $1.72 per pound since February 2015.

In contrast, the Oceania mid-point price has averaged $1.55 per pound through June, trading most recently at $1.35 per pound, FAS says.

The EU butter export price also was down about $400 per metric ton lower at the end of June, FAS adds. However, in contrast to the relatively slow pace of New Zealand and U.S. butter exports, shipments of EU butter have been surprisingly strong despite the loss of the Russian market.

FAS notes the EU likely will continue to be competitive in dairy exports for the duration of 2015.
For milk powders, FAS notes U.S. production of skim milk powder (SMP), including nonfat dry milk (NDM), has been surprisingly strong, primarily in the form of NDM which has more available options for use in the domestic and export markets. As a result, SMP production is forecast to reach 1.06 million metric tons in 2015, FAS says.

While exports of SMP were weak earlier in the year, they since have ramped up, and total shipments through May of this year are up 2 percent over the same period last year, FAS adds. Mexico has been the leading destination for U.S. SMP, with exports through May up 20 percent over the same period last year.

FAS notes that U.S. producers are in a position to match global prices as lower SMP prices may be partly offset by higher returns from domestic sales of the butterfat component when producing skim milk. The current strong pace of SMP shipments is anticipated to continue, and the export forecast for SMP is revised to a record 586,000 metric tons, FAS adds.

To view the report, visit www.fas.usda.gov/data/dairy-world-markets-and-trade.

CMN


Edgewood Dairy opens creamery, grows business

July 31, 2015

By Chelsey Dequaine

PURDY, Mo. — In the next two weeks, Melissa Fletcher plans to open Edgewood Creamery and an on-farm retail store in a newly built, 3,000-square-foot building located on the family’s pasture-based dairy operation Edgewood Dairy. Edgewood Creamery will make farmstead, artisan cheeses and bottled milk.

As owner and head cheesemaker, Fletcher says at 47 years old she never thought she would be making cheese. However, a desire to grow the business for additional family members — and a desire to provide the community with a local product — spurred on the family.

That family includes Fletcher’s daughter-in-law, Aubrey Fletcher, marketing executive and head of Hazardous Analysis Critical Control Point program; daughter, Mikala Fletcher, cheesemaking and retail store assistant; mother, Wanda Brown, retail store manager; and husband, Charles Fletcher, and son, Tyler Fletcher, Edgewood Dairy operations and creamery mechanical operations.

Edgewood Dairy originally opened in 1993 near Washburn, Missouri. Unfortunately, the area wasn’t conducive for a pasture-based dairy farm, and the family relocated to Purdy, Missouri, in 2001 where today the farm’s 350 cows reside on 260 acres.

It wasn’t until the summer of 2013, after returning from a vacation in Colorado, that the family began discussing the next step for the business.

“We knew we needed more income, but it wasn’t feasible to buy more land or start another farm,” Fletcher says. “We thought our grass-fed milk would be the perfect source for producing a value-added product directly from our farm.”

The family did their research, including talking to friends who had made cheese in Georgia for more than a decade. They also noted a demand for locally made cheese and dairy products.

“We spoke with people in the community and surrounding areas, and they are very excited,” Fletcher says.

Fletcher knew if the family was going to begin making cheese, she would be the one doing it. Her first attempt was in her home kitchen. From there, she and her husband Charles attended short courses in St. Louis and Vermont, learning everything from creamery operations to marketing. Fletcher says she still has a lot to learn.

“Making cheese in your kitchen and doing it in a 500-pound vat are two different things,” she says. “I feel confident we will succeed. I really love it. It’s more than just cooking — it’s an art.”

After a hard winter with below zero temperatures, Edgewood Creamery’s original May opening date was delayed. Fletcher says the family now sees the light at the end of the tunnel.

“It’s very exciting and a little intimidating,” she says. “I’m ready to work in the creamery and not on the creamery.”

Edgewood Creamery will offer Fromage Blanc, a spreadable cheese made from cow’s milk; Farmhouse Original, a fresh, sliceable cheese; and Cheddar curds. The creamery also will offer three aged cheeses: King’s Prairie, a Tomme cheese; Ozark Mountain Blue, a Blue cheese; and Edgewood Cheddar, a Clothbound Cheddar.

With the creamery, visitors will be able to see Edgewood’s entire cheesemaking process.

“This is important because there has been a disconnect between the farmer and the consumer,” Fletcher says. “We don’t want that here. We want to help educate people in agriculture.”

Edgewood Creamery will post an opening date for both the creamery and retail store on its website, Facebook, Instagram and Twitter, and online sales will begin once the creamery is established. Edgewood Dairy will continue to market the milk to Dairy Farmers of America.

CMN


Mr. Cheese O’s expands natural cheese out of refrigeration and into snack aisle

By Kate Sander

SONOMA, Calif. — Consumers craving a snack that’s both crunchy and packed with protein have to look no further than Mr. Cheese O’s, a gluten-free, low-carb, protein-packed real cheese snack made by Sonoma Creamery.

The product, featuring 10 grams of protein per 1-ounce bag, is made with only 100-percent real natural cheese, organic quinoa and other ancient grains and provides a satisfying crunch along with the flavor of real cheese.

Created to be a healthy snack alternative, Mr. Cheese O’s borrowed flavor types from the chip category and launched in four varieties — Parmesan, Cheddar, Tuscan Herb and Sweet Chili. Just introduced are two more flavors — Zesty BBQ and French Onion.

“Our goal was to take the goodness of cheese out of the confines of the refrigerated case and take it to the snack aisle,” says John Crean, CEO of Sonoma Creamery.

First unveiled last year at Natural Foods Expo West, Mr. Cheese O’s are meeting with success, having launched nationally in Target last month, Crean says. Mr. Cheese O’s also are available at Costco, Whole Foods, Kroger, HEB, Sprouts, other grocery retailers and convenience stores, as well as on Amazon.com.

Crean, who led an investor group that purchased the Sonoma Creamery three-and-a-half years ago, refers to competition in the dairy case as “trench warfare — too many products for the space.” By innovating and developing a “better-for-you” snack, the company has been able to extend from those confines while retaining its brand image for healthy, natural products. Mr. Cheese O’s are sold under the “Sonoma Creamery” halo brand.

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Grass-fed dairy growing as
selling point for cheese, dairy

July 24, 2015

By Rena Archwamety

MADISON, Wis. — The idyllic scene of dairy cows munching on grass in a green pasture has become a less common reality over time as the U.S. dairy industry has shifted toward a more grain-based, high-yield production structure and away from traditional grazing.

However, as interest in specialty foods and sustainable practices rises among consumers, makers of cheese and other dairy products touting the “grass-fed” label have found success in this value-added market.

Flavor and color are the most noticeable differences between grass-fed dairy products and conventional dairy that comes from cows fed total mixed rations, according to Mark Johnson, assistant director and senior scientist at the Wisconsin Center for Dairy Research.

“You can pick up what we call ‘grassy’ notes. They’re pretty obvious sometimes,” Johnson says. “It used to be considered a defect, but now it’s considered an attribute and adds extra value to the milk.”

The color difference, he says, is more noticeable in cheese and butter than in fluid milk from grass-fed cows.

“Beta carotene in the grass gives it that yellow note. It goes into the fat, and the fat is concentrated in butter and cheesemaking,” he says.

Ten years ago it would be rare to see a cheesemaker advertise that their products are made with milk from grass-fed cows, but now it is more common, especially among smaller farmstead cheesemakers, Johnson says.

“I see it as a specialty cheese. I see more farmstead or smaller manufacturers go for that, though not all small manufacturers go for grass-fed,” he says. “The volume of milk from grass-fed cows is smaller, so it’s more ideal for specialty cheeses.”

• Grazing season

Since it began making Cheddar in 1981, Shelburne Farms in Shelburne, Vermont, has been using milk from its small herd of pasture-grazed Brown Swiss cows. The 120 cows are on pasture from mid-late May until early fall. During the winter months, they eat hay that’s made on the farm. The farm does supplement a small percentage of the cows’ diet with grain, but it doesn’t use corn or soy.

Kate Turcotte, head cheesemaker at Shelburne Farms, says more people are asking about grass-fed cheeses now that consumers are becoming better educated about food processes.

Turcotte notes the grass-based system works well for Shelburne Farms’ location next to Lake Champlain in Vermont, where the soil structure is not ideal for other annual crops. She adds that many Vermont cheesemakers use milk from grass-fed cows, and the majority of dairies in the state also are pasture-based.

“The pasture helps the soil structure and prevents erosion. It helps with environmental sustainability, but also with cheesemaking. Because there is a diversity of grasses, we have a diversity of cheeses,” she says.

Turcotte notices a big difference between the winter milk and summer milk at Shelburne Farms, and the cheese recipe changes depending on whether or not the cows are out on pasture.

“In the winter, there’s more butterfat,” she says. “In the summer, when there’s less butterfat due to the grass and exercise, we have to compromise and include more moisture in the cheese.”

Color and flavor differences are quite noticeable between seasons, she adds.

“We have a lot of beta carotene from the grasses and dandelions that goes directly into the cheese,” she says of the summer milk. “During wintertime, it’s more white. Cheese in the winter also doesn’t have as much diversity in flavors. The dominating flavor carries throughout. With summer cheese, there’s more of a story — a beginning, a middle and an end.”

The winter cheese tends to do better in competitions due to its simplicity on the palate, Turcotte says, but many consumers prefer the complex flavors of the summer cheese from Shelburne Farms. The pasture-grazed cows also add to the experience of visitors to the farm.

“Shelburne Farms is a destination, where people visit all year round, especially during summer months,” Turcotte says. “You can see the cows on pasture and see our cheese being made in the viewing window. People make that connection and walk away with a piece of our cheese. We’re modeling a part of agriculture that’s not as common as it used to be.”

• 100-percent grass-fed

While it may be more common among smaller farmstead cheese operations, some larger brands have begun marketing grass-fed dairy products as well. In 2012, Organic Valley launched its Grassmilk line of organic milk produced from 100-percent grass-fed cows from farms in the Humboldt region of California. In 2013, the brand added a group of farms from the Upper Midwest, and in 2014 it expanded to eight farms in Vermont and New York. Now Organic Valley’s Grassmilk is available across the United States in natural food stores such as Whole Foods as well as in some mainstream grocery stores. Grassmilk Raw Cheddar and Raw Sharp Cheddar also are available in natural food stores nationwide.

While part of the organic standard requires dairy cows to be on pasture 120 days out of the grazing season, the member farms that produce milk for Organic Valley’s Grassfed brand go beyond these requirements, giving their cows only pasture forages even when they cannot graze outside during the winter.

“There was great interest from the farmers’ side, and some prefer to farm this way,” says Eric Snowdeal, Organic Valley milk and cream brand manager. “They make sure the pasture has enough energy to support the cows throughout the year. It’s something that requires work, making sure there’s the right mix of pasture and nutrients in the soils, and vets monitoring the health of the cows. There’s quite a bit going on behind the scenes.”

He stresses that because there is no standard for the “grass-fed” claim on dairy, some products that carry this claim may actually be from cows that are pastured very little.

“If it doesn’t say ‘100-percent grass-fed,’ you’re not sure what you’re getting,” he says.

Response to Organic Valley’s Grassmilk cheese and milks has been strong, with both outpacing regular organic milk and cheese categories as far as growth, though the grass-fed products encompass smaller niche segments, Snowdeal says.

“For consumers looking for it, there has been a very enthusiastic, amazing response,” he says. “It does tend to be for organic consumers who are wanting a little something more — like on the beef side, they want 100-percent grass-fed dairy. There is another group, the epicurean folks, who just like a unique product. The flavor of the milk changes over the course of the year depending on what’s in the pasture, and it changes color a little bit. It tastes a little different than regular milk. It can be floral or a little grassy. There’s a group of folks who like that taste.”

• Taste, nutrition research

Research from the University of Wisconsin-Madison’s Center for Integrated Agricultural Systems in 2007 surveyed consumer preferences over a 3-year study. Researchers Scott Rankin and Dave Combs studied differences in taste and components between milk produced by cows fed pasture only, pasture and grain, and grain-based total mixed rations. The research showed that cheese from the milk of pastured cows tastes significantly different from other cheese, and a consumer panel preferred the cheese made from the milk of cows that were fed a mix of pasture and grain.

Nutrition also is a consideration for consumers choosing grass-fed dairy products. In addition to the unique flavors and natural color of grass-fed dairy products, some studies have found that milk from grass-fed cows contains more beneficial fatty acids than conventional milk.

A study led by Washington State University researcher Charles M. Benbrook and published in PLOS ONE in December 2013 found that organic milk had a healthier ratio of fatty acids than conventional milk due to its greater reliance on pasture and forage-based feeds. A 2006 report published by the Union of Concerned Scientists comparing results of 12 published and unpublished studies of pasture-raised dairy cows also found that milk from pasture-raised animals tended to be higher in natural ALA (omega-3) and CLA fatty acids than that from conventionally-fed animals.

“This milk is more expensive, and (grass-fed) cheese will command a premium, so there must be more reasons to buy it than that it has grassy flavors,” Johnson says. “So people are looking at nutrition and other attributes.”

• Distant pastures

While only a small percentage of U.S. milk comes from cows that are primarily grass-fed, pasture grazing is much more common among dairy farms in countries like New Zealand and Ireland. Foreign companies have taken note of the rising interest in grass-fed items as they market their dairy products in the United States.

Last month, New Zealand-based dairy company Synlait announced it has teamed up with U.S. baby product manufacturer Munchkin for a new “Grass Fed” certified branded infant formula that will be sold in the United States and China (see “Synlait, Munchkin to offer grass-fed formula” in the June 6, 2015, issue of Cheese Market News).

Almost all New Zealand dairy farms use outdoor pasture grazing for the majority of feed for cows, but the Grass Fed certification for the new infant formula requires pasture forages only, with no grain or specialty additives, as well as other on-farm requirements.

“Some requirements of the Grass Fed standard include what diet a cow must be fed, how a herd should be managed and how compliance with the standard should be maintained,” says Synlait spokesperson Daniel Walraven. “The standard contains many elements of the U.S. FDA grass-fed standard for beef and has been further developed in partnership with Munchkin to ensure their Grass Fed infant formula product meets the specific needs of their consumers.”

Kerrygold, the brand owned by Irish dairy cooperative Ornua, in its marketing materials draws attention to the fact that its products are made from cows that are entirely grass-fed and that this results in the natural golden color and flavor definition of its cheeses and butters. One commercial, for example, features a boy on a dairy farm asking his grandfather, “Does grass taste good?”

“We’ve always had that messaging about the grass-based diet because it gives our products the golden color,” says Megan Pagels, marketing manager for Kerrygold USA. “We are certainly amplifying it now that consumers are seeking out grass-fed products. Because Kerrygold has always made products that way, we feel we can speak truly to the product and why it’s so important for our family.”

Chefs and food writers who have worked with Kerrygold have noticed the grassy taste and more creamy mouthfeel, especially in the brand’s butter. The grass-fed message also resonates with families who want to buy products with wholesome ingredients, Pagels says.

There are 14,000 Irish dairy farmers who contribute milk for the Kerrygold brand, and they represent a strong tradition of dairy farms that have been passed down through generations for hundreds of years, Pagels notes. She adds that the sustainability of Ireland’s grass-based dairy system is part of what draws consumers to the Kerrygold brand.

“Ireland’s non-mechanical irrigation system is the most carbon-efficient in the world,” she says. “Our consumers love Kerrygold butter and cheese for both the superior taste and performance of the product. But they have been speaking more to that they love it because it is grass-fed. They can trust us, being a sustainable company that feeds our cows grass.”

CMN


CDFA orders temporary change
to Class 4b milk pricing formula

July 24, 2015

SACRAMENTO —Karen Ross, secretary of the California Department of Agriculture (CDFA) late last week announced she is ordering a temporary change to the dry whey scale of California’s Class 4b milk pricing formula, effective Aug. 1, 2015, through July 31, 2016.

“I believe this adjustment will provide a needed increase in revenue to producers to ensure a stable milk supply,” Ross says in a letter to dairy industry stakeholders issued July 17. “I have taken this action even though I believe there are long-term structural challenges within the dairy industry that the department cannot address through changes in the class pricing formulas.”

California’s system of regulated milk pricing is “antiquated and outdated,” Ross adds.

“Our industry competes within national and international markets that have dramatically changed since our pricing system was established,” she says. “Our pricing system needs to be updated to provide the opportunity for our dairy families and processors to achieve long-term growth and prosperity.”

The announcement from CDFA comes after a June 3 hearing in Sacramento where industry stakeholders voiced concerns and presented proposals for changes to the way California prices its milk for cheese. The scope of the hearing focused possible adjustments to the whey factor contained within the Class 4b milk pricing formula for a period not to exceed 24 months.

Two proposals on changes to the state’s milk pricing formula were submitted: one jointly by Western United Dairymen (WUD), Milk Producers Council (MPC) and California Dairy Campaign, and another by the Dairy Institute of California. (See “California processor, producer groups file proposals with CDFA on changes to milk pricing” in the May 22, 2015, issue of Cheese Market News.)

At the hearing, dairy producers renewed their call for a more “fair” pricing structure for milk that would align California’s 4b price closer to the Class III price in the federal milk marketing order (FMMO).

Meanwhile, cheesemakers countered that setting milk prices at the level producers proposed would force small cheese plants out of business, stifle investment in plant capacity and reduce demand for milk while increasing supply. (For more details on the submitted proposals and hearing testimony, see “Dairy industry stakeholders testify on California pricing” in the June 12, 2015, issue of Cheese Market News.)

CDFA notes that based on its assessment of testimony, documentary evidence and other written correspondence, it has determined that changes to the Stabilization and Marketing Plans for Market Milk for the Northern California and Southern California marketing areas are necessary to effectuate their declared purpose as set forth in the Food and Agricultural Code.

Accordingly, CDFA says it agrees with and adopts the following panel recommendations for amendments to the stabilization plans:

• Continuing the use of the dry whey prices series as the basis of the whey factor;

• Modifying the steps of the current whey scale from 5-cent steps to 3-cent steps;

• Flooring the whey factor value at $0.00 per hundredweight; and

• Implementing a sunset clause of one year.

CDFA also decided increases to the whey values of the cap and the steps leading to the cap are necessary to assist producers in dealing with increased costs of production and the effect of the ongoing drought.

In so doing, CDFA notes it declined to accept the panel recommendation regarding the whey factor values associated with the steps and the cap of the whey scale. Therefore, it has determined that the whey scale will cap the whey factor at $2.0050 per hundredweight, not $1.5500 per hundredweight, with increased whey values for the steps leading to the cap.

Following last week’s announcement, WUD says it is encouraged by CDFA’s actions.

“We are appreciative of the intensive effort by CDFA to listen and respond to the industry and act accordingly,” says Frank Mendonsa, president, WUD. “While we had hoped for more, we will continue to work closely with the department to be more consistent with the federal order.”

WUD notes that if the announced adjustments to the Class 4b formula had been in place for the past five years, it would have resulted in a Class 4b price that would have been $1.01 per hundredweight higher.
“This represents 46 cents on the overbase price,” WUD says. “While this does not bring the Class 4b whey value exactly in line with the Class III whey value like the CDC/MPC/WUD proposal requested, it would have brought the two closer if this change had been implemented at the beginning of the year.”

Rob Vandenheuvel, general manager, MPC, says CDFA’s announcement “took a significant bite into the ‘California Discount,’ albeit on a temporary basis.”

He notes the announcement will bring California’s Class 4b price in much closer alignment with the federal order Class III price.

“Of course, producers must continue to work towards a long-term policy that facilitates milk prices that are at or above the rest of the country, as we can no longer afford to be the low-cost milk leader in this high-cost environment,” Vandenheuvel adds. “That is why MPC and our fellow producer groups and cooperatives must continue to press forward in promoting a California FMMO. Having said that, (CDFA’s) announcement represents good news for California’s dairy families, providing them with a much-needed immediate adjustment that will result in more market-based revenue for California’s dairy families and put us in a better position to compete with our fellow out-of-state dairymen.”

Rachel Kaldor, executive director of the Dairy Institute of California, says the institute appreciates that CDFA recognizes there are serious long-term structural problems with the state’s milk pricing system and that “this temporary decision does nothing to correct those problems.”

She adds that the association appreciates that this is only a temporary change.

“However, we remain extremely concerned that unless prices stay in the lower end of this new dry whey scale while it is in effect, a significant number of small California cheese plants will go out of business,” Kaldor says. “This change makes it even more difficult for all of our state’s cheesemakers and other milk processors to stay competitive in today’s increasingly competitive national and international markets.”

Kaldor notes that the institute continues to believe that basing the 4b scale on the price of dry whey is “completely out of step with today’s market, since today’s small- and medium-sized cheesemakers and other milk processors make some form of liquid whey instead of dry whey.

“Using the outdated dry whey scale can overvalue the price of milk California processors have to pay, hurting their ability to compete, which ultimately hurts everybody,” Kaldor says.

She adds that claims by dairy producers that California milk prices should be the same as milk prices in Wisconsin fail to recognize that milk has sold in Wisconsin at $5-$7 below the USDA Class III price and continues to be discounted.

“In reality, you can’t sustain a system that sets milk prices higher than the value processors can derive from the products they make,” Kaldor says. “We’re glad the CDFA recognizes this. Like them, we are committed to reforming the system and making the structural corrections that will ensure the long-term health of California’s milk industry.”

Ross notes she believes that the industry must work together to find long-term solutions to address the issues affecting California’s dairy industry.

“Later this year, I will contact members of our industry with the purpose of meeting together to collaboratively work towards implementing appropriate reforms to our pricing system,” she says.

CMN


Milk production in June up
0.7 percent from a year ago

July 24, 2015

WASHINGTON — Milk production in the 23 major milk-producing states during June totaled 16.35 billion pounds, up 0.7 percent from June 2014, according to preliminary data released this week by USDA’s National Agricultural Statistics Service (NASS). (All figures are rounded. Please see CMN’s Milk Production chart.)

May revised production, at 17.19 billion pounds, was up 1.5 percent from May 2014. The May revision represents an increase of 12 million pounds, or 0.1 percent, from last month’s preliminary production estimate.

Production per cow in the 23 major states averaged 1,895 pounds in June, unchanged from a year earlier. The number of milk cows on farms in the 23 major states was 8.63 million head, 56,000 head more than June 2014 but 2,000 head less than May 2015.

For the entire United States, NASS reports milk production totaled 17.45 billion pounds in June, an increase of 0.7 percent from June 2014.

Production per cow in the United States in June averaged 1,872 pounds in June, 3 pounds above June 2014.

The number of milk cows on farms in the United States in June was 9.32 million head, 50,000 head more than June 2014 but 7,000 head less than May 2015.

California, the nation’s top milk-producing state, was home to 1.78 million cows in June, 1,000 head less than June 2014 and unchanged from May 2015. Production per cow in California in June averaged 1,910 pounds, down 85 pounds from June 2014, driving a 4.3-percent decline in the June-to-June total milk production comparison to 3.40 billion pounds.

Wisconsin followed with production of 2.40 billion pounds in June, up 3.4 percent from a year earlier. Wisconsin was home to 1.28 million cows in June, an increase of 8,000 head from a year earlier and unchanged from a month earlier. Production per cow in Wisconsin in June averaged 1,880 pounds, up 50 pounds from June 2014.

CMN


House passes bill on national
GMO labeling standard

July 24, 2015

WASHINGTON — The U.S. House of Representatives this week voted 275-150 to pass the Safe and Accurate Food Labeling Act, which would set federal labeling guidelines for foods containing genetically modified organisms (GMOs).

The bill, HR 1599, would create a single voluntary, unified standard for food to be labeled as “GMO free” as part of a USDA program modeled after the USDA Organics program. It also would pre-empt states from implementing their own laws that require GMO labeling, such as one passed by Vermont that currently is the subject of a lawsuit brought by the Grocery Manufacturers Association (GMA), International Dairy Foods Association (IDFA) and other industry groups. Thursday’s House passage of this legislation comes two days after more than 475 organizations from all 50 states issued a letter supporting the bill.

“This bill, supported by over 400 groups that provide safe and affordable food for our world, will eliminate the state-by-state labeling patchwork that would serve to confuse consumers, stigmatize GMO crops and raise food costs,” says Rep. Mike Pompeo, R-Kan., lead sponsor of the bill. “The Safe and Accurate Food Labeling Act provides needed clarity and transparency in food labeling, supports innovation and keeps food affordable.”

The National Milk Producers Federation (NMPF) has thanked the House of Representatives for passing the legislation, saying it protects consumer choice while creating a uniform, science-based labeling standard for foods made with genetically modified ingredients.

“Today’s bipartisan vote demonstrates the broad support for voluntarily labeling foods with GM ingredients,” says NMPF CEO Jim Mulhern in a statement released Thursday. “A patchwork of state-by-state labeling requirements is simply not an option, as testimony at several congressional hearings clearly showed.”

NMPF has pledged to work with the U.S. Senate to pass a similar bill to ensure that the final legislation meets the needs of U.S. dairy farmers.

“This important legislation gives consumers the information they want in a consistent and factual way,” Mulhern says. “It also reaffirms the authority of federal regulators over food safety and labeling, and prevents the creeping development of dozens of different state food labeling laws.”

NMPF notes that genetically modified food ingredients have been proven safe by nearly 2,000 studies from leading scientific bodies worldwide, including the World Health Organization and the American Medical Association. Up to 80 percent of the food available in the United States contains genetically modified ingredients, NMPF adds.

GMA also applauded the passage of HR 1599, saying it demonstrates growing support for this legislation.

“A federal approach to food labeling remains the only way to ensure that Americans everywhere can access accurate information about the food they purchase,” says Pamela G. Bailey, president and CEO, GMA. “HR 1599 is fact-based, common sense legislation that will provide the kind of clarity and consistency in the marketplace for food labels that American consumers deserve.”

CMN


Panelists discuss the ‘fact and
fiction’ of dairy labeling claims

July 17, 2015

By Alyssa Mitchell

EGG HARBOR, Wis. — From the ever-evolving interests of consumers — especially fast-moving millennials — to tightening regulations, it can be challenging for dairy companies to create product labels that cut through the noise on retail shelves.

In a panel discussion titled “Labeling Claims for Dairy Products — Fact or Fiction?” at the Wisconsin Dairy Products Association’s annual Dairy Symposium in Egg Harbor, Wisconsin, this week, panelists Kevin Anderson, team leader of consumer insights at Schreiber Foods, and Michelle Albee Matto, MPH, RDN, AM Food & Nutrition, examined the fact and fiction of labeling claims prominent in today’s marketplace and how they influence consumers’ purchasing decisions.

Anderson notes that trends typically go through four stages — inception, adoption, proliferation and ubiquity. While trends have historically taken 10-12 years to go through all the stages, technology and social media have increased the speed at which trends develop and spread and it now takes only about 4-6 years for trends to move through the cycle.

“It’s imperative to be on top of these trends and act on them as soon as possible,” he says.
Anderson notes that when it comes to consumers, what they say they want is not always what they do.

For example, consumers say they want foods lower in fat with less sodium, but taste is still No. 1, he says.

Anderson adds that the meaning of “healthy” to consumers changes over time, too, with different claims resonating at different times.

For example, in 2001, consumers were focused on weight management, and words such as “fat,” “calories” and “low-carb.” In 2005, “feel-good foods” and “local,” “natural” and “organic” became major buzzwords, and today’s consumers are increasingly interested in functional foods, seeking out items with protein, so-called “superfoods” and foods that increase energy.

Protein is key in today’s marketplace, with top protein motivators including satiation, overall health, fuel, muscle building and weight management, Anderson says. Cheese is poised to fill this protein craving, though it is not always top-of-mind to consumers who may think of poultry before dairy, he says.

However, cheese still ranks relatively high and is currently ahead of soy products as a go-to protein source, he adds.

Anderson notes that consumers love milk, yogurt and cheese as a source of protein, so messaging on the protein benefits of these foods is important to increase consumption.

“A little bit of education to consumers that these items are a great source of protein — because they already love the products — will bring up consumption even more,” he says.

Alongside consumer trends in what they are looking for in product purchases are the opportunities within various eating occasions, Anderson notes. There are four main “eater types” — basic eaters, quality essentialists, progressives and experientialists, he says.

With eating occasions ranging from work lunches to relaxed weekend brunches to on-the-go eating for the morning commute, dairy products have an opportunity to meet each need, but manufacturers need to ensure they are meeting these needs with packaging that allows for on-the-go eating as well as telling a story with their product, something that resonates particularly with millennials, Anderson says.

Anderson notes that some of the major claims on dairy products today regard kosher, natural and fat terms, while claims about hormone-free, calcium, calorie, trans fat, organic, sugar and sodium also are popular. At the same time, claims about gluten, omega, lactose, protein, energy and pre/probiotics are gaining ground.

Meanwhile, Matto notes that as manufacturers work to keep up with the trends in claims and updated labels, it’s important to keep in mind the regulatory aspects of making product claims.

Any claim can be factual or fictitious, and claims must be truthful and backed up, particularly in an era of frivolous lawsuits, she says.

There are different types of claims, Matto notes, including defined claims (nutrient content and health), structure/function claims, claims to facilitate avoidance (lactose-free) and claims with federal guidance, which are fairly black and white.

Defined claims need to have adequate information to prove their truthfulness, she says, such as analytical results, records or certification, and claims must use specific language and any other statements, if required.

Structure/function claims describe the role of a nutrient or dietary ingredient intended to affect normal structure or function in humans. These claims cannot imply prevention, cure or mitigation of diseases, but may characterize the means by which a nutrient or dietary ingredient acts to maintain such structure or function, Matto notes.

For example, probiotic structure/function claims may talk about how certain cultures can affect the normal structure or function of the body, but there is no discussion of a particular disease or symptom, she says. One example may be, “Helps maintain healthy intestinal flora.”

Claims to facilitate avoidance are not defined nutrient content claims but are allowed through regulations, Matto notes, such as “lactose-free,” which requires substantiated analysis to prove that no detectable levels of lactose are present.

Other claims are defined by federal guidance. For example, with rbST claims, the FDA guidance’s recommended label statement reads “From cows not treated with rbST. No significant difference has been shown between milk derived from rbST-treated and non-rbST treated cows,” Matto notes. Context also can be established with other statements regarding the company’s reason not to use milk from cows treated with rbST.

However, FDA warning letters state “no hormones” and “hormone free” are false and misleading, as all milk naturally contains hormones and milk cannot be processed to remove hormones, she adds.

A grayer area is natural claims, Matto notes. These are not defined by FDA, though there is FDA guidance. FDA will not restrict the use of the term “natural” unless the product contains added colors, synthetic substances or artificial flavors, she says.

Therefore, there are varied interpretations between companies, consumers and retailers on “what is natural,” she adds. With this in mind, many companies have developed their own natural policies, but there also have been many class action lawsuits over ingredients, types of processing, and genetically-engineered ingredients, she notes.

Biotech food labeling laws in various states and at the federal level continues to be a hot-button issue, she adds, particularly regarding genetically-modified organisms (GMOs) (see article in this issue).
Matto notes that while milk is not genetically modified, the feed for the cows on dairy farms can be grown from genetically-modified seeds, as genetically-modified crops allow farmers to grow feed and food more efficiently.

“We understand some people are concerned about GMOs, but it’s important to know that the cows do not come from genetic engineering and the milk they produce is not genetically modified,” Matto says. “The dairy industry strives to offer a wide variety of choices for American families.”

Meanwhile, other claims such as “real food,” “sustainably raised” and “pure” do not have definitions but must be “truthful and not misleading,” Matto says. These claims must have analysis, consumer studies or other proof to support them and show that the statements are truthful and would not be misleading to consumers.

Matto emphasizes that no matter the claim, companies need to be very clear about a claim’s meaning to allow proof.

“When it comes to ‘mushier’ claims, give a lot of detail and make sure you can prove it,” she says.

“The further your claim and context get from each other, the more potentially misleading it can be,” she adds.

Anderson adds that the idea of transparency is huge in the millennial generation, and everything can be googled and shared quickly.

“These consumers have more emotional connections to these products and claims,” he notes.

CMN


Bill on federal guidelines
for GMO labeling advances

July 17, 2015

WASHINGTON — The U.S. House Committee on Agriculture on Tuesday passed the Safe and Accurate Food Labeling Act, which establishes federal guidelines for labeling foods containing ingredients from genetically modified organisms (GMOs). The bill, sponsored by Reps. Mike Pompeo, R-Kan., and G.K. Butterfield, D-N.C., has been championed by the International Dairy Foods Association (IDFA), the Grocery Manufacturers Association (GMA) and other food industry groups, and would block states from implementing their own GMO labeling laws.

GMA says this week’s vote indicates growing support and momentum in Congress for the bill, and it urged the full House to pass it before the August recess.

“This critically important bipartisan legislation will ensure that Americans have accurate, consistent information about their food rather than a 50-state patchwork of labeling laws that will only prove costly and confusing for consumers, farmers and food manufacturers,” says Pamela G. Bailey, president and CEO, GMA.

In his opening statement before Tuesday’s decision, House Agriculture Committee Chairman K. Michael Conaway, R-Texas, said a program to establish consistent, voluntary GMO labeling standards as proposed by the bill would address the threat to interstate commerce posed by state laws, such as one recently passed in Vermont, that would mandate labeling on products that contain GMOs.

“In testimony before this committee, multiple representatives of the food and agricultural sectors commented on the cost burden that would be placed on our food system if we were to allow the 50 states, more than 3,000 counties and nearly 20,000 towns and cities in the United States to establish their own laws regulating interstate commerce,” Conaway says. “I believe we all understand the importance of free and open commerce between the states. By creating a uniform national policy regarding biotech labeling, the legislation before us will allow consumers access to meaningful information, create market opportunities for those on the production and processing side, but most important of all will facilitate future innovation in this sector.”

Earlier this month, the White House released a memorandum calling for the Environmental Protection Agency (EPA), FDA and USDA to review and update their regulations related to products of biotechnology. The Coordinated Framework for the Regulation of Biotechnology, which separates responsibility for regulating GMOs and other biotechnology products between the three agencies, first was issued in 1986 and updated in 1992. The recent memorandum notes that advances in science and technology have dramatically altered the biotechnology landscape since the last update.

The memorandum directs the agencies to:

• Update the Coordinated Framework by clarifying the roles and responsibilities of the agency and identify which agency is responsible for what products or product areas;

• Develop a long-term strategy to ensure that the agencies are equipped to assess risks associated with future biotechnology products and changing technology; and

• Commission an external, independent analysis of the future landscape of biotechnology to identify potential new risks and risk assessment frameworks and to review areas of risk or non-risk that are well understood.

The White House says it expects the updated framework and regulations will ensure public confidence in the regulatory system and improve transparency, predictability, coordination and efficiency of biotechnology regulation.

EPA, FDA and USDA will hold three listening sessions over the next year in different parts of the country to allow the public to participate in the Coordinated Framework. The first session will be held this fall in the District of Columbia, and IDFA says it plans to participate.

CMN


Lawmakers push for dairy
market access in Canada

July 17, 2015

WASHINGTON — A bipartisan group of 21 U.S. House members sent a letter Wednesday to Canada’s ambassador to the United States, Gary Doar, urging Canada to commit to significant dairy market access in the Trans-Pacific Partnership (TPP) negotiations.

“It is our understanding that Canada has long been unwilling to seriously engage in the market access discussions regarding dairy, despite its commitment upon joining TPP to adhere to its high standards,” says the letter, which was led by U.S. Reps. Reid Ribble, R-Wis.; Ron Kind, D-Wis.; David Valadao, R-Calif.; and Suzan DelBene, D-Wash.

“The final dairy market access package with Canada will have a significant impact on how Congress views the final agreement,” the letter says. “It will be difficult for us to support Canada’s inclusion in TPP if significant new dairy access is not part of the deal.”

U.S. dairy industry groups praised the House members for putting pressure on Canada regarding dairy market access.

The International Dairy Foods Association (IDFA) says it is seeking market access for all dairy products across all tariff lines in the TPP negotiations. It commended the 21 U.S. representatives for taking a strong stance against Canada’s lack of engagement on dairy market access negotiations in the TPP talks.

“These lawmakers understand the importance of getting the best deal from all of the countries negotiating TPP for the U.S. dairy industry,” says Connie Tipton, president and CEO, IDFA. “Dairy was left out of both the U.S.-Canada Free Trade Agreement and the North American Free Trade Agreement; we are not willing to support another agreement that doesn’t include significant access to Canada’s dairy market.”

The National Milk Producers Federation (NMPF) and U.S. Dairy Export Council (USDEC) hailed the congressional message as a vital element to achieving the type of ambitious and balanced market access result that the groups say is still needed in the TPP agreement.

“We applaud this group of House members for demanding that Canada get serious about allowing more dairy imports,” says Jim Mulhern, president and CEO, NMPF. “Creating meaningful U.S. export opportunities in the Canadian market is one of three critical dairy market access issues remaining in TPP, and so far Canada has refused to live up to its commitment to address it. If U.S. dairy farmers are ultimately asked to grapple with greater competition under this agreement, it’s only right that they be able to have comparable product opportunities to tap into exports to Canada, as well as Japan.”

USDEC President Tom Suber adds that USDEC members had hoped that TPP would eliminate all dairy tariffs in the region, but that now appears unlikely.

“Despite this, we see the prospect for ample market access gains — particularly into Japan and Canada,” Suber says. “We hope to support a final agreement that ensures the United States gains at least as much increased dairy market access into those markets for major dairy commodities as it grants to our largest competitor in this agreement. Our industry is willing to do its part; Canada needs to do so as well if it wants to be part of TPP.”

NMPF and USDEC add that further expansion of access to the Japanese market for certain core dairy commodities also needs to be addressed in the final phase of the TPP negotiations. The groups say the final agreement must include net trade benefits for exports of major dairy commodities into Japan and Canada, TPP’s major dairy import destinations, in comparison with new dairy access into the United States for New Zealand, the world’s largest dairy exporter, for each of those products.

Earlier this week, U.S. Trade Representative Michael Froman traveled to Malaysia and Singapore for TPP negotiations. The United States plans to host a meeting of TPP trade ministers in Maui, Hawaii, July 28-31, preceded by a meeting of TPP chief negotiators July 24-27.

CMN


GI issues in TTIP agreement, WIPO treaty debated

July 17, 2015

BRUSSELS, Belgium — Geographical indications (GIs) were discussed at a stakeholders event held Wednesday in Brussels, Belgium, as part of the 10th round of Transatlantic Trade and Investment Partnership (TTIP) negotiations between the United States and the European Union.

Sébastien Breton, director of the Conseil national des appellations d’origine laitières (CNAOL), highlighted how GIs benefit rural development in France.

“GIs are an important tool for rural development, especially in less favored areas,” he says. “In the French GI cheese sector, 70 percent of the volumes are produced in mountainous areas. As by definition GI businesses cannot be outsourced, GIs are crucial to generate and maintain direct and indirect jobs in such areas. Without adequate legal protection though, all of this is at stake.”

The Organization for an International Geographical Indications Network (oriGIn) notes that while many of its European members participated directly in the stakeholders event, representatives of U.S. GIs closely followed the discussions from Washington.

Butch Weege, president of the American Origin Products Association (AOPA), invited U.S. negotiators to look at GIs in the TTIP as an opportunity to address the legal challenges U.S. GIs face in their country of origin as well as in the EU market.

“As a matter of fact, American GIs have to face high enforcement costs and increasing misuse in the U.S.,” Weege says. “For the ones protected through certification marks, there can be obstacles to lodging a GI application in the EU. We believe that these issues can be addressed in an ambitious free trade agreement such as the TTIP. We need to find innovative solutions that serve real GIs on both sides.”

Other U.S. industry groups, particularly those representing U.S. cheesemakers, argue that through TTIP, the EU is trying to “claw back” common names that have been used for decades on U.S. products. Shawna Morris, senior director of the international Consortium for Common Food Names (CCFN), spoke earlier this year at a meeting of the Global Business Dialogue about efforts by the EU in its trade negotiations that threaten to negatively impact the use of names such as “parmesan,” “feta” and “bologna.”

“Our goal is to promote approaches that protect both legitimate GIs and generic food names. But we very much oppose any attempt to monopolize common names that have already become part of the public domain,” Morris says.

Dairy industry groups also this week praised leaders in the House and Senate Judiciary committees, the Senate Finance Committee and the House Ways and Means Committee for expressing “grave disappointment” over recently approved treaty changes that are likely to severely limit the use of many generic food names in export markets. The World Intellectual Property Organization (WIPO), a United Nation agency charged with developing a balanced international intellectual property system, approved the treaty changes at a meeting in Geneva, Switzerland, in May. (See “Dairy groups say Lisbon Agreement endangers names” in the May 22, 2015, issue of Cheese Market News.)

In the July 15 letter to WIPO Director General Francis Gurry, the congressional leaders object to an expansion of geographical indications protections that will limit the use of certain food names to a specific region or country without sufficient protections for other users of the names. They also object to a WIPO decision to force those harmed by the changes to help fund them.

“We urge you to take appropriate steps to rectify the funding situation and to implement the agreement in a fair and balanced way that adequately protects the interests of trademark owners and users of generic names,” the letter says. “We will continue to monitor closely these developments and other areas of WIPO’s work to ensure that WIPO effectively functions as a global forum for the protection of intellectual property rights.”

The letter also questions whether the treaty provisions violated other international trade agreements.
“We are very concerned that parties to this agreement will implement it in a manner inconsistent with existing international trade obligations, including under the World Trade Organization’s Agreement on Trade-Related Aspects of International Property Rights,” the letter says.

Those signing the letter include Senate Judiciary Committee Chairman Chuck Grassley, R-Iowa and Ranking Member Patrick Leahy, D-Vt.; House Judiciary Committee Chairman Bob Goodlatte, R-Va., and Ranking Member John Conyers, D-Mich.; Senate Finance Committee Chairman Orrin Hatch, R-Utah, and Ranking Member Ron Wyden, D-Ore.; and House Ways and Means Committee Chairman Paul Ryan, R-Wis., and Ranking Member Sandy Levin, D-Mich.

Leaders of the National Milk Producers Federation (NMPF), the U.S. Dairy Export Council (USDEC) and the International Dairy Foods Association (IDFA) praised the members of Congress for sending the letter.

“The deep concern expressed by the United States and many other WIPO members must be taken seriously not only by WIPO but by the World Trade Organization,” says Jim Mulhern, president and CEO, NMPF. “These eight congressional leaders are to be commended for objecting to an agreement that hamstrings many users of common or generic food names around the world.”

USDEC President Tom Suber says the United States may need to reassess the benefits of belonging to WIPO if this decision is a model for future actions.

“The letter correctly notes that WIPO missed an opportunity to develop a consensus agreement and instead approved a one-sided document that ignores the concerns of the United States and many other members,” Suber says.

Connie Tipton, president and CEO of IDFA, adds, “WIPO needed to be called out for pushing through an agreement that includes new geographical indications for a wide range of agricultural and non-agricultural products. The congressional letter does that. We hope WIPO sits up and takes notice.”

CMN


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Today's Cheese Spot Trading
August 4, 2015


Barrels: $1.6925 (+1/4)
Blocks: $1.7200 (-1 3/4)


Click here for more market activity
Cheese Production
U.S. Total May
973.123 mil. lbs.


Milk Production
U.S. Total June
17.445 bil. lbs.

Guest Columnist

Truth in labeling
finally moving forward

Jim Mulhern, president and CEO of the National Milk Producers Federation

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