Update highlights

Dairy organizations encouraged by USTR report citing GIs as priority issue

The heads of three major U.S. dairy organizations are encouraged by an Office of the U.S. Trade Representative (USTR) report identifying the misuse of geographical indicators (GIs) as a priority issue in 2022.

Natzke dave
Editor / Progressive Dairy

The annual USTR Special 301 report outlines global challenges on intellectual property issues and details the European Union’s (EU) restrictions on the use of common food and beverage terms, such as “Parmesan,” “bologna” and “chateau.” Those GIs erect nontariff trade barriers to U.S. food and beverage producers’ market access rights in foreign countries, according to leaders of the Consortium for Common Food Names (CCFN), U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF).

“We whole-heartedly agree with USTR about the harm imposed by the EU’s deliberate restriction of generic food and beverage terms in markets around the world,” said Jaime Castaneda, executive director of CCFN. “USTR’s Special 301 report should serve as a foundation upon which the administration can build a more proactive and focused global campaign of its own to counteract the EU’s long-running efforts. U.S. farmers and food producers, and others around the world, deserve the chance to compete fairly in export markets.”

“The U.S. government has accurately diagnosed the EU’s deliberate global strategy of cloaking nontariff trade barriers as ‘GIs’ so that it doesn’t have to compete head to head in common product categories with U.S. food producers,” said Jim Mulhern, president and CEO of NMPF. “By deploying all of the tools at its disposal, including use of existing U.S. FTAs, the upcoming IPEF talks and TIFAs, the administration can take strong action to establish concrete market access protections with our trading partners around the world. The time for this is now and we stand ready to support those proactive efforts on behalf of American farmers.”

“Because we export the equivalent of 17% of U.S. milk production, trade barriers like bans on the use of common cheese names have profound consequences for the entire American dairy industry, from the many small and medium-sized family-owned companies to farmer-owned cooperatives and the workers employed there,” said Krysta Harden, president and CEO of USDEC. “U.S. dairy farmers and cheesemakers only want a fair shot at sharing their high-quality, sustainably produced products with consumers around the globe. By doubling down on combating global restrictions on the sale of common name products, USTR can defend opportunities for American-made products internationally and the jobs they support here at home.”

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Dairy cull cow marketing up in March

Following annual patterns, marketing of U.S. dairy cull cows in U.S. slaughter plants rose in March to 297,200 head, a 12-month high.

Based on USDA historical data, March is usually the highest dairy cow culling month of the year. The March 2022 total was up 30,700 head from February but 5,000 head less than March 2021. Both March 2022 and 2021 had 23 non-holiday weekdays and four Saturdays.

At 824,600 head, year-to-date (January-March 2022) cull dairy cow slaughter was about 20,100 less than the same period a year earlier. Factoring in the slowdown, the USDA’s Milk Production report previously estimated there were 9.395 million cows in U.S. herds in March 2022, down about 87,000 head from the same month a year earlier.

Heaviest dairy culling during March 2022 occurred in the Southwest (Arizona, California, Hawaii and Nevada), where 71,500 dairy cows were marketed for beef. That was followed by the Upper Midwest (Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin) at 66,900 head.

Other regional totals were estimated at 46,000 head in Delaware, Maryland, Pennsylvania, West Virginia and Virginia; 37,400 head in Arkansas, Louisiana, New Mexico, Oklahoma and Texas; and about 41,600 head in Alaska, Idaho, Oregon and Washington.

Primary data for the USDA’s Livestock Slaughter report are obtained from reports completed by inspectors from the USDA Food Safety and Inspection Service (FSIS). These counts are combined with data from state-administered non-federally inspected (NFI) slaughter plants to derive total commercial slaughter estimates. The USDA estimates there are approximately 900 livestock slaughter plants in the U.S. operating under federal inspection and nearly 1,900 state-inspected or custom-exempt slaughter plants.

Cheese, butter inventories mostly lower

With less milk production in the first quarter of 2022 compared to a year earlier, the status of dairy product inventories was also mostly lower to end March, according to the USDA’s monthly Cold Storage report.

Total natural cheese stocks were estimated at about 1.458 billion pounds, down 1% from both February 2022 and March 2021. Stocks of American cheese were estimated at about 822.2 million pounds, also down 1% from both February 2022 and March 2021.

Butter stocks were estimated at 283.1 million pounds, up 8% from February but down 20% compared with March 2021.

Milk futures have weakened in recent days

Quarterly average 2022 Class III and Class IV milk futures prices have declined during Chicago Mercantile Exchange (CME) trading this week. As of the close of trading on April 27, third- and fourth-quarter averages were down 35-40 cents per hundredweight (cwt) on Class III contracts and down 44-50 cents on Class IV contracts.

Upcoming reports impacting markets and risk management tools include the USDA’s monthly milk and feed price summaries, as well as the March Dairy Margin Coverage (DMC) program margin and potential indemnity payments, all on April 29. The USDA’s Dairy Products report wil be released May 5. Federal Milk Marketing Order (FMMO) uniform price and producer price differentials for April milk marketings will be released on 11-14. Check back with Progressive Dairy for summaries and analysis.

Read also: Lagging milk production and robust demand for dairy – domestically and overseas – are expected to support milk prices near $27 per cwt during the second half of 2022, according to the NMPF’s Peter Vitaliano, summarizing markets in the April 2022 Dairy Management Inc./National Milk Producers Federation Dairy Market Report. However, feed costs will likely reach the same high levels they did during the drought period of 2012-13. That will restrain DMC margins but still at rates above the maximum coverage level of $9.50 per cwt. Read the full report here.  end mark

Dave Natzke