Cheese companies benefit from trade show strategies
February 5, 2016
By Chelsey Dequaine
MADISON, Wis. — Trade shows happen yearlong and all over the world, providing a variety of opportunities if companies know how to work them.
Judy Keller, events director at the Wisconsin Cheese Makers Association (WCMA), which sponsors cheese industry shows annually, says trade shows provide a one-stop opportunity for the cheese industry to learn about business issues and to network with suppliers and processors.
“The whole realm of the industry is in one place,” she says. “A person could travel all year and not meet the people you could at one trade show.”
Keller believes trade shows remain important in the cheese industry because of the need to educate and share advancement within the industry.
“The cheese industry is its own niche,” she says.
Keller uses the upcoming 2016 International Cheese Technology Expo, April 12-14 in Milwaukee, as an example of how events can draw people together.
“This event draws CEOs, plant managers, developers and research and development staff,” she says. “If you are looking for new ideas, it gives you a variety as well as education from seminars.”
Rachel Juhl, sales and education, Essex Street Cheese Co., a cheese importer and wholesaler, Brooklyn, says she appreciates how many trade shows the cheese industry offers. At shows such as Specialty Food Association’s Winter Fancy Food Show, which was Jan. 17-19, Juhl says she is able to get a lot of business done in a short amount of time.
“We only have two partners, so constantly traveling to meet with customers would be frustrating,” she says. “The biggest things trade shows offer us are networking and face time with our clients. It’s an opportunity for people to learn from the source, not just the importers.”
Skyline Exhibits, a provider of trade show exhibits and display systems, offers free webinars, local seminars and a blog with tips on how companies can benefit from trade shows.
Sofia Troutman, customer engagement and industry relations manager, Skyline Exhibits, suggests that companies properly train staff on how to engage with potential clients at trade shows, and learn how to make booth design more functional and welcoming.
“The flexibility of that design often gets overlooked,” Troutman says. “Skyline Exhibits focuses on modular design so companies can alter their booth due to space. Making a booth lightweight and portable also can save on cost.”
The exhibit can be around 20 percent of the cost a company spends at a trade show. If you can get a booth that minimizes that cost, that can be helpful, she says.
“If you can set up the booth yourself, that can save on labor,” she adds. “If you can dismantle your booth quickly, that may mean you can leave the day the show is over rather than leaving the next day and save on cost there as well.”
• Business before
Keller and Juhl agree, getting the most out of a trade show begins before the show.
Keller says attendees can search on the WCMA website before a show for exhibitors, and she encourages attendees to make contact with the companies who they want to visit prior to the event.
“It’s always a good idea to review the event agenda and website for seminar topics and information about exhibits and sponsors,” she says.
Keller also recommends companies take advantage of tools a trade show may provide. The 2016 International Cheese Technology Expo is offering exhibitors a free pre-show customized email campaign (www.exhibitorinvites.com/cheeseexpo). Exhibitors can use the tool to create an email marketing campaign to offer free registration for exhibits, lunches and receptions.
Juhl says time management and planning before a trade show helps pave the way for success. She schedules a conference call for the week after a trade show to break down notes with her co-worker.
“That’s been critical,” Juhl says. “Before you travel, know how you will follow up, build agendas and set meetings.”
• Connecting during
At trade shows, Juhl builds more connections with cheese producers.
“Because we are the advocates for companies overseas, my relationships do better because people are able to meet,” she says. “We’ve always done that. I’ve noticed more and more other companies around us doing it. That’s an added benefit to attending a trade show.”
When working in the booth, Keller recommends exhibitors greet customers as they walk by.
“It’s important to be available and open to participation with attendees,” she says. “Refrain from sitting in the back of the booth using your phone or computer, offer a game or contest to draw attendees into your booth, have a representative in the booth who can answer questions a customer might have, and be sure to be in your booth.”
• Momentum after
To keep the momentum after a trade show, Keller suggests rewatching seminars online after the event if possible.
“You might see something you missed,” she says. “It’s also helpful within 24 hours after the event to review notes and business cards and make connections. Implement changes and ideas you’ve learned that you feel would help your business.”
For Juhl, fast follow-up also is key.
“You don’t want to forget details and notes as more time passes,” she says. “As soon as you get back home, decompress, go through your notes and get your to-do list together.”
Juhl suggests sorting a list to accomplish the easiest tasks first, such as sending a quick email. She also suggests setting a goal of when you want to have followed up with every contact and to take advantage of travel downtime, such as waiting in an airport, to send emails.
• Opportunities outside
Because of high attendance, Juhl says it’s common for attendees to network outside of a trade show.
“You can host events in the host city to provide more networking opportunities,” she says. “The cheese community enjoys being social. That’s how business usually gets done. It’s a very warm community.”
Juhl also visits clients’ stores in the surrounding area of a trade show and teaches educational cheesemonger classes with the staff.
“Building relationships and understanding the product better — that continues happening at events outside of trade shows,” she says.
In its 10th year of business, Juhl says Essex Street Cheese Co. is a strong advocate for education.
At the New York State Cheese Manufacturers annual meeting, March 7-8, the company brings all of its cheesemakers and hosts both broad and specific classes outside of the event.
“It becomes like a family road trip,” Juhl says. “Customers get one-on-one time and the cheesemongers love meeting the faces behind cheese stores.”
• Signs of success
Keller says she measures the success of a trade show by counting the number of experiences she has with others in the industry.
“It’s amazing when you have conversations at an event with those who have interests the same as yours,” she says. “You can come away with ideas and techniques that benefit your company, stay current on industry topics, make relationships and be able to call someone after a year down the road when questions develop. To have those networks in place means it was successful.”
The reactions from classes and overall feedback tells Juhl if a trade show was successful.
“That gives you a pulse as you are going through the trade show,” she says. “If you leave your meetings and there is follow up and you have that feeling that there is business to be done, that’s success.”
2015 cheese production hits record 11.72 billion pounds
February 5, 2016
WASHINGTON — Total U.S. cheese production, excluding cottage cheese, was 1.02 billion pounds in December, up 1.2 percent from December 2014’s 1.01 billion pounds, according to preliminary data released Wednesday by USDA’s National Agricultural Statistics Service (NASS). (All figures are rounded. Please see CMN’s Dairy Production chart on page 11.)
December cheese production was up 2.8 percent from November 2015’s revised 994.0 million pounds. On a daily average basis accounting for the number of days in the months, December cheese production was down 0.5 percent from November 2015.
The latest numbers bring total U.S. cheese production to an estimated 11.72 billion pounds in 2015, up 2.4 percent from 2014’s 11.45 billion pounds and a new record. Revised data will be released by NASS this spring.
According to NASS, Mozzarella led the nation’s cheese production in December with 352.3 million pounds, up 2.6 percent from December 2014. Total Italian-type production, of which Mozzarella is the largest component, was 452.8 million pounds in December, up 3.1 percent from December 2014. Of the Italian cheese types NASS reports, Romano and Parmesan experienced the largest percentage increases, climbing 14.2 percent and 13.6 percent, respectively, from the previous December.
Cheddar production totaled 289.9 million pounds in December, up 1.5 percent from December 2014’s 285.6 million pounds. Total American-type cheese production, of which Cheddar is the largest component, was up 0.7 percent from December 2014 to 397.4 million pounds.
Wisconsin led the nation’s cheese production with 264.6 million pounds in December 2015, up 3.5 percent from its production a year earlier. California followed with 216.3 million pounds, up 0.9 percent from its production a year earlier.
The next four cheese-producing states in December were Idaho with 83.3 million pounds, up 2.9 percent; New York with 71.1 million pounds, down 2.1 percent; New Mexico with 61.0 million pounds, down 3.3 percent; and Minnesota with 59.7 million pounds, up 0.2 percent.
NASS reports U.S. butter production totaled 177.1 million pounds in December 2015, up 4.3 percent from December 2014’s 169.8 million pounds. December production was up 17.0 percent from November 2015’s 151.3 million pounds, NASS also reports. On a daily average basis accounting for the number of days in the months, December butter production was up 13.2 percent from November 2015.
California led the nation’s butter production with 51.4 million pounds in December, a 0.1-percent increase from its production in December 2014, NASS reports.
TPP agreement signed; ag groups appeal to Congress
February 5, 2016
AUCKLAND, New Zealand — Trade ministers from the United States and 11 other countries signed the Trans-Pacific Partnership (TPP) agreement in a ceremony held here this week.
“After more than five years of negotiations, we are honored to be able to formalize our collective agreement of TPP which represents an historic achievement for the Asia-Pacific region,” the ministers say in a joint press release issued yesterday.
The 12 countries in November reached the free trade agreement, which would cover nearly 40 percent of global gross domestic product (GDP), a market of more than 800 million people, and approximately one-third of world trade.
“The signing of the agreement signals an important milestone and the beginning of the next phase for TPP. Our focus now turns to the completion of our respective domestic processes,” the ministers say, adding that other countries throughout the region have shown interest in joining the TPP as well.
Recently The Japan Times reported that according to sources with access to the TPP negotiations, South Korea and Taiwan have started talks with some members in hopes of joining the treaty, which would require approval by all 12 members. In addition to the United States, current TPP members include Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
“We recognize the interest shown by a number of other economies throughout the region,” the ministers say. “This interest affirms our shared objective, through TPP, of creating a platform that promotes high standards for broader economic integration in the future.”
Earlier this week, members of the National Association of State Departments of Agriculture (NASDA) voted to support the TPP at their Winter Policy Conference in Washington. The action item, which was cosponsored by Nebraska Director of Agriculture Greg Ibach and Missouri Director of Agriculture Richard Fordyce, calls on Congress to swiftly ratify the TPP agreement. Ibach is NASDA’s current president and Fordyce serves as chair of NASDA’s Marketing and International Trade Committee.
“We are pleased with the successful conclusion of the TPP negotiations, but now we need Congress to act,” Ibach says. “American agriculture cannot afford a loss of forward momentum on this agreement. The global marketplace is more competitive than ever, and this agreement provides important access for U.S. producers in 11 countries, including key concessions for the critical Asian market.”
Meanwhile, the National Farmers Union (NFU) this week called on Congress to block the TPP, saying it is modeled after failed deals of the past.
“The more people learn about TPP, the more they dislike it,” says NFU President Roger Johnson. “It’s soft on enforcement, it fails to reign in predatory trade practices abroad, and it does nothing to improve America’s trade balance.”
In testimony before the U.S. International Trade Commission last month, Johnson said TPP needs better mechanisms to hold trading partners accountable for promises made and should focus on improving the U.S. trade balance instead of simply reducing tariffs.
U.S. Dairy Export Council President Tom Suber also testified last month, telling the Trade Commission that while the deal falls short in providing the degree of market access the dairy industry had been seeking, it also avoids a disproportionate opening of the U.S. market to dairy exporters. He also noted in his testimony that the agreement contains landmark non-tariff achievements dealing with sanitary and phytosanitary rules and geographical indication provisions. (See “Dairy industry testified before U.S. International Trade Commission on impact of TPP” in the Jan. 15, 2016, issue of Cheese Market News.)
The TPP is projected to increase annual real incomes in the United States by $131 billion, or 0.5 percent of GDP, and annual exports by $357 billion, or 9.1 percent of exports, over baseline projections by 2030, when the agreement would be nearly fully implemented, according to a working paper published this week by the Peterson Institute for International Economics, a private, nonpartisan, nonprofit institution for the study of international economic policy.
The working paper also projects that while the agreement will raise U.S. wages, it is not projected to change U.S. employment levels.
To read the full report, visit http://www.piie.com/publications/
Suit: McDonald’s Mozzarella not cheesy enough
February 5, 2016
RIVERSIDE, Calif. — A California consumer has filed a complaint against McDonald’s Corp. over the restaurant chain’s new Mozzarella sticks.
The complaint, filed Jan. 29 in U.S. District Court for the Central District of California-Eastern Division, alleges that the Mozzarella sticks are “adulterated and misbranded” and are filled with a substance that is composed in part of starch, which the plaintiff says is in violation of the federal standards of identity for Mozzarella cheese and “contrary to reasonable consumers’ expectations regarding the meaning of the term ‘Mozzarella.’”
Chris Howe, lead plaintiff in the lawsuit, is seeking $5 million in damages from the company for himself and 40 other consumers involved in the suit over McDonald’s claim that the sticks are “100 percent real cheese” and “real Mozzarella.”
Per Howe’s claim, he alleges testing of the cheese sticks’ cores — without the breaded coating — showed they were 3.76 percent starch by weight, allegedly in violation of federal regulations.
McDonald’s launched its Mozzarella sticks in late 2015. According to the company’s website, the Mozzarella sticks are made with “100 percent real and melty Mozzarella cheese breaded with a golden crust based in wheat flour that includes onion, garlic and a pinch of salt.”
The ingredient list on the company’s website for the Mozzarella sticks notes they are made with low moisture part skim Mozzarella cheese, with 2 percent or less modified food starch, among other ingredients.
Lisa McComb, director of media relations for McDonald’s, says its Mozzarella cheese sticks are made with 100 percent low moisture part skim Mozzarella.
“We intend to defend ourselves vigorously against these allegations,” she says.
Crave Brothers Farmstead Cheese welcomes family’s next generation
Company positions itself for continued growth
By Kate Sander
WATERLOO, Wis. — For Crave Brothers Farmstead Cheese, “brothers” isn’t simply a part of the name. Family, starting with the four brothers who began the business, is an important part of what makes this growing farmstead cheese company successful.
“Having our family unit is a huge asset — wives, brothers and children,” says George Crave, who manages the company’s cheese business.
The four Crave brothers — George, Charles, Thomas and Mark — grew up on a small dairy farm and together purchased their Waterloo, Wisconsin, dairy farm in 1980, milking 80 Holsteins. Since then, they have grown the farm into a well-regarded agricultural enterprise that includes 1,700 cows on two separate locations, farming 2,700 acres and, of course, their cheese company.
Crave Brothers Farmstead Cheese began producing its first cheese in a small on-farm plant in 2002, pumping milk from the family’s then-600 Holstein cows 320 feet through insulated underground pipes to a brand new cheese factory. The goal of the cheese plant was — and is — to add value to the farm’s milk and to continue to grow the business into a sustainable operation for the next generation.
When deciding what cheeses to make 15 years ago, the Craves decided to focus on just a small handful of types.
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New study: Bold changes
can bring growth for dairy
January 29, 2016
PHOENIX — The future is bright for U.S. dairy companies willing to make bold changes to pursue high-growth opportunity areas, according to new research from McKinsey & Co. presented at the International Dairy Foods Association (IDFA) Dairy Forum 2016, held here this week.
In a session Monday titled “Growth in an Evolving Dairy Market: Strategies for U.S. Dairy Companies” speakers Paul Carbonneau and Ludovic Meilhac, partner and associate partner, respectively, at McKinsey & Co. — a private worldwide management consulting firm headquartered in New York City — outlined the challenges and opportunities facing the dairy industry, concluding that future growth in the competitive dairy landscape will require decisive focus and fortitude to implement a combination of new strategies.
Carbonneau notes that with the release of the new study — which was conducted last fall specifically for discussion at this year’s Dairy Forum — McKinsey & Co. aims to “put some facts on the table and encourage you all to have a conversation as an industry.”
The research involved in-depth interviews with 33 dairy executives followed by a broader survey of 61 dairy companies representing all dairy products and business models. Research findings also included responses from 10 McKinsey consultants with expertise in retail and dairy in both the United States and abroad.
Carbonneau notes that the dairy industry today faces many challenges, and it also must take into account several trends.
“We see three strategic responses underway that could help bolster growth in the dairy industry — global growth, growth beyond traditional business models and insight-driven innovation,” he says.
Some companies will aggressively pursue growth outside the United States, Carbonneau notes.
“Some of you are already doing that, and we’re going to learn from your experience,” he says.
Carbonneau notes that dairy consumption in emerging markets is growing seven to eight times faster than it is in the United States.
While U.S. dairy exports have steadily increased as a percent of U.S. milk production from 1996-2015, the United States still lags behind global counterparts in terms of export share of production, he says.
For example, Carbonneau notes that looking at the revenue of the top five leading U.S. dairy companies, 95 percent of that revenue came from the domestic market. Meanwhile, the top five leading European Union dairy companies had 51 percent of that revenue coming from their domestic market.
Carbonneau and Meilhac note that the global imbalance of growth in dairy consumption leaves U.S. dairy manufacturers with the option of chasing international opportunities or competing for share in the increasingly competitive home market.
Some manufacturers, they say, will grow by capturing share in the global market and employing “best-in-class” international export and local production capabilities. Other companies, excited about the prospects of ingredients and product categories beyond traditional dairy, will succeed by redefining their businesses and broadening their consumer bases.
Targeting these markets will require “fit-for-purpose divisions” and tightly focused sales, Carbonneau and Meilhac say.
Noting that consumer preferences, particularly among millennials, are evolving faster than ever before, Carbonneau and Meilhac note the benefits of insight-driven innovation. Companies with top consumer insight and product development capabilities can win consumers over through innovative product portfolios, they say.
Growth opportunities also are available to companies that heighten their efforts on operation and performance excellence, the consultants note. For dairy companies to remain competitive, they will need additional emphasis on network optimization, manufacturing and procurement efficiencies, supply chain and logistics, and in-store execution.
“Growth often requires changing how you do your business,” Carbonneau says, noting recent transitions made by companies in the carbonated soft drink industry as an example.
Facing annual declines in consumption, these soft drink companies redefined their businesses from being “cola-players” to companies that succeed by leveraging existing assets — such as world-class distribution and marketing and packaging capabilities — and becoming “lifestyle refreshment companies,” Meilhac notes.
Some companies are changing how they think about ingredients, he adds.
Meilhac notes that while cheese once was the core business and ingredients were often treated as byproducts, cheese companies can optimize high-growth categories by treating ingredients as a core business, with concentrated investments in capital and talent.
“Milk companies face a similar question — where does one find growth?” he adds.
Meilhac notes that going forward, dairy companies that see strong potential for non-traditional dairy can redefine themselves as “lifestyle companies” to serve a broader consumer base.
The soft drink companies have many parallels with companies in the dairy industry, Carbonneau adds. He encourages dairy executives to consider adopting new growth-oriented definitions that will move them from makers of milk, cheese, yogurt or ice cream to health-and-wellness lifestyle companies in the food and beverage category.
One of the challenges noted by survey respondents includes the current federal milk marketing order (FMMO) system in the United States, Carbonneau and Meilhac note.
According to their research, 74 percent of respondents say they would like the current FMMO system replaced with a market-based mechanism.
“We think there will be a lot of conversation on this in the next 2-3 years,” Carbonneau says.
He adds that respondents say the FMMO system was built in an era when the U.S. market was very domestically-focused, and that the industry needs to figure out how this system can fit into a more global and export-oriented market.
However, that carries its own set of risks, Carbonneau notes.
“When you hitch your wagon to the global market, the level of volatility goes up. Then the question becomes, how good are we at managing risk? How many risk management tools are used?” he says. “But if we’re going to begin participating in global markets more, we have to get better at this. The bigger risk is not doing anything.”
Carbonneau and Meilhac asked participants to reflect on four questions as they go back to their companies:
• How will you build your knowledge of consumption and supply trends at a granular level in key markets;
• Are you ready to invest resources and deploy top talent to grow and serve international customers;
• Should you go alone or partner with other international dairy companies or global customers; and
• How will you create a holistic risk management program to deal with commodity and currency volatility?
Land O’Lakes buys Hillsboro Riverview Dairy, will expand
January 29, 2016
By Alyssa Mitchell
HILLSBORO, Wis. — Land O’Lakes Inc. recently closed on the purchase of the assets of Hillsboro Riverview Dairy, Hillsboro, Wisconsin. The purchase price and other terms of the deal were not disclosed.
According to John Kennedy, senior strategic operations director for Land O’Lakes Inc., during the last several years the cooperative has purchased a number of butter and butterfat-based products from Hillsboro Riverview Dairy and Alcam Creamery Co., Richland Center, Wisconsin. Alcam Creamery began in 1941 and expanded to include the Hillsboro facility in 2012. Both facilities were under the name Dairy Wisconsin, and Hillsboro Riverview Dairy now will be under the Land O’Lakes name. All current employees at the Hillsboro facility have been offered job opportunities contingent on standard hiring practices, Kennedy says.
“Our butter growth is above category levels, which shows continued strength in our brand,” he says. “This acquisition strategically supports present and future growth and geographically expands our manufacturing footprint for butter.”
Land O’Lakes plans to expand the Hillsboro facility and make improvements that will result in the property and improvements having a tax assessed value of $1.5 million, Kennedy says.
Land O’Lakes recently entered into an agreement with the City of Hillsboro regarding the adjacent Joshua Sanford Field, a public use airport owned by the city. The agreement made it feasible for Land O’Lakes Inc. to proceed with its purchase of the assets of the Hillsboro facility, which was finalized Jan. 19, Kennedy says.
“We plan to expand our location in Hillsboro on the property we purchased. As was discussed during the Hillsboro City Council meeting (Jan. 18), there are safety concerns regarding one of the runways (at the airport),” he says. “We reached an agreement with the city that will address those concerns.
“Safety of our employees and facilities is a core value and our top priority,” Kennedy adds. “We wanted to ensure that the departure and arrival of aircraft from the airport could be done safely when we expand the facility.”
Details on the expansion are still being finalized, the cooperative says.
According to an agenda from the City Council meeting Jan. 18, the City of Hillsboro is considering whether to close the airport or convert it to a private-use airport.
Winter Storm Jonas causes closings,
milk pickup delays
January 29, 2016
By Chelsey Dequaine
MADISON, Wis. — Multiple feet of snow fell in some areas on the East Coast last weekend during Winter Storm Jonas, leading to cheese and dairy companies delaying or canceling milk pickups and early business closures.
Daniel J. Johnson, eastern region dairy market reporter of USDA’s Dairy Market News, says some haulers commented it was the worst weather and roads they had ever seen. There were missed pickups by haulers and milk was dumped, but totals weren’t known as of press time.
Johnson reports the biggest challenge was the closure of turnpikes and bridges in Pennsylvania and New York City that limited the ability to get to customers located within the cities.
“There were a few accidents reported, but no spilled milk because of it,” Johnson says.
According to USDA’s Fluid Milk and Cream Review — East, as it stands, areas of the Eastern region are slowly recovering from the impact of storm. The storm dropped 24-40 inches of snow in areas from the Gulf Coast to New England. Bottling orders are mixed following the heavy demand prior to the storm, and deliveries that were delayed over the weekend are being filled.
USDA says the storm hindered the movement of milk supplies to several area cheese plants, and consequently, limited production moved into and out of distributors’ warehouses. Retail sales and foodservice orders have been slowed by the snow storm as conditions continue to make deliveries to stores and restaurants difficult.
Andrew M. Novakovic´, the E.V. Baker professor of agricultural economics, Charles H. Dyson School of Applied Economics and Management, Cornell University, says while the storm was nasty, it wasn’t out of the realm of normal for New York in dealing with the snow accumulation.
“The storm was isolated along the East Coast, and the central part of New York barely has any snow on the ground,” he says. “The southeastern part of the state that received the snowfall doesn’t have that many farms and plants.”
Firefly Farms is located in Accident, Maryland, 3,000 feet above sea level. Andrea Cedro, director of sales, says most reports predicted 18-24 inches in Accident prior to the storm, but when businesses began closing early Friday, she got nervous.
“It began snowing heavily on Friday around noon,” she says. “It didn’t slow down until Saturday night.”
The total snowfall in Accident was about 35 inches. Firefly Farms closed its store, which is attached to its creamery, early on Friday and stayed closed Saturday and Sunday.
Cheesemaking continued, however. Matt Cedro, director of operations and head of cheesemaking, and Dan Porter, head cheesemaker, completed all of the creamery’s prep work on Friday to prepare for the worst of the storm. Matt Cedro personally picked up cheesemakers on Saturday. They cleared a path to the creamery’s front door and made cheese for five hours, instead of the typical eight.
“We were fortunate to not lose power,” Andrea Cedro says. “That could’ve been disastrous.”
Penny Sagawa, owner, Spring Gap Mountain Creamery, Paw Paw, West Virginia, says the biggest impact the storm had on her business was the inability to fulfill online orders and get UPS pickups of orders. The creamery got 3 feet of snow.
Because the creamery doesn’t make cheese during the winter, Sagawa says that side of the business wasn’t affected. However, as of Wednesday, the staff is still shoveling snow and has been unable to get into its cheese house since Saturday.
“Normally we would be in the aging rooms every day to brush and turn the wheels and monitor the temperature and humidity,” Sagawa says.
Spring Gap Mountain Creamery suffered no loss of production, just an inability to fill orders. Sagawa says the company contacted customers who placed an order it hasn’t been able to fulfill.
“Most of our customers are in D.C., Maryland, Virginia and Pennsylvania, so they are all dealing with the same issues and have been very understanding,” Sagawa says.
Caputo Brothers Creamery, Spring Grove, Pennsylvania, got 30 inches of snowfall in less than 24 hours. Rynn Caputo, president, says she has never seen anything like Storm Jonas before.
“Everyone is still baffled by the whole thing,” she says. “We have about a 10-foot snowbank in front of our creamery.”
Caputo Brothers Creamery closed Friday, canceled its cheese dinners Friday and Saturday night and reopened Monday.
During the storm, which dropped 3 inches of snow per hour, Caputo and some of her staff trudged into the snow with a roof rake to prevent any damage being done to the creamery’s barn, which contains refrigerated and frozen cheeses.
“The snow was up to our hips,” she says. “It took a while to get out there.”
The creamery reported no production losses. However, Caputo says cheese sales are slower.
“From the farmers working through the night to ensure the cows could get milked, to the chefs who are impacted by people not leaving their homes to go out to dinner, we all will feel an impact over the next few weeks.”
Year over year milk production rises 1.2 percent
January 29, 2016
WASHINGTON — U.S. milk production totaled an estimated 17.45 billion pounds in December, up 0.7 percent from December 2014, according to according to data recently released by USDA’s National Agricultural Statistics Service (NASS). This brought total U.S. milk production to an estimated 208.494 billion pounds in 2015, up 1.2 percent from 2014. USDA will release revised data next month.
In the 23 major milk-producing states during December 2015, production totaled 16.36 billion pounds, up 0.7 percent from December 2014. This brought U.S. milk production in the 23 major states to an estimated 195.378 billion pounds in 2015. (All figures are rounded. Please see CMN’s Milk Production chart on page 11.)
NASS says November revised production in the 23 major states was 15.64 billion pounds, up 0.7 percent from November 2014. The November revision represents an increase of 26 million pounds or 0.2 percent from last month’s preliminary production estimate.
Production per cow in the 23 major states averaged 1,894 pounds for December, 6 pounds above December 2014. This is the highest production per cow for the month of December since the 23 state series began in 2003, NASS says.
The number of milk cows on farms in the 23 major states was 8.64 million head, 29,000 head more than December 2014 and 1,000 head more than November 2015.
In the entire United States, NASS estimates there were 9.32 million cows in December, 23,000 head more than December 2014 and 1,000 head more than November 2015.
Production per cow in the United States averaged 1,872 pounds in December 2015, 8 pounds more than a year earlier.
For the entire year, estimated milk production per cow in the United States averaged 22,383 pounds, NASS reports, up 125 pounds from a year earlier. In the 23 major states, production per cow averaged 22,639 pounds in 2015, up 88 pounds from 2014.
Dairy prices still volatile; CME to change standards for butter
January 22, 2016
By Alyssa Mitchell
MADISON, Wis. — Following yet another unexpected surge in the butter price at the Chicago Mercantile Exchange (CME) last week, prices for butter and other dairy commodities have pulled back this week, and analysts anticipate continued volatility in the weeks ahead.
Butter jumped 21.5 cents last week to settle at $2.25 per pound Jan. 15. While butter has had continued price support and has been elevated at $2 or above for some time, the latest run up was a bit unexpected.
“Things may have gotten a little carried away to the upside last week,” says Phil Plourd, president of Blimling and Associates Inc., Madison, Wisconsin. “At the same time, we are not convinced that the fear that drove prices higher is just going to evaporate. It would not surprise us to see the market remain edgy — and quite possibly elevated — into the Easter holiday.”
CME butter has pulled back a bit this week from last week’s levels, settling at $2.17 today. While the price is still at a premium to global butter prices, domestic demand prospects are still solid, Plourd notes.
Mike McCully, owner of The McCully Group LLC, Chicago, agrees that both U.S. cheese and butter prices continue to be driven largely by domestic market fundamentals.
CME Cheddar continues to move around the $1.50 price level. Cheddar barrels this week have pulled back from the $1.50s, settling at $1.43 today. Blocks crept up to $1.50 earlier this week but settled at $1.46 per pound today.
McCully notes, however, that milk powders and whey products, which are heavily dependent on export markets, are feeling the pressure from low European and Oceania prices.
CME NDM was at $0.755 per pound Dec. 31 but since has dropped to $0.71.
“Central low/medium heat nonfat dry milk prices are lower on an unsettled market,” USDA’s Dairy Market News says. “Recent price announcements from offshore auctions undermined any inkling of this market entering steady to firm territory, according to market participants.”
McCully notes milk and whey products are closer to global prices as they have to compete to maintain markets.
“Furthermore, the strong U.S. dollar is another challenge being faced by U.S. exporters, and that will likely continue for some time as the U.S. economy, while not great, is in better shape relative to other parts of the world,” he says.
James Dunn, professor of agricultural economics at Penn State University, says with the strength of the U.S. dollar, the U.S. dairy market, particularly for powders, cannot be too far from the world price if it wants buyers.
“Certainly, we saw that last year,” he says. “NDM is a bit different anyway because of Mexico, which is more aligned with our market because of its location, and NDM is a big product for them. Our markets are not isolated anymore, and global events hurt us as well.”
Plourd says it is “not getting any easier” to be excited about U.S. export prospects, noting European milk production is still the biggest factor, with substantial milk output growth in Ireland and the Netherlands at the end of 2015.
Sara Dorland, managing partner with Ceres Dairy Risk Management LLC, Seattle, says that while U.S. demand has been remarkable over the last year, macroeconomic news and uncertainty about markets surfacing could take a toll on U.S. consumer confidence.
“The U.S. economy still looks pretty good, but it could be tough to keep from being pulled into the global woes right now,” she says. “Until consumers feel better about things, they may start to slow spending — something that could spell trouble for dairy demand in 2016.”
Meanwhile, CME this week announced new grading standards for butter traded at the exchange, set to take effect Feb. 1. Next month butter sellers no longer will be required to provide a USDA grading certificate, unless a buyer requests one. In lieu of a USDA Grade AA certificate, sellers can provide a Certificate of Analysis (COA) as an acceptable document for deliverable loads of butter on the spot market.
Butter sold with a COA will continue to meet the grading standards of a Grade AA certificate, according to CME, which says the change will allow more eligible loads of butter to be transacted on the spot market.
The change for butter at the CME was welcomed by the American Butter Institute (ABI), which worked closely with CME to recraft the rules. Irv Holmes, president, ABI, says the institute’s membership proposed this change based on member feedback and discussions across the industry, including collaborative efforts between CME and ABI.
ABI created a task force in 2015 to gain industry agreement and lead its efforts toward ending the current CME rule that sellers must supply a USDA certificate in order to sell butter on the CME spot call, Holmes notes.
He says there are several benefits of eliminating the grade certificate requirement, including added liquidity to the cash spot session, which enhances real price discovery, and a reduction in the cost of selling butter on the CME by eliminating the requirement of a grader.
It also recognizes the fact that the vast majority of salt bulk butter sales occur with a COA and not a grading certificate, Holmes adds.
According to Holmes, grading requirements have been burdensome for some market participants, leading to less butter offered on the CME.
“This evolution of document requirements moves the butter industry forward and reduces unnecessary costs,” he says. “It’s a win-win for buyers and sellers, and in an era of increasing price volatility, this change will aid in the efficient marketing of butter.”
Dairy market analysts say the change was necessary and is supported by the industry.
“As a matter of practice, companies do not routinely grade butter. Requiring grading was a carry-over from the delivered butter futures contract,” Dorland says. “As a result, this outdated aspect of the rule constrained tradable butter to a very small subset of butter.”
Plourd says the rule change brings better alignment between the CME delivery process and industry practice.
“The move should facilitate liquidity, which we see as a positive,” he says.
Dunn says that if the change works, it will be a positive move.
“The butter market was performing oddly last year and, in my opinion, not consistently with butter supply and demand conditions,” he says.
CME also made changes to nonfat dry milk (NDM) requirements at the exchange two years ago. As of Jan. 27, 2014, Extra Grade NDM was no longer eligible to be traded at the CME; Grade A is now the only NDM item on the spot call. (See “CME: Extra Grade nonfat dry milk no longer trading on spot call beginning Jan. 27” in the Jan. 17, 2014, issue of Cheese Market News.)
“The changes to the CME spot NDM market were also a much-needed update from the old specifications,” McCully says. “The results speak for themselves. The CME NDM spot market has gone from virtually no trading to now being the primary indicator of NDM cash prices in the United States. Furthermore, the increase in trading volume has allowed companies to use that price in commercial transactions just like how the industry can use CME spot prices to value cheese and butter.”
France promotes tradition of cheesemaking excellence
January 22, 2016
Editor’s note: Passport to Cheese is Cheese Market News’ feature series exploring the dairy industries of nations around the world. Each month this series takes an in-depth look at various nations/regions’ dairy industries with coverage of their milk and cheese production statistics and key issues affecting them. The nations’ interplay with the United States also is explored. This month we are pleased to introduce our latest nation — France.
By Rena Archwamety
MADISON, Wis. — It can be difficult to have a conversation about cheese without bringing up France, or visa versa, as cheese is such a central part of French cuisine, and French cheese a centerpiece of fine cheese shops around the world.
“When you say ‘France,’ you think cheese, cuisine. They are known for taking time for living life and enjoying living. When they make something, they really get into the process,” says Colette Hatch, a cheese, food and wine consultant based in Santa Rosa, California.
Hatch, a French native with a background in restaurant and hotel management, says when she moved to Sonoma County 20 years ago, Americans — and even prominent chefs — were not very familiar with French cheeses.
“When I started 20 years ago, Camembert was not known at all. French cheeses were not well known,” she says. “Cheeses was not a subject chefs understood well.”
She started to bring goat cheeses, Époisses, Comté and other cheeses over from France and gave classes on French cheeses. At the same time, she says, French cheeses began to gain popularity on the East Coast and in larger cities across the United States.
• Cheese export markets
As interest in French cheese began to grow in the United States, French cheese producers saw their domestic market stagnate and began looking for new markets.
One of the first French cheese companies to start exporting its products is what is now Isigny Ste. Mére, a 500-farm cooperative, following the merger of the Isigny-sur-Mer and Sainte-Mére cooperatives in 1980. Among the cooperative’s specialties are PDO Normandy Camembert, PDO Pont l’Evéque, Mature and Extra Mature Label Rogue Mimolettes, and butter.
“Isigny has a long story of exports,” says Benoit de Vitton, manager for the Americas, Isigny Ste. Mére. “The visionary heads of the co-op understood the French market was going to be matured and saturated at some point, and they had to find growth outside of France.”
The market for French cheeses in the United States started at the end of the 1970s, and de Vitton says it became a more long-term, committed market at the end of the 1990s when the trend and interest for cheese increased. The cooperative established its first U.S.-based offices in 2001. Today, 56 percent of Isigny Ste. Mére’s production is exported, and the United States is one of its main markets for cheese.
In 2014, France produced 1.8 million metric tons of cow’s milk cheese, 94,780 metric tons of goat’s milk cheese, 33,890 metric tons of sheep’s milk cheese and 30,700 metric tons of mixed milk cheese, according to the International Dairy Federation’s (IDF) World Dairy Situation 2015 report. France’s cheese exports in 2014 totaled 672,000 metric tons.
“Twenty to 30 percent of the cheese is exported. It’s a big part,” says Diane Sauvage, USA branch manager of Interval Export, which exports specialty cheeses and butters from 14 companies in France. “It’s the only way to grow. In France the market is pretty flat, so export is very important for them.”
Russia used to be a very large market for French cheese, but it is now closed to European cheeses due to counter-sanctions imposed in 2014 following Russia’s annexation of Crimea. Sauvage notes that Australia, Japan and the Middle East are among the fastest growing markets for French cheese and butter.
Rachel Perez, who offers sales support and marketing for six French cheesemakers in the United States through The French Cheese Club, says the United States is the biggest market for French cheeses, but the rest of the world collectively is bigger.
“Asia right now is really trending,” Perez says. “Upper-middle class Chinese people are starting to drink wine, which is a status symbol. Now they’re adding cheese onto that also.”
North America also has new opportunities, she adds, as the traditionally protectionist Canadian market is set to lift quotas on many French imports, and U.S. consumers continue to seek specialty cheeses.
“The sheer number of cheese consumers in the U.S., and outlets like Costco, Trader Joe’s Whole Foods and Wegmans, are an indication that the U.S. market will continue to grow and develop,” she says.
• Make it Magnifique
French cheese exports to the United States have had much success over the past decade due in large part to the efforts of The Cheeses of Europe, a marketing program for exports funded partly by French dairy farmers and partly by the European Union. The Cheeses of Europe’s most recent campaign is called “Make it Magnifique.”
“By adding French cheese, it makes a dish ‘magnifique,’” says Wassila Satouri, senior account executive for Fifteen Degrees, the agency handling the 3-year campaign. “Even something as simple as mac and cheese, if you change it to French cheese, like Mimolette, it makes it amazing.”
In addition to its website, thecheesesofeurope.com, which includes videos, recipes and other information about French cheeses, there are a Cheeses of Europe pairing app, TV, print and online advertising, 1,000 in-store demonstrations a year, and several pop-up and press events promoting French cheeses.
The main goal of the campaign is to educate consumers about French cheeses. Last month, the campaign hosted an event that featured bloomy rind French cheeses such as Brie, Camembert and triple creams.
“We explained a Brie is not always the same Brie. It depends on the process, what grass the cow ate, what farm the milk was produced. They see the difference in color and taste,” Satouri says.
“For some of the cheeses we present, it’s from a very small herd, like 40 cows,” she adds. “Also we keep the tradition to produce cheeses for 100 or 200 years — we keep the same process.”
Satouri says studies done after promotions to measure their effect have shown an increased knowledge and awareness of French cheeses.
Sauvage says Interval Export has definitely seen increased U.S. interest in French Cheeses in the past 10 years since the Cheeses of Europe program started in the United States.
“This helped a lot in order to go to the U.S.,” she says. “They offer a lot of demos. This is key when a cheese is new on the market. They also offer marketing support, really promoting French cheeses, why they are good, and why people should use them more.”
• Preserving traditions
France is known for its small farms and traditional handcrafted cheeses, many of which hold designations of protected origin (PDO or AOP), meaning they are limited to certain cheesemaking and dairy farming regions and must conform to strict standards and methods of production.
“A lot of preservation has to do with the PDO system,” says Perez, adding that in addition to preserving traditional cheesemaking arts, this system also helps to ensure quality and natural cheeses.
“We’re starting to work with organics, but for the French, ‘organic’ is a nebulous term. They fundamentally are organic,” she says. “I think Americans are looking for quality but want to recognize it with certifications. The French already have quality set up with the PDO system. Investing into that extra certification, to them, is kind of a foreign concept.”
Isigny Ste. Mére is famous for its AOP products, de Vitton says, and various aspects of the Normandy region give its products their defining attributes.
“Why such great products? Because of the terroir,” de Vitton says. “The climate is very mild, almost all year round. There is grass that grows very green and very well. About three months of the year, a big part of the field is covered with water, and the salty taste comes from the sea. Norman cows, the breed most present in Normandy, produce the highest fat content and protein content in France.”
He also says the preservation of France’s dairy farming and cheesemaking traditions are very much linked to the AOP or PDO system, which dictates the feeding of the cows and the size of land that the cows need to have. The average farm size in the cooperative, he says, is 45 cows.
“If you have 30 cows, you need 30 hectares. If you have 30 hectares, you are not allowed more than 30 cows,” he says. “Farming in France and Normandy has nothing to do with thousands of cows. It’s very traditional farming. People love the animals and take care of them. They have been doing this for generations. It’s still very traditional.”
• Changes and challenges
Its dairy farms may be small, but France is home to some of the world’s largest dairy processors, including two of the top 3 (Danone and Lactalis), and two more of the top 20 global dairy companies (Sodiaal and Savencia, formerly Bongrain), according to Rabobank. A Euromonitor report notes that Groupe Lactalis led the nation in cheese sales in 2015 with a 21 percent value share of the French market.
French people consumed a total of 1.7 million metric tons of cheese or 26.7 kilograms (58.9 pounds) per capita in 2014, according to IDF’s World Dairy Situation report. While cheese remains a major staple in their diet, the types of cheese French consumers prefer is changing.
“In 2015, the main growth drivers in cheese were products positioned as meal solutions or for snacking,” Euromonitor reports. “Such products include ingredients for salads, savory pies and other recipes such as Mozzarella, Feta and other cheese cubes, slices of Raclette (included in packaged hard cheese) and recipes for fondue, traditional culinary cheese (grated cheese, sticks, slices for sandwiches) and cheese for apertifs and tapas. Such products continued to gain ground at the expense of basic platter cheese that is usually consumed at the end of a meal, including for instance Camembert and Coulommiers, Blue veined cheese and even goat cheese — although the main reason behind the slow performance of the latter was a shortage due to the bankruptcy of some dairies in 2014.”
Another change is a decline in the number of small, traditional cheesemakers. Perez notes a steep decline since 2000 in the number of raw milk Camembert producers.
“There’s a very romantic idea in the U.S. of going back to farms and herds. Especially with millennials, it’s very trendy,” she says. “In France, it’s very opposite. Everyone is looking to get out of the country and into the city.”
Additional challenges for small cheesemakers in France include export regulations, particularly following the passage of the U.S. Food Safety Modernization Act (FSMA).
“Since the passage of FSMA, there is a lot more paperwork and bureaucracy. HACCP plans, third-party audits, at least at the beginning of this process are complicated. Getting their ducks in a row for FSMA definitely is a challenge,” Perez says.
She adds that some of the smaller and more specialty artisan producers in Europe are no longer exporting to the United States because of these challenges.
“In reality, I think there will be less imports, and what we will see is going to be very industrial,” she says. “I see when I go to cheese shows in France, people used to be interested in the U.S. market. Now if you say you’re from the U.S., some don’t want to bother with you anymore.”
Hatch says when she returns to visit family in France, she looks to fill the refrigerator with a variety of cheeses. However, in the last few years, she noticed a smaller variety of specialty cheeses available.
“As the EU added regulations, there were shifts in making cheese. Some small producers could not follow or be bothered by their application and began to let go,” she says. “I couldn’t find too many good raw milk cheeses. It was horrible!”
This last year, though, she says she was able to find more of these cheeses.
“They were definitely made again with more care and more love. They are coming back.”
Hatch says she believes recent focus on slow foods and television shows about food production may have helped to renew interest in traditional French raw milk cheeses.
“I think the French always assumed their food was delicious and would be good,” she says. “So they assumed it was continuing the same way, until programs started to be aired on TV. They realized, ‘We’re not eating the good stuff anymore. Something is wrong.’ I think that’s what really helped to bring back the awareness.”
Child nutrition bill given approval by ag committee
January 22, 2016
WASHINGTON — U.S. Sens. Pat Roberts, R-Kan., chair of the Senate Agriculture Committee, and Debbie Stabenow, D-Mich., ranking member, this week announced that the committee has approved bipartisan legislation to reauthorize child nutrition programs for five years. The legislation, “Improving Child Nutrition Integrity and Access Act of 2016,” reforms and reauthorizes child nutrition programs under the Richard B. Russell National School Lunch Act and the Child Nutrition Act of 1966.
Authorization for federal child nutrition programs formally expired at the end of September 2015, but the existing programs continue to operate pending approval of the reauthorization bill.
“Folks said we couldn’t come to an agreement on child reauthorization — let alone a bipartisan agreement — but we did,” Roberts says. “This legislation ensures programs use taxpayer dollars more efficiently, gives local schools more flexibility in meeting standards and focuses on fraud and error prevention.”
Roberts adds the bill is a comprehensive and inclusive product including concerns of school nutrition professionals, students, producers and public health groups.
“This bipartisan bill puts the health of America’s children first,” Stabenow says. “We are making sure our children get nutritious meals based on smart, science-based policies to give every child a fair shot at success. The investments made in this bill will give important new resources to fight hunger, from WIC (the Special Supplemental Nutrition Program for Women, Infants and Children) to the summer meals program.”
According to the lawmakers, the legislation:
• Improves integrity in school meal programs while ensuring that access to the programs for eligible participants is not compromised.
• Provides flexibility to school food operators while preserving the intent to provide U.S. schoolchildren with healthful meals, leading to improved academic performance and healthy eating habits.
• Strengthens the summer meals program through reduced administrative burden and relief of regulations that prevented local innovations.
• Increases efficiency for participants, stakeholders and related industry, thereby increasing the effectiveness with which these programs use taxpayer resources to serve eligible populations.
• Uses modern technology to reduce paperwork and improve accuracy.
“We are pleased the Senate is making bipartisan progress to reauthorize critical child nutrition programs,” says U.S. Agriculture Secretary Tom Vilsack. “The Senate’s bill is a win for children, parents, schools and for our country’s future. It maintains our commitment to science-based nutrition standards for school meals and protects the advancements we have made in children’s health since the passage of the Healthy, Hunger-Free Kids Act.”
The International Dairy Foods Association (IDFA) and National Milk Producers Federation (NMPF) say they support the child nutrition bill, noting it includes provisions that would help reverse the decline of milk consumption in schools and improve the health of America’s children.
IDFA and NMPF note that almost all age groups consume less dairy than recommended by the newly-released Dietary Guidelines for Americans, and this legislation offers the opportunity to improve dairy intake among the nation’s youth.
The nutrition bill reflects the latest findings of the Dietary Guidelines, which indicated that consumption of dairy foods provides numerous health benefits, including a lower risk of diabetes, metabolic syndrome, cardiovascular disease and obesity, IDFA and NMPF add.
“Along with dairy’s long-established role in promoting bone health, reducing the risk of insidious chronic diseases and conditions demonstrates why milk is offered with every school meal and dairy foods are prominent parts of other nutrition assistance programs,” says Connie Tipton, president and CEO, IDFA.
The measure approved this week directs USDA to review milk consumption in both the school meal program and the WIC program. It also calls for adjustments to promote greater consumption of milk as recommended by the Dietary Guidelines.
Jim Mulhern, president and CEO, NMPF, says passage of the legislation “will help reverse the trend of declining milk consumption in schools, a trend that unfortunately is in direct conflict with federal Dietary Guidelines, which say children should be drinking more milk for lifelong health.
“If the trends is allowed to continue, it will have serious consequences for children’s health today and throughout their adult lives,” he adds.
The Senate bill also calls on USDA to address the needs of lactose-intolerant students by offering lactose-free milk through USDA’s Foods Program.
The School Nutrition Association (SNA) praised the Senate Ag Committee’s action on the bill this week.
“The School Nutrition Association greatly appreciates the leadership of the Senate Agriculture Committee in crafting a bipartisan reauthorization bill that offers practical solutions for school meal programs and the students they serve,” says Jean Ronnei, president, SNA.
SNA says it worked with USDA, the White House and the Senate Ag Committee to address challenges including student participation declines, food waste and student cultural taste preferences.
SNA notes it is disappointed the bill does not increase federal reimbursement for school meals to help offset the higher cost of meeting new nutrition standards.
“SNA continues to review the details of this legislation and will work to identify additional ways to support school nutrition professionals in their efforts to improve school meals and protect the financial viability of meal programs,” Ronnei says.
The child nutrition reauthorization bill is now expected to move to the full Senate for consideration. The House has begun consideration of a similar measure but has not yet approved any legislation.
USDEC forecasts long-term dairy growth in report
January 22, 2016
ARLINGTON, Va. — Despite a sustained downturn in global dairy markets, a new U.S. Dairy Export Council (USDEC) analysis forecasts that the fundamentals driving long-range global dairy trade demand remain positive through 2020.
The report, “2020 Global Demand Forecast for U.S. Dairy Exports,” says demand will grow, but with less strength than the past decade and with increased international competition, especially from the European Union (EU). Even with those challenges, U.S. dairy exporters are positioned to compete for increased export volumes and global market share in key product sectors, particularly cheese.
“We are encouraged to see that, despite the recent prolonged soft export market, long-term global dairy demand fundamentals are still in place that will again pressure available milk supplies,” says Tom Suber, president, USDEC. “This should bring both higher prices and a resumed export upside for U.S. suppliers. Yet with a resurgent EU industry, U.S. exporters will need to up their game.”
The analysis is part of USDEC’s ongoing strategic planning that it conducts with Dairy Management Inc., its primary funder through the dairy checkoff. The report also is a useful supplement to USDEC’s continual assessments of current market conditions, the organization notes.
In its January Global Dairy Market Outlook, USDEC forecast it may take until 2017 for global dairy markets to fully recover from the current soft dairy cycle.
The new report, however, takes a longer-range view to 2020 to determine how U.S. dairy exports can take advantage of the positive upward trends existing since 2003 when growth in global dairy demand started pinching global supply growth.
“There will be growth,” says Ross Christieson, senior vice president of market research and analysis, USDEC, who oversaw the report. “The United States is still well-positioned to take advantage of this growth, but our competitors are also well-positioned. We need to continue to improve what we do with product, customer service, marketing and supply chain efficiencies.”
In 2009, the Innovation Center for U.S. Dairy released its “Globalization Report,” an influential strategic analysis by the management consulting firm Bain & Co. The report, updated in a 2011 “refresh,” says global demand for dairy would exceed the ability of traditional suppliers to meet the need. It concluded that the U.S. dairy industry was well-positioned during the early years of the upcoming decade to meet a larger-than-historical supply/demand gap.
Part of the new USDEC report compares what was forecast in the previous two reports with what actually happened. It concludes dairy exports grew more than forecast in the original reports, with total global exports actually increasing 30 percent more than forecast through 2013, with U.S. dairy exports growing 50 percent more than forecast.
Looking ahead, the new USDEC report identifies several multi-year market trends:
• Despite the currently tough market, prospects are positive for global growth.
• Growth will be driven by economic and population dynamics in developing countries.
• The U.S. dairy industry remains positioned to build share in global dairy markets.
• The U.S. dairy industry will be particularly well-positioned to capture growth in cheese, skim milk powder and whey, with EU suppliers providing the toughest competition.
• Cheese presents the most significant growth opportunity for the U.S. dairy industry.
USDEC says other noteworthy data points include:
• On a liquid milk equivalent (LME) basis, total global dairy trade grew 5.4 percent annually from 2007-2014.
• From 2014-2020, total global dairy trade is forecast to grow 3.7 percent annually.
• From 2007-2014, global cheese exports grew 6.2 percent annually.
• From 2014-2020, global cheese exports are forecast to grow 3.2 percent annually.
• Developing countries imported more cheese than developed countries in 2014, a trend likely to continue, USDEC says.
The report can be downloaded immediately by USDEC members at usdec.org with a member log-in. Non-members can request access to the report at www.usdec.org/research-and-data/research-reports/research-reports/market-research-reports/2020-global-demand-forecast-for-us-dairy-exports, with USDEC reviewing non-member requests on a case-by-case basis.