Industry: Economic Analysis Shows Damage of GI Abuses
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Volume 36 October 14, 2016 Number 39 Industry: Economic analysis Like us on Facebook and follow us on Twitter! shows damage of GI abuses A WASHINGTON — If the Eu- National Milk Producers Fed- and this report fi nally quantifi es • Push U.S. dairy farm ropean Union (EU) succeeds eration (NMPF), the U.S. Dairy those impacts.” margins below the break-even INSIDE in extending its policies on Export Council (USDEC) and The report used a case study point in up to six out of 10 years, geographical indications (GIs) the International Dairy Foods approach, quantifying the im- costing farmers a cumulative ✦ Guest column: ‘Four to U.S. cheeses as they have in Association (IDFA). pacts of GI protections on the $59 billion in revenues. ways to keep customers trade agreements in other parts According to these groups, Danish and German markets • Reduce the size of the na- after an acquisition.’ of the world, the U.S. cheese a European farm policy agenda after the European Commission tional dairy herd up to 9 percent, For details, see page 4. industry could lose $5.2 billion focused on using GIs to grant granted and activated protected or 852,000 cows, putting many in sales, and dairy farm revenues European food producers a designation of origin (PDO) farms out of business. ✦ Co-op net income up could drop $59 billion over 10 commercial advantage, would status for various cheeses. The • Close numerous cheese in 2015, USDA reports. years, according to a new eco- force farmers and food produc- analysis indicates that Germany plants, especially specialty For details, see page 5. nomic study released this week. ers outside of Europe to rebrand lost more than $259.6 million cheese manufacturing plants. ✦ Lawsuit over Kraft’s use of The 60-page analysis was familiar foods with unfamiliar as a result of PDO implementa- • Limit choices and raise ‘natural’ claim on cheese commissioned by the Consor- names. The resulting confusion tion, driven by losses in the feta prices for cheese varieties with likely to move forward. tium for Common Food Names in the U.S. marketplace could cheese market. Germany also familiar names. For details, see page 6. (CCFN), an international alli- put family farms out of busi- suffered signifi cant economic According to the study, ance of companies and organi- ness, eliminate thousands of losses domestically. Similarly, consumers will choose imported ✦ Retail WATCH Exclusive: zations dedicated to preserving rural jobs and hurt the overall Denmark lost more than $115 cheeses with names they rec- Agropur makes plans the right to use common food U.S. economy, the analysis says. million after PDO protection ognize over domestic products to market its specialty terms. It was conducted by The EU advocates extending GI became active for feta and with names they don’t recog- cheeses in the U.S. Informa Economics IEG and protections beyond a small num- parmesan. The report says on nize. As a result, demand for For details, see page 7. unveiled Tuesday by CCFN, the ber of specialty foods to cover average, the PDO status for feta domestic cheese will fall. The many food names that have and parmesan in the EU created study also notes that potential little to no geographic identity a 14-percent price decrease in damages extend beyond just the and have long been commonly EU countries producing these dairy industry. As impacts on USDA to buy more cheese; used by food producers around product types. dairy ripple through industries the world, the groups add. Multiple econometric tech- such as grain farming, transpor- industry mixed on impact “Under Europe’s GI policies, niques then were used to deter- tation and veterinary services, U.S. manufacturers would face mine how enforcing European the U.S. economy could lose up WASHINGTON — U.S. Agriculture Secretary Tom Vilsack this week a choice of abandoning markets GIs on U.S. cheese with common to 175,000 jobs and $23 billion announced that USDA is offering to purchase $20 million of Cheddar to for cheeses like feta and parme- names would impact the U.S. dairy in gross domestic product in reduce a private cheese surplus that has reached record levels, while san or selling them under names industry. The study found that in the short run. assisting food banks and other food assistance recipients. like ‘crumbly white cheese’ 10 years, such policies could: The full report is available While USDA projects dairy prices to increase throughout the rest or ‘hard grated cheese,’” says • Reduce U.S. cheese con- at http://www.commonfood- of the year, many factors including low world market prices, increased Connie Tipton, president and sumption up to 21 percent, or names.com/wp-content/up- milk supplies and inventories, and slower demand have contributed to CEO, IDFA. “It’s not hard to 2.3 billion pounds, totaling up to loads/Informa-GIs-Research- a sluggish marketplace for dairy producers and caused dairy revenues imagine the problems those $5.2 billion in lost cheese sales Report_FINAL.pdf. to drop 35 percent over the past two years, Vilsack says. Section 32 name changes would create, based on current prices. Turn to ANALYSIS, page 16 a of the Agriculture Act of 1935 authorizes USDA to purchase surplus food to benefi t food banks and families in need through its nutrition assistance programs. “America’s farming families are being called on to demonstrate their world-famous resourcefulness and resilience in the face of this current USDA report: Dairy sector USDA forecasts market downturn, and USDA is making use of every tool that we have milk supply to to help them,” Vilsack says. “For dairy farmers, this has included $11.2 growth hinges on trade rise, lower prices million in payments in August through the Dairy Margin Protection WASHINGTON — A new report released this week by USDA’s Program (MPP), in addition to the surplus purchase offers. Offi ce of the Chief Economist (OCE) shows continued growth WASHINGTON — In its lat- Vilsack adds that reducing the surplus can provide extra reassur- of the U.S. dairy sector is largely contingent on trade. est “World Agricultural Sup- ance while also fi lling demand at food banks and other organizations The report, “Why Trade Agreements Matter: The Case for ply and Demand Estimates” that help families in need. U.S. Dairy,” also estimates that the Trans-Pacifi c Partnership report released this month, He notes that farmers at other points in the supply chain also are (TPP) could create an additional $150 million to $300 million USDA raised its forecasts receiving a boost with more than $7 billion in Agriculture Risk Cover- in annual U.S. dairy exports. for 2016 and 2017 U.S. milk age and Price Loss Coverage payments for the 2015 crop year, which USDA notes that strong growth in overseas demand has production and, as a result, by design kick in when times are tough. helped fuel U.S. dairy exports, while domestic structural and lowered its price forecasts “As always, we continue to watch market conditions and will explore policy adjustments have enhanced U.S. competitiveness. for cheese and butter. opportunities for further assistance in the coming months,” Vilsack says. According to the report, U.S. dairy exports have grown by more As cow inventory has “For producers challenged by weather, disease and falling revenue, we than fi vefold over the past 15 years, reaching a record $7.1 billion grown more rapidly that will continue to ensure the availability of a strong safety net to keep in 2014. While 2015 exports decreased due to strong global dairy previously expected, USDA them farming or ranching.” supplies, weaker import demand and an appreciation of the U.S. has upped its 2016 milk a Turn to PURCHASE, page 15 Turn to TPP, page 14 a Turn to WASDE, page 15 a © 2016 CHEESE MARKET NEWS® — This is Cheese Market News’ E-subscription and may not be forwarded to anyone other than the intended paid subscriber without the express permission of Cheese Market News (For more information, contact [email protected]) 2 CHEESE MARKET NEWS® — October 14, 2016 MARKET INDICATORS Chicago Mercantile Exchange CHEESE FUTURES for the week ending October 13, 2016 Cash prices for the week ended October 14, 2016 (Listings for each day by month, settling price and open interest) Monday Tuesday Wednesday Thursday Friday Oct. 10 Oct. 11 Oct. 12 Oct. 13 Oct. 14 Fri., Oct. 7 Mon., Oct. 10 Tues., Oct. 11 Wed., Oct. 12 Thurs., Oct. 13 OCT16 1.602 3,421 1.585 3,457 1.571 3,440 1.578 3,454 1.575 3,454 Cheese Barrels NOV16 1.634 3,750 1.608 3,777 1.584 3,807 1.610 3,816 1.600 3,802 Price $1.4900 $1.4700 $1.4575 $1.4475 $1.4600 DEC16 1.628 3,668 1.613 3,696 1.583 3,761 1.611 3,787 1.605 3,808 Change -2 -2 -1 1/4 -1 +1 1/4 JAN17 1.625 1,822 1.614 1,831 1.600 1,877 1.615 1,874 1.623 1,879 FEB17 1.636 1,730 1.626 1,733 1.616 1,741 1.629 1,743 1.639 1,746 Cheese 40-lb. Blocks MAR17 1.648 1,745 1.646 1,750 1.635 1,796 1.646 1,798 1.650 1,803 Price APR17 1.655 1,483 1.655 1,485 1.655 1,485 1.655 1,491 1.656 1,492 $1.5375 $1.5175 $1.5175 $1.5175 $1.5500 MAY17 1.680 1,375 1.680 1,383 1.670 1,419 1.673 1,419 1.674 1,421 Change -1 1/4 -2 NC NC +3 1/4 JUN17 1.704 1,205 1.700 1,212 1.694 1,230 1.695 1,230 1.700 1,234 JUL17 1.721 545 1.719 551 1.719 559 1.719 574 1.719 576 Weekly average (Oct.