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Tensions between China, U.S. escalate; NAFTA talks ongoing

Sept. 21, 2018

WASHINGTON — The Trump administration this week announced its intent to place a 10-percent tariff on $200 billion worth of Chinese goods and threatened to levy tariffs on an additional $267 billion worth of imports.

“In accordance with the direction of President Trump, the additional tariffs will be effective starting Sept. 24, 2018, and initially will be in the amount of 10 percent,” says the Office of the U.S. Trade Representative. “ Starting Jan. 1, 2019, the level of the additional tariffs will increase to 25 percent.”

The Chinese government has responded with tariffs on $60 billion worth of American imports, including dairy.

The moves are the latest in a tit-for-tat trade dispute between the United States and China that began over the summer.

Starting Sept. 24, China will target U.S. lactose, infant formulas, ice cream, chocolate milk and whey proteins and isolates. The move means that nearly all U.S. dairy products exported to the country will face additional import taxes, says the International Dairy Foods Association (IDFA).

“This action will have a significant impact on IDFA members who export their products to our third-largest export market,” says Beth Hughes, IDFA senior director of international affairs. “IDFA will continue to communicate members’ concerns to top officials within the administration and promote equitable trade as one of our top priorities.”

The National Farmers Union (NFU) expressed concern over President Trump’s “imprudent and antagonistic approach” to trade negotiations.

NFU says that while it believes China has unquestionably engaged in unfair and manipulative trade behavior for many years and that President Trump is correct to address these actions, NFU disagrees with the president’s go-it-alone approach.

“We believe he would be more successful in achieving fundamental reforms in China’s trading tactics by leading the rest of the world in a united front,” says Rob Larew, vice president of public policy and communications for NFU.

“The administration’s current strategy has created serious and potentially irrevocable problems for American farmers and ranchers. The effect these tariffs will have on export markets is clearly not a temporary problem, and as such, a temporary solution will not be sufficient,” Larew says. “We call on Congress and the administration to establish meaningful long-term safeguards that will prevent family farmers and ranchers from collapsing under the weight of a global trade war.”

News reports say even as the conflict escalates, the Trump administration signaled it would still be open to talks with China as soon as next week.

News reports also say that, due to the latest escalation in the U.S.-China trade war, the start of a second round of trade talks between the United States and Japan will be delayed until the new tariffs on China go into effect Sept. 24.

Meanwhile, talks continue between the United States and Canada on renegotiating the North American Free Trade Agreement (NAFTA). A tentative deadline has been set for the end of the month.

The United States and Mexico reached a preliminary deal last month, but nothing has been finalized as the United States and Canada continue negotiations.

New reports last week said Canada has indicated it is ready to offer the United States limited access to the Canadian dairy market as a concession in negotiations to rework NAFTA. Canada is said to be considering similar concessions on the dairy industry to those that it agreed to in free trade deals with the European Union and Pacific Rim nations, reports say.

Dairy Farmers of Canada (DFC) this week called on the Canadian government to ensure that any final NAFTA deal does not negatively impact the sector and Canadian consumers.

Gathered in Ottawa, dairy producers from communities across Canada stated that the dairy sector has already paid the price in several recent trade deals with Europe and the Transpacific countries, resulting in the equivalent of $250 million annually in lost milk production to dairy farmers from other countries.

“This doesn’t only hurt dairy farmers. From equipment dealers, to feed manufacturers to veterinarians to truck drivers, to processors, all are negatively impacted by these deals which will have long-lasting effects across the entire Canadian economy,” says Pierre Lampron, president, DFC. “Many American dairy farmers know that more access to the Canadian market isn’t a viable solution to American overproduction. Canada has a population that is less than the state of California. For American farmers, the Canadian market is a drop in the bucket; for us, it is our livelihood.

“We want to add our voice to that of Prime Minister Trudeau — that the dairy sector is worth fighting for — and we call on the government to ensure that any final NAFTA deal has no further negative impact on our dairy sector,” he adds.

CMN


Dairy farms sustain minimal damage in wake of hurricane

Sept. 21, 2018

RESTON, Va. — Hurricane Florence left flooding and farm damage in its wake as it settled over the Southeast late last week, but the dairy industry escaped relatively unscathed.

Maryland and Virginia Milk Producers Cooperative Association Inc., which has 156 of its members in North Carolina, South Carolina and Virginia, received no reports of major issues on any of its farms besides power outages, wet barns and some structure damage.

“We are very fortunate that the storm weakened significantly before it got to many of our members,” says Amber Sheridan, director of corporate communications, Maryland and Virginia Milk Producers Cooperative Association Inc. “Our haulers did a great job getting milk picked up, and other than some rerouting for road closures, the hurricane has not been as hard on our members as first anticipated.”

USDA’s Dairy Market News reports that Southeast milk production has been fairly level this week, though Hurricane Florence impacted parts of the Southeast with heavy flooding. Some dairy operations in Virginia and the Carolinas closed temporarily in anticipation of delivery problems or due to evacuation orders.

“There have been reports of power outages and road closures due to the storm. Some operations are closed at this time,”

Dairy Market News says in its Sept. 19 Eastern U.S. Fluid Milk and Cream report. “Market participants report in other parts of the Southeast, where the hurricane didn’t hit as hard, operations are running fairly smoothly and haulers are having little or no issues with transporting milk.”

Borden Dairy Co.’s plant in North Charleston, South Carolina, closed Sept. 11 in conjunction with the state’s mandatory evacuation order and reopened the morning of Sept. 16. As a result of the temporary closure, Borden shifted production across its network of 12 other plant locations to prevent customer disruptions.

Borden also last Friday processed and packaged 45,000 individual servings of milk at its London, Kentucky, plant to distribute to those affected by Hurricane Florence in partnership with the Food Bank of Central and Eastern North Carolina and World Central Kitchen.

A spokesperson for Dean Foods says its plants were not impacted from the storm, and that ahead of the storm, the company reached out to its customers and provided additional deliveries where needed to help meet increased demand.

Dairy Farmers of America (DFA) also reports that Hurricane Florence had little to no impact on milk pickup and distribution in the Southeast region.

“With more than 250 dairy farmer members throughout Virginia, North Carolina and South Carolina, we have been and continue to monitor Hurricane Florence and its impact. Our primary concern is ensuring the health and safety of our farmer members and their animals,” says Kristen Coady, vice president of corporate communications, DFA.

Coady says overall reports from DFA field staff indicate that DFA farmers prepared for and weathered the storm “as well as possible,” and that the farmers are in the process of clean-up and recovery from water damage to barns and pastures.

“DFA field staff will continue responding to any on-farm issues, ensuring that members and their animals are safe and connecting them to applicable programs, including state and local resources, as well as DFA Cares, which offers financial assistance to dairy producers whose operations are impacted by natural disasters,” Coady says.

Other agriculture industries in these states sustained heavier damage. The North Carolina Department of Agriculture and Consumer Services reported Wednesday that preliminary livestock losses included 3.4 million poultry and an estimate of 5,500 hogs. Estimates on crop losses were not yet available.

“This was an unprecedented storm with flooding expected to exceed that from any other storms in recent memory. We know agricultural losses will be significant because the flooding has affected the top six agricultural counties in our state,” says North Carolina Agriculture Commissioner Steve Troxler, who conducted an aerial survey of damage on Tuesday. “The footprint of flooding from the storm covers much of the same area hit by flooding from Hurricane Matthew in 2016, which only worsens the burden on these farmers.”

North Carolina’s veterinary division is working with livestock and poultry producers to assess risk to livestock operations. The state’s food and drug inspectors are reaching out to grocery stores and other outlets, and they will be visiting stores in places where there have been prolonged power outages or flooding when it is safe to do so.

On Tuesday, South Carolina Commissioner of Agriculture Hugh Weathers surveyed crop damage from the storm during an aerial tour of six counties. He estimates crop damage in the state to be between $55 million and $330 million.

“We had good engagement with upwards of 60 farmers who verified what we suspected: cotton was most impacted by high wind, followed by peanuts damaged by drenched soil, and soybeans whose pods were blown from the plants,” Weathers says, adding that no crop was a total loss.

CMN


Milk production increases 1.4 percent over year ago

Sept. 21, 2018

WASHINGTON —Milk production n the 23 major milk-producing states during August totaled 17.25 billion pounds, up 1.4 percent from August 2017, 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.)

July revised production, at 17.32 billion pounds, was up 0.5 percent from July 2017. The July revision represented an increase of 16 million pounds or 0.1 percent from last month’s preliminary production estimate.

Production per cow in the 23 major milk-producing states averaged 1,974 pounds for August, 28 pounds above August 2017. This is the highest production per cow for the month of August since the 23-state series began in 2003, NASS says. The number of milk cows on farms in the 23 major states was 8.74 million head, 3,000 head less than August 2017, but 4,000 head more than July 2018.

For the entire United States, milk production during August totaled 18.30 billion pounds, up 1.4 percent from August 2017.

Production per cow in the United States averaged 1,946 pounds for August, 27 pounds above August 2017. The number of milk cows on farms in the United States was 9.40 million head, 4,000 head less than August 2017, but 5,000 head more than July 2018.

California, the nation’s top milk-producing state, saw milk production increase 1.2 percent from the previous year to 3.30 billion pounds in August 2018. Cow numbers in California were down by 12,000 head from the previous August to 1.73 million head, unchanged from July 2018. However, average production per cow in California was up 35 pounds from the previous August to 1,905 pounds.

Wisconsin followed with 2.62 billion pounds of milk in August 2018, up 1.4 percent from its production a year earlier. Wisconsin was home to 1.27 million cows in August, down 4,000 head from August 2017 but unchanged from July 2018. Production per cow in Wisconsin in August averaged 2,060 pounds, up 35 pounds from August 2017.

Wisconsin was one of the 10 states among the major 23 states that had production per cow levels above 2,000 pounds in August. According to NASS, Colorado had the highest production per cow in August, averaging 2,245 pounds per cow, followed by Michigan with 2,240 pounds per cow.

CMN



Program offers assistance to Pa. dairy industry

Sept. 21, 2018

HARRISBURG, Pa. — Pennsylvania Gov. Tom Wolf this week announced the availability of $5 million in grant funding to help Pennsylvania dairy farmers overcome challenges and capitalize on new opportunities. The funding is being made available for the first time under the Pennsylvania Dairy Investment Program and is the most recent of several initiatives from the Wolf administration to support Pennsylvania’s dairy industry.

“Today’s market has presented new challenges to dairy farmers that are requiring them to innovate and adapt in order to remain successful,” Wolf says. “The new Pennsylvania Dairy Investment Program is a key tool that incentivizes the dairy industry to support the often costly and difficult process of modernizing or expanding their business model or operation. My administration is proud to continue to stand with our hard-working dairy farmers and their families.”

The Pennsylvania Dairy Investment Program was established under Act 42 of 2018 and will provide $5 million in grants to eligible applicants for researching new technologies, products and best practices; marketing to new domestic and international markets and exploring new business opportunities to diversify their operation and revenue streams; transitioning to organic production methods; and incorporating or expanding value-added dairy production, such as cheese and yogurt products.

The program is now open for applications after guidelines were approved at a Commonwealth Financing Authority board meeting held this week.

“These grants will help enable Pennsylvania dairy producers to overcome existing challenges, diversify their businesses and strengthen their operations to aggressively and effectively compete in an increasingly competitive market,” says Pennsylvania Agriculture Secretary Russell Redding. “This historic funding is not only a critical investment in an industry grappling with difficult global market conditions, but a critical investment in our largest sector of production agriculture and the people whose livelihoods rely on it.”

Redding in August unveiled the Wolf administration’s Dairy Development Plan, designed to guide Pennsylvania’s dairy industry toward growth and development amid a challenging market. (See “Pennsylvania unveils dairy development plan” in the Aug. 24, 2018, issue of Cheese Market News.)

Other measures the administration has taken to support the dairy industry include joining dairy partners to kick off the “Choose PA Dairy: Goodness that Matters” campaign to support Pennsylvania’s dairy industry by educating consumers on how to find and buy locally-produced milk, and why it matters to Pennsylvania’s economy and the health of its residents; launching a statewide study by some of the nation’s leading dairy economists in 2017 to evaluate opportunities and inhibitors to growth in the industry; petitioning the Pennsylvania Milk Marketing Board to use the full extent of its statutory and regulatory powers to provide relief to dairy farmers affected by the persistent low-price environment; working to attract new processors to Pennsylvania; and surveying county economic development organizations to create an inventory of sites suitable for a dairy processing operation.

CMN


Ellsworth Creamery focuses on value for members and customers

By Kate Sander

ELLSWORTH, Wis. — The village of Ellsworth, Wisconsin, is proclaimed to be the Cheese Curd Capital of Wisconsin, thanks to the production prowess of Ellsworth Cooperative Creamery, which has the ability to produce 170,000 pounds of curds a day.

Ellsworth Cooperative Creamery, which produces its products at a plant in Ellsworth as well as plants in Comstock and New London, Wisconsin, is perhaps best known around the country for its curds, which it supplies to customers both big and small. The village of Ellsworth has been known as the Cheese Curd Capital for the last 35 years since then-Wisconsin Gov. Anthony Earl issued a proclamation declaring it so.

Yet as proud as the people of Ellsworth are of their cheese curds, what cooperative General Manager and CEO Paul Bauer wants the co-op to be most known for is its ability to provide value added dairy products for its customers.

Value-added doesn’t mean complicated, or even specialty, Bauer says. Whether it’s curds or whey, the co-op strives to provide what its customers need and at the same time enhance the bottom line of its producers’ milk checks.

“Value-added is more than what you would get from the base commodity,” Bauer says. “By taking barrels and converting them to process cheese, or turning blocks into loaves, we’re adding value for our members and our customers.”

To that end, Ellsworth recently introduced a new line of pasteurized process cheese, available in standard and custom flavors.

“I want to see our cooperative have a stronger financial footing and not be as dependent on commodity pricing,” Bauer says. “Our long-term goal is to get more than 40 percent of sales as value-added products. We’re working on that.”

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U.S. continues NAFTA talks, makes progress on other deals

Sept. 14, 2018

WASHINGTON — As a trade war continues between the U.S. and China, reports this week indicated a meeting between the two nations may be coming soon. Meanwhile, the United States this week also continued talks with Canada on the North American Free Trade Agreement (NAFTA) and made progress in trade issues with the European Union and Turkey.

• China

News reports this week indicated that China and the United States may hold a new round of trade talks as tit-for-tat tariff escalation between the two countries continues.

Reports have indicated President Trump could move to impose new tariffs on $200 billion worth of Chinese goods. The proposed tariffs, if implemented, would bring the total value of Chinese goods Trump has hit with tariffs to about $253 billion — or about half of current U.S. imports from China.

China, in turn, has threatened to retaliate on another $60 billion worth of U.S. goods, bringing its total to about $113 billion of its $130 billion in imports from the United States, reports say.

Stakeholders are hopeful new talks between the United States and China may delay any further tariff escalation.

Until tariff issues are resolved, agricultural stakeholders continue to speak out on the harm tariffs are inflicting on U.S. ag markets.

Americans for Free Trade, a new coalition of trade groups representing the retail, manufacturing and services sector, this week joined with the Farmers for Free Trade advocacy group to launch a multimillion dollar campaign to combat the Trump administration’s tariffs.

The “Tariffs Hurt the Heartland” campaign will hold town halls; run television, radio and online advertisements; and reach out to lawmakers about the tariffs’ negative effects.

The campaign includes a geographically searchable map (available at www.tariffshurt.com) that allows users to find stories of job losses, deferred investments, higher prices and other negative consequences for farmers and businesses.

Members of the National Farmers Union (NFU) also expressed frustration with the Trump administration’s trade disputes this week as hundreds of farmers gathered in Washington, D.C., for NFU’s legislative fly-in.

“Family farmers and ranchers are in the midst of the worst decline in the farm economy in decades, and they want to see action from their federal representatives,” says NFU President Roger Johnson. “It is critical right now for family farm agriculture to have the support of Congress and the administration. And that support can come through immediate passage of the farm bill and movement on a long-term, legislative solution that protects family farmers from the significant damage occurring to our trade markets.”

• NAFTA

This week, talks continued between the United States and Canada on the North American Free Trade Agreement (NAFTA).
New reports say Canada has indicated it is ready to offer the United States limited access to the Canadian dairy market as a concession in negotiations to rework NAFTA. As the Oct. 1 deadline to renegotiate the trade agreement approaches, Canada is said to be considering similar concessions on the dairy industry to those that it agreed to in free trade deals with the European Union and Pacific Rim nations, report say.

Trump has indicated that if Canada doesn’t sign on to a new NAFTA deal, he would move forward with a bilateral deal with Mexico.

Trade officials hope any deal involving Mexico can be signed before Mexican President Enrique Peña Nieto’s last full day in office Nov. 30. Under the Trade Promotion Authority law, Trump is required to send Congress text of any agreement by the end of this month for that to be able to happen.

News reports say U.S. Trade Representative (USTR) Robert Lighthizer is expected to meet with lawmakers soon to discuss the status of NAFTA talks.

• Other trade updates

This week Lighthizer met with European Union Commissioner for Trade Cecilia Malmström to initiate the Executive Working Group to improve trade relations between the United States and the European Union.

The ministers addressed each of the topics in the joint statement issued by President Trump and European Commission President Jean-Claude Juncker on July 25. (See “U.S., EU announce agreement to ease trade tensions; NAFTA talks resume this week” in the July 27, 2018, issue of Cheese Market News.)

The ministers will meet again at the end of the month to continue talks. In October, professional staff will hold further discussions on identifying and reducing tariff and non-tariff barriers to trade. Ministers then will meet in November to finalize outcomes in a number of areas.

“Specifically, we hope for an early harvest in the area of technical barriers to trade,” USTR says. “We look forward to each party pursuing their domestic processes for negotiating mandates. USTR will begin consultations with Congress pursuant to Trade Promotion Authority to facilitate negotiations on longer-term outcomes.

Meanwhile, Turkey has reopened its market to U.S. dairy products, following a lapse in market access for nearly three years while Turkish and U.S. officials negotiated to renew a certificate that Turkey requires for imports.

According to the International Dairy Foods Association (IDFA), Turkey currently imports around $200 million each year in specialty products such as cheese, butter, infant formula and lactose.

“We’re pleased to learn this hiatus is over and that American dairy companies once again have access to Turkey, a market that was worth $24.2 million for U.S. dairy in 2014,” says Beth Hughes, IDFA senior director of international affairs.

Under the new certificate, the United States can export products such as butter, cheese, ice cream, milk and cream, whey and milk powders, and yogurt.

IDFA says it expects USDA’s Agricultural Marketing Service to soon publish formal instructions for dairy exporters wishing to send products to Turkey.

CMN


UW officials, donors celebrate groundbreaking on renovation

Sept. 14, 2018

By Alyssa Mitchell

MADISON, Wis. — Officials from the University of Wisconsin-Madison’s Babcock Hall Dairy Plant and College of Agricultural and Life Sciences (CALS) gathered with donors and government officials last Friday to celebrate the start of a long-anticipated renovation of Babcock Hall and the Center for Dairy Research (CDR).

More than 150 cheese industry leaders, project leaders and government and university officials gathered for the celebration and luncheon, held Sept. 7 at UW’s Dejope Residence Hall. The celebration kicked off with a small parade of students from the UW Marching Band and included comments from CALS, Babcock and government officials, as well as industry leaders including John Umhoefer, executive director of the Wisconsin Cheese Makers Association, which has been a key fundraiser and donor for the project.

“We did it!” Umhoefer exclaimed excitedly when he got on stage. “Scores of people have worked hard to make this new dairy center a reality.”

Scott Rankin, UW-Madison’s Department of Food Science chair and professor, noted that when he recently moved to a new office, he found a flier from the last time Babcock Hall was renovated — in 1951.

The new $47 million renovation of Babcock Dairy Hall and a new, three-story addition to CDR is being made possible with funding from donors, the state of Wisconsin and UW-Madison. Donors, primarily from Wisconsin’s cheese industry, raised more than $18 million to support the project.

“We are deeply grateful for everyone’s efforts on behalf of this project,” says CALS Dean Kathryn VandenBosch. “We could not have done this without the support of our industry investors, UW-Madison and the state. I can’t say ‘thank you’ enough.”

Rebecca Blank, UW-Madison chancellor, says the facility will be one of the premier dairy education and research centers in the nation.

“Most importantly, it’s going to be a hub for discovery and innovation for Wisconsin’s dairy industry, working closely with our faculty and students,” she says.

The project will commence in three phases. Phase one, currently underway, involves constructing a new loading dock and milk receiving bay. The demolition of Science House, which took place in early August, also was part of the first phase.

Phase two, anticipated to start in early 2019, involves the construction of the CDR addition. The third phase is the Babcock Hall Dairy Plant renovation, which is expected to begin in early 2020. Projection completion is slated for later in 2020.

The renovation will modernize the dairy plant, adding a new ice cream maker, more freezer and cooler space, an improved raw milk receiving bay, and new piping, pumps and valves to more efficiently move milk and milk products around the plant.

During construction, Babcock Hall Dairy Store, including the main entrance, will be open, but the plant will be shut down. Officials say customers may notice a reduction of some products, such as cheese and milk, and a possibly reduced selection of ice cream flavors.

Closure of the Babcock Hall Dairy Plant is expected in early 2020 and is anticipated to last for 13-14 months.

During the plant renovation, Babcock ice cream will continue to be made at an off-site frozen dessert manufacturing facility — following the dairy plant’s special Babcock ice cream recipe — and will be available for purchase at Memorial Union, Union South and the Babcock Hall Dairy Store, as well as the other on- and off-campus sites where it usually is available.

The Babcock Hall Dairy Plant serves as a laboratory and learning facility for students, university researchers and industry personnel. It is utilized for product testing and recipe development, as well as professional training through short courses, college instruction and research projects.

Rankin notes the dairy plant shutdown will impact the students (course work), employees and extension clients with whom UW currently engages.

“We are working to minimize those impacts and to find creative alternatives during the shutdown period,” he says.
John Lucey, CDR director, says the project will allow for expanded production of specialty cheese, with nine individual ripening rooms, new cheese vats and other equipment.

The entire square footage of the entire project — including the renovation and addition — is around 77,400 square feet.
The architectural plan for the project was developed with the support of a design team including representatives from UW-Madison, industry groups and the state Division of Facilities Development working with vendor Zimmerman Architectural Studios.

The general contractor of the project is C.D. Smith Construction Inc., Fond du Lac, Wisconsin.

CMN


USDA raises most dairy price forecasts in report

Sept. 14, 2018

WASHINGTON —In its “World Agricultural Supply and Demand Estimates” report released this week, USDA lowered its 2018 milk production forecast by 100 million pounds from its report last month to 217.8 billion pounds in this month’s report due to slightly lower cow numbers and a slower rate of growth in milk per cow in the third quarter.

However, for 2019, the milk production forecast is raised from the previous month on slightly higher cow inventories. In 2019, U.S. milk production is forecast to total 221.0 billion pounds.

For 2018 and 2019, USDA’s fat-basis export forecasts are reduced from the previous month on slowing shipments of whey products and a number of other dairy products, while fat-basis import forecasts for 2018 and 2019 are raised on higher purchases of imported butterfat products and cheese.

On a skim-solids basis, the export forecasts for 2018 and 2019 are lowered on weaker whey product sales to China. Skim-solids basis import forecasts for 2018 and 2019 are raised on continued strong purchases of cheese and other miscellaneous dairy products, USDA says.

Cheese, nonfat dry milk (NDM) and whey prices are forecast higher for 2018 while butter prices are lowered from the previous month. Cheese is forecast to average in the $1.570-$1.590 per pound range, up from $1.550-$1.570 in last month’s report. NDM is forecast to average $0.785-$0.805, up from $0.755-$0.775, and dry whey is forecast to average $0.320-$0.340, up from $0.295-$0.315. Butter is forecast to average $2.220-$2.260, down from $2.265-$2.305 in last month’s report.

For 2019, NDM and whey price forecasts are raised to $0.825-$0.895 and $0.350-$0.380, respectively, while the butter price forecast is reduced from last month’s report to $2.205-$2.335. The 2019 cheese price forecast is unchanged at $1.590-$1.690.

The 2018 Class III price forecast is raised on higher forecast cheese and whey prices to $14.85-$15.05 per hundredweight. The Class IV price forecast is raised to $14.00-$14.30 as higher forecast NDM prices more than offset lower butter prices. In 2019, the Class III price forecast is raised to $15.20-$16.20, and the Class IV price forecast is raised to $14.30-$15.40.

The 2018 all-milk price forecast is raised to $16.30-$16.50 for 2018, up from $16.10-$16.30 in last month’s report. In 2019, the all-milk price is forecast to average in the $16.75-$17.75 range, up from $16.45-$17.45 forecast last month.

CMN



Contract breach alleged in cheese company lawsuit

Sept. 14, 2018

GREEN BAY, Wis. — Titletown Cheese Trading Co. LLC, De Pere, Wisconsin, has filed a lawsuit against Door Artisan Cheese Co. LLC, Egg Harbor, Wisconsin, that alleges a breach of contract.

According to the lawsuit, filed July 26 in Brown County, Wisconsin, Titletown Cheese and Door Artisan Cheese in October 2017 entered into a manufacturing

supply agreement in which Door Artisan agreed to manufacture, produce and deliver select varieties of artisan cheeses for Titletown and Titletown agreed to accept certain quantities of those cheeses at agreed upon prices.

The lawsuit alleges that from November 2017 to April 2018, Door Artisan Cheese manufactured, produced and delivered to Titletown cheese that was “defective, did not comply with the terms and conditions of the agreements between the parties, including the implied covenants of good faith and fair dealing contained therein.”

Titletown alleges in the suit that Door Artisan’s failure to deliver cheese as agreed between the parties constitutes a breach of contract in that Titletown received a defective product while Door Artisan received payment from Titletown for the full value of the cheese.

Titletown is seeking judgment against Door Artisan Cheese for damages.

Door Artisan Cheese responded with a counterclaim filed Aug. 16 in Brown County.

According to the counterclaim, Door Artisan Cheese says the balance of allegations are denied as alleged for the reason that Titletown failed to purchase cheese as required under written contract between the two companies.

According to the claim, Door Artisan entered into discussions in September 2017 with Titletown about producing artisan cheeses, during which Titletown represented to Door Artisan that Titletown would purchase 40,000 pounds of cheese per month from Door Artisan.

“In reliance on said representations, Door Artisan began to hire additional employees, purchase equipment and expand its cheese manufacturing facility to accommodate Titletown’s requirements,” the counterclaim says.

Door Artisan says Titletown refused to accept delivery of substantial quantities of cheeses, failed to pay for substantial quantities of cheeses and then unlawfully converted to its own possession and control substantial quantities of cheeses which were not paid for and without Door Artisan’s consent, the claim says.

The claim also denies Titletown’s allegation that cheese delivered by Door Artisan to Titletown was defective and did not comply with the terms and conditions of the agreements between parties.

The counterclaim alleges breach of contract by Titletown Cheese and also alleges trespassing and that Titletown “engaged in tortious conversion of goods not paid for that were in the custody and control” of Door Artisan.

Door Artisan Cheese is asking that Titletown’s complaint be dismissed and that Door Artisan be awarded monetary damages for the cheese Titletown agreed to purchase.

Terry Bouressa, attorney for Titletown Cheese, declined to comment on the matter. Requests for comment to Door Artisan Cheese’s attorney were not returned by press time.

CMN


NAFTA, farm bill discussions continue as deadlines loom

Sept. 7, 2018

WASHINGTON — Congress returned to Washington this week with a list of legislative business to address — much of which impacts the dairy sector — before the October congressional recess and the midterm elections.

Congressional negotiators this week are working to reconcile differences between the House and Senate-passed farm bills through conference committee meetings, both public and private. The current farm bill is set to expire Sept. 30.

“The goal, the responsibility, the absolute requirement is to provide farmers, ranchers, growers and everyone within America’s agriculture and food value chain certainty and predictability during these very difficult times. This is paramount to many other issues and concerns,” says Pat Roberts, R-Kan., chair of the Senate Ag Committee. “Both the House and Senate recognize this need. Clearly, both have taken the steps to get us to this point today. We are very close to the finish line, but we still have a lot of work — a lot of compromise — that remains to be done.”

House Agriculture Committee Chairman K. Michael Conaway, R-Texas, says while he is pleased with progress on the farm bill, Congress must pick up the pace.

“This will all come together quickly if all four principals (Roberts, Conaway, Senate Ag Committee Ranking Member Debbie Stabenow, D-Mich., and House Ag Committee Ranking Member Collin Peterson, R-Minn.) are willing to make meaningful compromises,” Conaway says. “I have made it very clear that I am willing to do so. We still have a lot of work to do, but I believe we can get this done on time.”

News reports say that agriculture committee leaders are waiting on Congressional Budget Office scoring of certain provisions of the farm bill and that the analysis will play a role as they work to land a compromise on the major points of contention. The scores will be for the conference committee’s use and likely won’t be made public, reports say.

Reconciling the competing House and Senate approaches to funding the Supplemental Nutrition Assistance Program remains a contentious issue and one of the biggest hurdles to on-time passage of a farm bill.

Dairy stakeholders have stressed that the bill should include better risk management tools that would benefit dairy processors and producers alike, as well as establish voluntary incentives to encourage Supplemental Nutrition Assistance Program participants to consume more milk and dairy foods to improve their overall nutrition, especially for children.

The International Dairy Foods Association (IDFA) notes that the pending legislation also should ensure that the label “natural cheese” retains its historic meaning and helps consumers identify “natural cheese” from “process cheese.” IDFA has told lawmakers that U.S. cheese companies have been using the term “natural cheese” for decades and that enacting a bill is necessary to help prevent consumer confusion.

• Appropriations

Congress also needs to pass a 2019 appropriations bill by Sept. 30. IDFA says it has worked closely with Congress to develop proposals that would fund research to help companies find sustainable solutions for ice cream co-product as well as increase support for FDA efforts to modernize standards of identity. The Senate passed its appropriations bill to fund USDA and FDA earlier this summer, but the House has yet to pass its agriculture appropriations funding bill, although some progress has been made in committee.

• Trade

Meanwhile, the Trump administration decided to extend NAFTA talks with Canada that were set to end last Friday, according to U.S Trade Representative (USTR) Robert Lighthizer.

Last week, the Trump administration announced it had secured a preliminary U.S.-Mexico trade agreement as part of NAFTA renegotiations. While it was unclear whether Canada would be included in a deal, President Trump has notified Congress of his intent to sign a trade agreement with Mexico, and potentially Canada, in 90 days. Leaders from Canada and the United States met this week to continue trade discussions. (See “U.S.-Mexico preliminary trade deal to remove tariffs” in last week’s issue of Cheese Market News.)

This week, state Farm Bureau presidents met with President Trump and Vice President Pence to express their continuing concerns over trade and the financial difficulties tariffs and related barriers are causing farmers and ranchers.

Texas President Russell Boening, Illinois President Richard Guebert and American Farm Bureau Federation Vice President Scott VanderWal — who also is president of the South Dakota Farm Bureau — told the president and vice president that they need open markets soon.

The small group of ag leaders included representatives of several agricultural organizations in addition to Farm Bureau, covering row crops, dairy and livestock, and specialty crops.

Boening, Guebert and VanderWal also met with Agriculture Secretary Sonny Perdue as well as Ambassador Gregg Doud, chief agricultural negotiator at USTR.

“Farmers and ranchers are counting on the administration to fight for strong trade deals that expand our markets — now more than ever as we face the worst farm economy in 12 years,” AFBF President Zippy Duvall says. “This White House has been the most ag-focused in recent memory, and we are grateful to have a seat at the table with our nation’s leaders to discuss the importance of agriculture to our rural economies and the importance of trade to farmers and ranchers across the country.”

CMN


Organic Trade Association plans new voluntary checkoff

Sept. 7, 2018

WASHINGTON — The Organic Trade Association (OTA) this week announced a plan to move forward with a voluntary industry-invested organic research, promotion and education checkoff program that will be collaboratively designed and implemented by organic stakeholders across the organic supply chain.

“The Organic Trade Association recognizes great demand for coordinated organic research and promotion, and the organic sector is ready to work together on innovative solutions that will have key benefits for organic,” says Laura Batcha, executive director and CEO, OTA.

In May 2015, OTA submitted an application to USDA to consider implementing an organic checkoff program. In January 2017, USDA officially proposed a nationwide organic checkoff program, opening the process for public comments.

However, last May, USDA terminated the rulemaking process despite comments in support of the program from more than 12,000 individuals and businesses, OTA says.

“In today’s political environment, organic companies and stakeholders are increasingly seeking private sector solutions, and the trade association is taking the lead in supporting these efforts,” Batcha says. “There is a critical need to educate consumers about organic, for more technical assistance to help more farmers transition to organic, and to loudly promote the organic brand. Responding to that need, we are launching a two-track effort to develop a voluntary governance approach and to also advance initiatives that will deliver immediate big wins for the organic sector.”

OTA has formed a steering committee to coordinate and lead the efforts. The committee is charged with addressing the governance questions around a voluntary program to maximize participation as well as to bring together multi-pronged private efforts to foster coordinated organic research and promotion.

“These big ideas all live under the banner of GRO — shorthand for Generate Results and Opportunity for Organic,” Batcha says. “Everyone in our organic industry has a stake in eliminating consumer confusion, growing the market and building the organic brand, so we’ll work collectively to ensure the future of organic.”

The steering committee established two subcommittees to guide the process — a governance subcommittee and an immediate programming subcommittee. The governance subcommittee will be opening up a comment period this fall for interested parties to provide detailed comments in writing to address the questions of how to maximize participation in a voluntary program and how to make the best decisions on investments.

Members of the governance subcommittee include: Batcha; Kim Dietz, The J.M. Smucker Co.; Marty Mesh, Florida Organic Growers; Perry Clutts, Pleasant View Organic Dairy Farm; Melissa Hughes, Organic Valley; Gary Hirshberg, Stonyfield Organic; Melody Meyer, Source Organic; and Grant Lundberg, Lundberg Family Farms.

The immediate programming subcommittee will identify programs to advance organic, coordinating and funding these programs immediately. OTA says these prototype programs will invest in critical needs and serve as proven projects for investment when a formal voluntary program rolls out.

Collaborate programs already are being developed and funded. OTA is joining with Organic Voices and the group’s “It’s Not Complicated” campaign to fund a nationwide message drive aimed at reducing confusion about organic. The goal for the campaign is to raise a minimum of $1 billion for each of the next two years.

Other projects underway include: conducting in-depth consumer research on effective ways to reinforce the organic brand; advancing a portfolio of research to show beneficial impacts of organic on environmental and human health; and providing funding for more organic extension agents across the country.

OTA will unveil more details on its plans to interested stakeholders and members with a series of informational meetings next week at the Expo East Natural Products Trade Show in Baltimore.

CMN


July cheese production up 3.7 percent from year ago

Sept. 7, 2018

WASHINGTON — Total U.S. cheese production, excluding cottage cheese, was 1.09 billion pounds in July, 3.7 percent above July 2017’s 1.05 billion pounds, according to the Dairy Products report released this week by USDA’s National Agricultural Statistics Service (NASS). (All figures are rounded. Please see CMN’s Dairy Production chart.)

July cheese production was 2.7 percent above June 2018’s 1.06 billion pounds, although when adjusted for the length of the months July cheese production was down 0.6 percent from June on an average daily basis.

Production of Mozzarella, the nation’s most-produced cheese type, totaled 364.9 million pounds in July, up 3.7 percent from 352.0 million pounds in July 2017. Italian-type cheese production, of which Mozzarella is the largest component, totaled 463.5 million pounds, 2.6 percent above July 2017’s 451.9 million pounds.

Cheddar production totaled 326.4 million pounds in July, a 9.4-percent increase over the 298.3 million pounds produced in the United States in July 2017. American-type cheese production, of which Cheddar is the largest component, totaled 439.8 million pounds in July, 6.1 percent above July 2017’s 414.5 million pounds.

Wisconsin led the nation’s cheese production with 284.2 million pounds produced in July, up 0.1 percent from its production a year earlier. California followed with 211.2 million pounds, down 0.9 percent from its production a year earlier.

U.S. butter production was 136.2 million pounds in July, 0.5 percent above July 2017’s 135.6 million pounds. July 2018 butter production was 4.4 percent below June 2018’s 142.5 million pounds, and when adjusted for the length of the months, July butter production was down 7.5 percent from June 2018 on an average daily basis.

California led the nation’s butter production with 42.7 million pounds produced in July, up 12.0 percent from its production a year earlier.

CMN



Dairy exports at lowest volumes since January

Sept. 7, 2018

WASHINGTON — U.S. dairy exporters shipped 170,100 metric tons of milk powders, cheese, butterfat, whey products and lactose during July, 11 percent higher than July 2017, but the lowest volumes since January, according to the latest report from the U.S. Dairy Export Council (USDEC). July U.S. dairy exports were valued at $434.0 million, up 3 percent from a year earlier.

USDEC notes gains in July were led by sales of nonfat dry milk/skim milk powder (NDM/SMP) and lactose, while whey and cheese volumes slowed.

Cheese exports totaled 27,636 metric tons in July, up 1 percent from July 2017 but the lowest since January, USDEC reports. Cheese shipments to Mexico were down 1 percent. Sales to Japan were down 14 percent and sales to China down 56 percent, offsetting volume gains to South Korea (up 11 percent) and the Middle East/North Africa (MENA) region (up 43 percent).

Whey exports totaled 39,273 metric tons, the lowest in more than two years and down 8 percent from a year ago, USDEC says. Shipments to China were down 26 percent with steep declines in dry whey and whey protein concentrate sales.

USDEC reports exports of NDM/SMP totaled 54,343 metric tons, up 30 percent from a year ago. Shipments to Mexico and Southeast Asia, the two largest U.S. markets, were up 31 percent and 40 percent, respectively.

Lactose exports totaled 33,828 metric tons in July, up 15 percent from a year earlier. USDEC notes shipments to China were up 53 percent and exports to Southeast Asia were up 29 percent.

CMN


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Today's Cheese Spot Trading
September 25, 2018


Barrels:$1.3400 (-4)
Blocks: $1.6350 (NC)


Click here for more market activity
Cheese Production
U.S. Total July
1.091 bil. lbs.


Milk Production
U.S. Total Aug.
18.295 bil. lbs.

Guest Columnist

Detailing Dairy Revenue Protection

Andy Faulman, Rice Dairy LLC

Also this week: “As FSMA takes full effect, partnership opportunities abound” by Larry Bell, LBell Consulting, and Jim Mueller, Mueller Consulting

Click here for our columnist archives




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