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Dairy groups urge passage of USMCA free trade agreement

June 14, 2019

WASHINGTON — Dairy organizations and other stakeholders this week urged members of Congress to swiftly ratify the U.S.-Mexico-Canada Agreement (USMCA).

In a letter sent Monday to representatives of top-producing dairy states, the U.S. Dairy Export Council (USDEC), the National Milk Producers Federation (NMPF) and the International Dairy Foods Association (IDFA) detail how provisions of USMCA positively impact the U.S. dairy industry. The groups say that the timely resolution of ongoing trade disputes and negotiations is critical to growing the dairy sector’s international market share and maintaining credibility with U.S. trading partners.

“On behalf of the dairy farms and businesses in your district, please pursue a USMCA vote without delay by working to resolve any outstanding issues as swiftly as possible and then quickly ratify the trade deal to send a clear message to the world that America still values fair trade and robust trade partnerships with our allies,” the organizations write.

“Solidifying and expanding trade opportunities abroad through USMCA will improve the prospects of dairy farms here at home,” says Jim Mulhern, president and CEO, NMPF. “In the midst of uncertainty surrounding our trade relationships and yet another year of meager milk prices, the United States lost an average of seven dairy farms a day in 2018. The passage of USMCA will instill a renewed sense of optimism in our dairy farmers.”

With approximately 16 percent of the U.S. milk supply exported annually, the groups say strengthening trading relationships and expanding international market opportunities is vital to the financial well-being of the U.S. dairy industry. USMCA preserves U.S. dairy sales to Mexico, the U.S. dairy industry’s largest foreign customer, while increasing market access in Canada and tackling nontariff barriers that can hinder exports, they add.

“It is time for Congress to swiftly pursue a USMCA vote by working closely with the administration to resolve outstanding concerns and then quickly ratify the agreement to bring USMCA across the finish line,” says Tom Vilsack, president and CEO, USDEC. “The successful resolution of the Section 232 retaliatory tariffs helped pave the way for this critical trade agreement; while we work together to secure its passage, Congress must also stand against the imposition of any additional tariffs that could jeopardize forward progress.”

USDEC and NMPF last Friday joined a group of 140 business and agriculture associations in a joint statement opposing the Trump administration’s plan to impose a 5-percent tariff on all goods imported from Mexico over border and immigration issues. NMPF estimates that producers already have lost at least $2.3 billion in revenues through March due to higher tariffs by Mexico and China against U.S. dairy.

After meetings last week between the United States and Mexico, the Trump administration announced that the two countries will work together to implement a solution to address migrant flow issues, and the threat of new tariffs has subsided for now.
Stakeholders and lawmakers continued throughout this week to encourage the passage of USMCA.

On Tuesday, IDFA joined more than 960 national, state and local agriculture groups calling on Congress to support ratification of USMCA.

“USMCA meets the U.S. dairy industry’s top priorities to ensure a more level playing field, including preserving duty-free market access to Mexico, eliminating the unfair Canadian Class 7 pricing program and increasing market access to the Canadian market,” says Michael Dykes, president and CEO, IDFA. “The U.S. dairy industry, which supports more than 3 million jobs in the United States and pumps $620 billion into the U.S. economy, is making a strong appeal to Congress to vote to ratify this important trade deal. USMCA will ensure that our dairy industry grows valuable market share and continues to be viewed by our North American customers as a reliable supplier.”

Also during a hearing of the U.S. House Subcommittee on Livestock and Foreign Agriculture Tuesday, Ranking Member David Rouzer, R-N.C., called for the approval of USMCA, noting it is “another significant opportunity to expand U.S. trade.”

Analysis by the U.S. International Trade Commission indicates that U.S. agricultural exports will increase by at least $2.2 billion under the renegotiated deal, Rouzer notes, and additional gains are likely to be seen from science-based improvements to export procedures and cooperation on agricultural biotechnology.

CMN


Lawsuits filed against Fairlife; Fair Oaks on probation by FARM

June 14, 2019

CHICAGO — Two class action lawsuits have been filed in a U.S. district court in Illinois against Fairlife LLC over the statements made on its products relating to the treatment of animals on farms supplying the milk. Both lawsuits cite undercover footage recently released by Animal Recovery Mission (ARM) showing the abuse of cows at Fair Oaks Farms, a group of large-scale dairies in Indiana that supplied milk for Fairlife. (See “Undercover video shows calf abuse at Fair Oaks Farms site” in last week’s issue of Cheese Market News.)

One suit was filed Tuesday by Chicago-based McMorrow Law P.C., representing plaintiff Alain Michael of California, against both Fairlife and its co-founders Mike and Sue McCloskey, who also own Fair Oaks Farms. This suit alleges the defendants charge a premium for their milk products by indicating on the labels that Fairlife provides “Extraordinary care and comfort for our cows” and “provides extraordinary animal care.” The suit seeks relief for the plaintiff on behalf of all purchasers of Fairlife milk products for the defendants’ “fraud, negligent misrepresentation, unjust enrichment and violations of various state consumer protection laws.” The lawsuit asks for a jury trial where damages would be determined.

The other suit was filed against Fairlife LLC Wednesday on behalf of plaintiffs Andrew Schwartz of Illinois and Alice Vitello of Ohio by the firm Wolf Haldenstein Adler Freeman & Herz LLP with offices in Chicago and New York. This suit also requests a jury trial and seeks to recover the amounts the plaintiffs and other class members allegedly overpaid for Fairlife products and to prevent Fairlife from “continuing to engage in its unlawful, deceptive and unfair conduct, and to correct the false perception it has created in the marketplace through its misrepresentations of material facts.”

The Coca-Cola Co., which distributes Fairlife, responded to CMN’s request for comment on the lawsuits with an outline of actions the company is taking to ensure suppliers uphold its animal welfare standards.

“We know people have high expectations of our conduct and products, and we can play an important role in improving animal welfare across the dairy industry,” Coca-Cola’s statement says.

Fairlife on Wednesday released an updated statement on animal care, reiterating that the brand has discontinued the use of milk from Fair Oaks Farms. The statement also highlights actions the company is taking, including audits of all 30 of its supplying farms over the next several weeks; increasing the frequency of its unannounced farm audits to 24 per year; requiring all supplying farms’ employees to be re-certified in animal welfare training on an annual basis; and holding its supplying farms to a zero-tolerance policy on animal abuse.

News outlets have reported that criminal charges have been filed against three of the farm workers shown abusing cows in the footage of Fair Oaks Farm, and one now has been arrested.

After the initial footage ARM released last week, the animal welfare organization has continued to release additional footage from the original as well as a second investigation on one of Fair Oaks’ dairies. ARM says during the second investigation, employees were observed on a daily basis hitting and punching cows, as well as poking, stabbing and shoving them with metal tubes and broom sticks and bending and breaking bones in the cows’ tails when the animals would not cooperate in the milking line.

The National Milk Producer Federation’s Farmers Assuring Responsible Management (FARM) program issued a statement at the end of last week, saying the actions exhibited in the footage violate the standards of the FARM program. The statement notes that Fair Oaks Farm currently is on probation from the program until corrective actions and a follow-up audit are completed.

“The dairy community is committed to continually improve our animal welfare practices, and the integrity of the program ultimately relies on its vigilant management and implementation,” the FARM statement says. “Animal abuse in any form is not tolerated.”

CMN


USDA lowers milk production forecast in latest WASDE report

June 14, 2019

WASHINGTON — In its latest “World Agricultural Supply and Demand Estimates” report released this week, USDA lowered its 2019 milk production forecast by 500 million pounds from last month’s report to 218.2 billion pounds due to slower-than-anticipated growth in milk per cow and lower expected cow numbers.

The 2020 milk production forecast also is reduced from last month — down 800 million pounds to 221.9 billion pounds — as higher expected feed costs are expected to weaken producer margins, limiting growth in the dairy cow herd and milk per cow next year, USDA says.

The 2019 and 2020 fat-basis import forecasts are unchanged from the previous month. The 2019 fat-basis export forecast is reduced from the previous month to 9.7 billion pounds, as gains in cheese exports due to the elimination of tariffs by Mexico only partly offset weakness in butterfat exports to other markets, USDA says. The 2020 fat-basis export forecast is unchanged at 10.4 billion pounds.

The skim-solids basis import forecast for 2019 is raised by 300 million pounds from last month to 5.4 billion pounds on increased imports of milk protein products, USDA says. The 2020 skim-solids basis import forecast is unchanged at 5.0 billion pounds.

The skim-solids basis export forecast for 2019 is reduced by 600 million pounds from last month to 42.0 billion pounds. USDA says the reduction is based on current weakness in exports of nonfat dry milk (NDM) while exports of lactose are expected to be constrained by the additional tariffs imposed by China. The 2020 skim-solids basis export forecast is lowered by 200 million pounds to 43.4 billion pounds on continued weakness in sales of lactose.

The 2019 cheese and whey price forecasts are reduced from the previous month, with cheese forecast to average $1.640 per pound and whey forecast to average $0.390.

NDM and butter price forecasts are raised from the previous month’s report, with 2019 NDM forecast to average $1.015 and butter forecast to average $2.325.

For 2020, cheese and butter price forecasts are raised from the previous month, while NDM is unchanged. Cheese is forecast to average $1.725, and butter is forecast to average $2.365. NDM is forecast to average $1.045. The 2020 whey price forecast is down a half cent to $0.375.

The 2019 Class III price is reduced on lower cheese and whey price forecasts and the Class IV price forecast is raised on higher forecast butter and NDM prices. The 2019 all-milk price is forecast at $18.00 per hundredweight, down 5 cents from last month’s report.

Class III and Class IV prices are raised in 2020. The 2020 all-milk price forecast is 10 cents higher than a month ago and currently is forecast at $18.90.

CMN



Starting with Feta, Nasonville Dairy introduces Café Olympia line for retail

By Kate Sander

MARSHFIELD, Wis. — Nasonville Dairy, a family-owned dairy processor in northern Wisconsin, continues to expand its product lines with its Café Olympia label for retail.

The company is starting with Feta under the brand and likely will expand to other cheese varieties as well, says Ken Heiman, who manages the business along with his brothers Kelvin and Kim.

The decision to introduce the Café Olympia brand for retail was made to meet the needs of customers who don’t want to do a private label product but also want something smaller than a national brand, Heiman says.

The company has had the brand for awhile, but has used it as a control brand as needed. This will be the company’s first foray into the retail world with the branded line.

Among the offerings under the retail brand is the company’s new Cucumber Lemon Feta Crumbles, which won second place in the Flavored Feta class at the 2019 U.S. Championship Cheese Contest.

This cheese joins other award winners, including the company’s plain Feta, which won first place in last year’s World Dairy Expo Championship Dairy Product Contest and second place in its class at the Wisconsin State Fair. Also offered under the Café Olympia brand are other flavors of Feta including Tomato & Basil, Mediterranean, Garlic & Herb, Lemon Pepper and Black Pepper in addition to plain and reduced-fat varieties.

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Trade tensions continue as dairy sector urges resolution

June 7, 2019

WASHINGTON — Just a few weeks after dairy industry stakeholders cheered the announcement of a deal between the United States, Canada and Mexico to remove retaliatory tariffs imposed on American goods, relations between the United States and Mexico are strained following an announcement late last week from President Trump that the United States will impose new tariffs on Mexican goods in response to illegal immigration across the U.S.-Mexico border.

News reports say U.S. and Mexican officials left a White House meeting this week without reaching a deal to postpone the new 5-percent tariffs that Trump has threatened to levy on Mexican goods, effective June 10. That duty will increase to 10 percent on July 1 and rise by 5 percentage points each month until it reaches 25 percent on Oct. 1 if Mexico does not satisfy Trump’s demand, news reports say.

In a tweet Wednesday night, President Trump said talks with Mexico would resume the next day with the understanding that, if no agreement is reached, tariffs at the 5-percent level will begin Monday, “with monthly increases as per schedule.”

After celebrating the removal of Mexico’s retaliatory tariffs earlier this month and the momentum that lent to support passage of the U.S.-Mexico-Canada Agreement (USMCA), the U.S. Dairy Export Council (USDEC) expressed serious concern about the White House’s announcement last week.

“Mexico is a trusted trade partner and ally, and the dairy industry was looking forward to the resumption of a robust trade relationship with Mexico,” says Tom Vilsack, president and CEO, USDEC.

Vilsack notes U.S. Sen. Chuck Grassley, R-Iowa, has indicated this action may threaten forward movement on the USMCA ratification effort, which is a top priority for the dairy industry and the Trump administration.

Grassley last week said trade policy and border security are separate issues.

“This is a misuse of presidential tariff authority and counter to congressional intent. Following through on this threat would seriously jeopardize passage of USMCA, a central campaign pledge of President Trump’s and what could be a big victory for the country,” Grassley says. “President Trump should consider alternatives, such as imposing a fee on the billions of dollars of remittances that annually leave the United States to Mexico, which only encourage illegal immigration and don’t help the U.S. economy.”

USDEC notes the United States shipped $1.4 billion in dairy products to Mexico last year, accounting for 73 percent of Mexico’s dairy imports and more than one-quarter of U.S. dairy exports. According to U.S. government estimates, dairy sales to Mexico and Canada should grow by $277 million once USMCA is fully implemented.

“Sen. Chuck Grassley is right: Border security issues are border security issues, and trade issues are trade issues,” says Jim Mulhern, president and CEO of the National Milk Producers Federation (NMPF).

New tariffs against Mexico are unlikely to secure the border, but judging from reaction on Capitol Hill, they may very well jeopardize the chances of passing the USMCA, a key White House priority and one that’s crucial for future agricultural prosperity.

“For dairy farmers, renewed turmoil with Mexico also threatens gains made earlier this month, when Mexico dropped retaliatory tariffs against U.S. cheese,” Mulhern adds. “Re-escalating trade tensions only harms farmers further, just when they were seeing glimmers of hope.”

NMPF estimates that producers have lost at least $2.3 billion in revenues through March due to higher tariffs against U.S. dairy, which has lowered milk prices for all producers.

“We’re struggling right now to retain our market share and continue to be viewed by our international customers as a reliable supplier,” says Michael Dykes, president and CEO of the International Dairy Foods Association. “This new tariff on Mexico will not help get USMCA ratified. Tariffs put us further behind competitors and chip away at our ability to get USMCA across the finish line. We must return to a market-principled approach and regain market share from our competitors who’ve benefited from these trade disputes.”

Meanwhile, U.S. tariff battles with China continue, and sales of American dry dairy ingredients to China have dropped severely, stakeholders say. USDEC reported May 17 that U.S. dairy exports to China fell 40 percent in the first quarter of 2019, and the initiation of new tariffs on American lactose and infant formula June 1 is expected to further erode U.S. sales into this market.

The Trump administration has had no face-to-face meetings with Chinese officials since May 10, the day Trump increased tariffs on $200 billion of Chinese goods to 25 percent, prompting Beijing to retaliate. Trump this week said tariffs on China could be raised by another $300 billion if necessary.

CMN


U.S. cheese production is up 0.2 percent vs. previous April

June 7, 2019

WASHINGTON — Total U.S. cheese production, excluding cottage cheese, was 1.080 billion pounds in April, 0.2 percent above April 2018’s 1.078 billion pounds, according to data released this week by USDA’s National Agricultural Statistics Service (NASS). (All figures are rounded. Please see CMN’s Dairy Production chart.)

April 2019 total cheese production was down 3.6 percent from the previous month; when adjusted for the length of the months, April cheese production was down 0.4 percent from March on an average daily basis.

Production of Mozzarella, the nation’s most-produced cheese, was 372.7 million pounds in April, up 4.0 percent from April 2018. Italian-type production, of which Mozzarella is the largest component, was 474.3 million pounds, up 2.9 percent from the previous year.

Cheddar production totaled 308.5 million pounds in April, down 3.3 percent from April 2018. American-type cheese production, of which Cheddar is the largest component, totaled 431.9 million pounds, a 2.8-percent decrease from April 2018.

Wisconsin, the nation’s leading cheese-producing state, produced 279.5 million pounds of cheese in April, down 2.1 percent from its production the previous year. California followed with 212.2 million pounds, up 0.7 percent from its production in April 2018.

NASS reports total U.S. butter production in April was 166.7 million pounds, a 4.8-percent decline from 175.2 million pounds in April 2018. April butter production also was down 3.9 percent from March 2019’s 173.6 million pounds; when adjusted for the length of the months, April butter production was 0.7 percent lower than March production on an average daily basis.

NASS reports U.S. nonfat dry milk production in April was down 2.6 percent from the previous year, totaling 165.0 million pounds.

CMN


Undercover video shows calf abuse at Fair Oaks Farms site

June 7, 2019

FAIR OAKS, Indiana — This week Animal Recovery Mission (ARM), a nonprofit group dedicated to investigating animal cruelty, released footage of animal abuse that it says occurred in 2018 at Fair Oaks Farms in Fair Oaks, Indiana.

Fair Oaks Farms, owned and operated by Mike and Sue McCloskey, runs a major agritourism operation. The McCloskeys also founded Fairlife LLC, which partners with Coca-Cola and Select Milk Producers to produce and distribute Fairlife Milk, Core Power and YUP dairy products.

ARM says one of its investigators was hired by Fair Oaks Farms as a calf care employee between August and November 2018. ARM reports that its investigator never received training prior to handling calves or throughout their time employed at Fair Oaks Farms.

On a daily basis, ARM says, Fair Oaks Farms employees were observed throwing calves in and out of their huts. Newborn calves were pushed, thrown, slapped, kicked and slammed to the ground if and when they did not nurse from the artificial rubber nipple during the feeding process. ARM claims many calves were emaciated. ARM also says its investigator witnessed calves being stabbed and beaten with steel rebar, hit in the mouth and face with hard plastic milk bottles, beaten with steel branding irons and kneed in the middle of the back, resulting in pain, suffering, permanent injury and death of the calves.

ARM says its investigator never observed disciplinary action being taken upon any employee. Additionally, ARM says employees of Fair Oaks Farms were seen harvesting suspected marijuana plants, smoking it and selling while working. ARM says cocaine also was used by supervisors while working on the property, and the investigator was asked on multiple occasions if he was interested in doing cocaine and/or buying it from managers. All evidence and a copy of the investigation report have been submitted to the Newton County Sheriff’s Office, ARM says.

In an official statement, Mike McCloskey says he takes full responsibility for what happened and full responsibility to “correct and ensure that every employee understands, embraces and practices the core values on which our organization stands.” Fair Oaks Farms also has canceled the Dog-A-Palooza event it had scheduled for this weekend.

McCloskey says he closely reviewed the released ARM video and found there were five individuals committing “multiple instances of animal cruelty and despicable judgment.” Of the five, he says four were Fair Oaks Farms employees and one was a third-party truck driver who was picking up calves.

Of the four employees, he says three were terminated months ago prior to the farm’s awareness of the undercover ARM operation, as they were identified by their coworkers as being abusive to the animals and reported to management. The fourth employee’s animal abuse was not caught at that time, but he was terminated after the video was released. McCloskey adds that the individual who worked for the transportation company will not be allowed on Fair Oaks’ farms again.

McCloskey also says when he first learned of the undercover activity months ago, he requested a third-party review and went through a re-training process throughout the dairies. He says the review came back favorable.

“It is a shock and an eye-opener for us to discover that under our watch, we had employees who showed disregard for our animals, our processes and the rule of law,” McCloskey says. “This ARM video shines a light on an area that — despite our thorough training, employee on-boarding procedures and overall commitment to animal welfare — needs improvement. However, as I have stated before, the fact that ARM takes months before notifying owners or authorities regarding ongoing animal abuse is concerning.”

In a statement Fair Oaks Farms released after it learned of the ARM investigation but before the investigation’s results and video were released, it says “an animal activist organization infiltrated our farms,” and that it believes “they came to our farms not to share a fair and balanced view of animal welfare, but to specifically and misleadingly create animal cruelty videos.” This statement also notes that Fair Oaks Farms works to follow all of the protocols of the National Farmers Assuring Responsible Management (FARM) program.

McCloskey also says the statement that drugs are grown and sold on the farm is false. The plants in the video, he says, are an invasive perennial species that is rampant on farms all over the Midwest.

“With that said, I am disappointed to learn of potential drug use on our properties,” he says. “Months ago, the individual seen smoking by the barn and doing drugs in a truck was turned in by his coworkers to one of our managers. That manager notified local law enforcement about the drug use and, accordingly, a police report is on file.”

Mike Saint John, CEO of Fairlife LLC, released a statement detailing the steps the company is taking to improve oversight and animal welfare practices at its supplying farms. Fairlife has suspended all milk deliveries from Fair Oaks Farms and says until new assurances are in place, no milk from the dairy in the video will be included in Fairlife products.

“Approximately 30 dairies support Fairlife; therefore, we are visiting all supplying dairies in person and conducting independent third-party audits within the next 30 days to verify all animal husbandry practices at the farms, including all training, management and auditing practices,” Saint John says. “We will also continue to work with Fair Oaks Farms to ensure specific actions are taken to address this situation and uphold our high standards for animal care.”

The Coca-Cola Co. also released a statement detailing actions Fairlife and Fair Oaks Farms are taking to address this issue.

“We care deeply about animal welfare, and these images left all of us at Coca-Cola with a heavy heart. Any form of animal cruelty is simply unacceptable and counter to our company values. We expect all our suppliers to operate with the highest degree of integrity and comply with all laws, including animal welfare laws,” Coca-Cola’s statement says.

The FARM program, administered by National Milk Producers Federation, released a statement that applauds Fair Oaks Farms for proactively addressing the mistreatment that occurred.

“Our initial audit of Fair Oaks Farms found the company’s training program met or exceeded requirements of the FARM animal care program,” the statement says. “It included suggestions on additional employee shadowing to help ensure training compliance. We are conducting a follow-up audit of the farm to further review Fair Oaks Farms animal-care practices and supplement our initial audit.”

A number of stores have removed Fairlife from their shelves as a result of the ARM video. Jewel-Osco, which operates grocery stores in Illinois, Indiana and Iowa, has removed all Fairlife products from its stores.

“At Jewel-Osco, we strive to maintain high animal welfare standards across all areas of our business, and work in partnership with our vendors to ensure those standards are upheld. We apologize for any inconvenience,” says a statement provided to CMN by Mary Frances Trucco, director, public affairs and government relations, Jewel-Osco.

Family Express, a chain of convenience stores and fueling centers that operates stores in northern and central Indiana, has announced it has canceled pending orders of Fairlife/Coca-Cola milk products and will be replacing the line with Organic Valley milk products. Family Express says, “Organic Valley treats animals differently” and notes that there are 143 Organic Valley family farms in Indiana.

“The exposé of animal abuse in the Fair Oaks Farm network is chilling,” Family Express says in its statement. “A factor in our decision was the public response by Fair Oaks, asserting the notion that this was an isolated incident. This is hardly the response you would expect from an organization that gets it. The minimizing of the graphic animal cruelty offers little assurance of change in a culture that is likely in need of fundamental retooling.”

Metcalfe’s Market, which has three stores in Wisconsin, and Tony’s Fresh Market, which has 13 locations in the Chicago vicinity, this week announced on their Facebook pages that they have removed Fairlife products from their stores.

Strack & Van Til, which has several markets in northwest Indiana, and Casey’s Foods in Naperville, Illinois, also have pulled Fairlife from their shelves, according to news reports.

CMN


IDDBA’s ‘What’s in Store Live’ brings research insights to life

May 31, 2019

By Alyssa Mitchell

MADISON, Wis. — As the International Dairy Deli Bakery Association (IDDBA) gears up for its annual conference this coming week in Orlando, Florida, the organization is looking forward to engaging attendees with its new “What’s in Store Live” interactive experience.

“What’s in Store Live” is an evolvement of IDDBA’s Show & Sell center, a destination on the trade show floor for the past 30 years that provided attendees with merchandising ideas and education to share with associates and colleagues to generate excitement at their stores.

With “What’s in Store Live,” IDDBA seeks to further connect the interactive show experience with research highlighted in its annual What’s in Store trends publication, says Whitney Atkins, vice president of marketing, IDDBA.

“‘What’s in Store Live’ reflects an evolution of us basing our concepts on our research, something we’ve been working on for the last few years,” Atkins says, noting it has been a subtle shift as IDDBA a few years ago started implementing data points and pieces from What’s in Store into the Show & Sell center.

“The idea of calling it ‘What’s in Store Live’ is really linking it back to some of our research pieces,” adds Jeremy Johnson, vice president of education, IDDBA. “We’re activating our research for the retailers and bringing it to life in a live, interactive experience.”

Johnson says the targeted takeaway for sponsors and retailers in attendance is looking at their spaces and their departments and inspiring experiences for their customers.

“Our goal is to inspire our attendees by keeping the food front and center while also making What’s in Store trend reporting real and relevant to build basket size as well as elevate customer experience,” he says.

New this year, IDDBA also is focusing on different generational groups and how to specifically target these groups with displays, sales and offerings.

“This year we created 3 ‘personas’ — based on Gen X, millennial and Gen Z — and some of our concepts are designed specifically for those personas,” Johnson says.

He notes each persona generally has unique shopping preferences. For example, Gen Z (18-21) tends to think more about their food choices, with more than one-third of their shopping basket containing organic products. Millennials (22-36) value speed and convenience, which drive their purchasing behaviors, while Gen X (37-52) tend to have the highest brand loyalty at 70 percent.

With “What’s in Store Live,” IDDBA seeks to showcase ways retailers can engage with these values and preferences in store. With this in mind, the organization is focusing on “Building the Basket” based on these preferences to get more targeted items from dairy, deli and bakery into more baskets, Johnson says.

“What’s in Store Live” will feature several cheese usage concepts, including fresh grates, melted cheese like fondue and an emphasis on award-winning cheeses, Atkins notes.

Johnson adds there will also be a focus on building a cheese board and various cheese occasions, with a focus on the nutritional value of cheese.

IDDBA also is focusing on the concept, “it all begins with milk,” he says.

“It’s a call back to the source of our dairy industry,” Johnson says, noting a milk bar will be featured on the show floor to try to showcase different varieties of milk and expand beyond the concept of commodity milk.

“The idea is to generate excitement around the trends identified in our What’s in Store publication,” Atkins says. “From there, we can make refinements and enhancements based on feedback, and then some of those changes may be reflected in What’s in Store 2020. So it’s cyclical.”

Also new this year, IDDBA will feature a “What’s in Store Live” reception at the show’s closing Tuesday where attendees can talk about cheese and pairings, but also network, she adds.

“We want people to come in and relax after the show, and also learn a bit,” she says.

“It’s a way for attendees to get a real experience with some of the concepts they’ve been learning about during the show,” Johnson adds. “IDDBA’s goal is to inspire its attendees by keeping the food front and center, while making our What’s in Store trend reporting real and relevant to build basket size as well as elevate customer experience.”

CMN


Rabobank reports potential impact of trade war with EU

May 31, 2019

CHICAGO — As tensions in dairy trade rise between the United States and European Union (EU), the EU could be much harder hit than the U.S. dairy industry, according to a recent report from Rabobank.

On April 12, the U.S. Trade Representative (USTR) announced it is considering imposing additional tariffs on European products included in 317 tariff codes, valued at approximately $21 billion, related to a long-running dispute over EU subsidies to large civil aircraft manufacturers. (See “Dairy groups urge Trump to address EU GI abuse, subsidies” in the May 17, 2019, issue of Cheese Market News.) The EU also has threatened potential tariffs as a result of a March 29 World Trade Organization (WTO) decision indicating that the United States provides illegal subsidies to Boeing.

The U.S. list of 317 European products potentially facing additional levies covers 44 dairy tariff codes that include European butter, yogurt and cheese varieties. Of the more than 400 tariff codes on the EU preliminary list, just 11 include dairy products. Three of the tariff codes are for cheese, and eight include high-protein dairy ingredients like casein, whey protein concentrate and milk proteins.

Rabobank’s report notes that in a dairy trade battle, the EU stands to lose more than the United States because U.S. imports of European dairy products far exceed EU imports of U.S. dairy products. In 2018, the United States imported more than 230,000 metric tons of EU-28 dairy products. In contrast, the EU imported less than 23,000 metric tons of U.S. dairy products. In terms of value, the EU exports more than $1 billion of products to the U.S. market, while U.S. dairy exports to the EU average slightly more than $100 million annually.

Four countries — Ireland, France, Italy and Spain — represented 65 percent of the U.S. dairy imports from the EU under the selected tariff codes that could face additional duties up to 100 percent, Rabobank says.

In 2018, the United States imported 34,467 metric tons of Irish dairy products included in the selected 44 tariff codes, including 28,021 metric tons of butter with a customs value of $181.5 million, and nearly 6,350 metric tons of cheese valued at more than $40 million. Under the worst-case scenario, an additional tariff up to 100 percent would likely double the existing price of European butter — which already is twice the price of the leading U.S. branded butter — making it unlikely that European butter would retain its existing market share, Rabobank says.

The United States in 2018 imported 28,256 metric tons of French dairy products covered by the selected 44 dairy tariff codes. Rabobank notes that more than 80 percent of that volume was cheese, which represented more than 95 percent of all cheese imports from France with a customs value of more than $190 million. U.S. imports of yogurt and butter from France were minimal in 2018.

Last year the United States imported nearly 16,000 metric tons of cheese from Italy and 11,150 metric tons of cheese from Spain. These were dominated by sheep’s milk cheeses, which accounted for almost 70 percent of Italian and more than half of Spanish cheese imports. Rabobank adds that more than 95 percent of sheep’s milk cheeses that enter the United States originate from Europe.

Rabobank concludes that while butter, cheese and yogurt imports account for a small percentage of U.S. supply, and EU exports to the United States represent a small percentage of Europe’s output, additional tariffs on selected European dairy exports to the United States will create winners and losers. A 100-percent surcharge on top of already pricey European cheeses could lead customers to choose less expensive domestic cheese or a non-EU import. In this case, Rabobank predicts winners would include, but not be limited to, specialty dairy manufacturers across the United States and in Australia, Canada, New Zealand, Norway, Switzerland and other non-EU countries. Individually, Rabobank says the biggest loser is likely to be Ireland, with nearly 34,500 metric tons of annual dairy exports at risk of higher tariffs. Rabobank adds that collectively, the EU “can ill afford to lose the U.S. as a market for over 100,000 metric tons of cheese,” especially with uncertainty over Brexit and the United Kingdom’s 400,000 metric ton cheese market.

CMN


Settlement approved in lawsuit against DairyAmerica, CDI

May 31, 2019

SACRAMENTO, Calif. — The U.S. District Court for the Eastern District of California recently approved a $40 million settlement agreement in a lawsuit against Dairy America and California Dairies Inc. (CDI).

The court’s May 8 order says the plaintiffs — four dairy farmers who claimed DairyAmerica and CDI misreported their milk prices — asserted the settlement was “fair, reasonable and adequate.”

The practices, which allegedly occurred from 2002 through 2007, allegedly affected approximately 84,000 dairy farmers throughout the state. The plaintiffs filed the suit in 2009.

The plaintiffs claimed that throughout the six-year period, DairyAmerica had “shaped the raw milk prices paid to farmers by fraudulently modifying the data it reported to the USDA each week through various schemes and artifices,” the court order states. They also alleged the defendants conspired to “artificially depress” the price of milk products to increase their profits.

“Plaintiffs calculate that, assuming a full award of fees, costs and expenses, the net settlement amount distributable will be approximately $26 million, to be distributed on a pro rata basis to the 26,000 claimants,” the order says.

“Nothing in this order, the settlement or the settlement agreement is or shall be deemed or construed to be an admission or evidence of any violation of any statute or law or of any liability or wrongdoing,” the order states.

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Today's Cheese Spot Trading
June 14, 2019


Barrels: $1.6050 (+1/4)
Blocks: $1.7825 (-1 3/4)


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Cheese Production
U.S. Total April
1.080 bil. lbs.


Milk Production
U.S. Total April
18.430 bil. lbs.

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