Digest Highlights

IDFA, food associations seek COVID-19 vaccination priority designation

Dairy and food industry leaders want their employees to be near the front of the line when COVID-19 vaccine distribution gets underway. The International Dairy Foods Association (IDFA) joined about 15 other food industry organizations in a letter to President Donald Trump, asking that workers in the U.S. food supply chain be placed on a priority list when a COVID-19 vaccine becomes available.

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Dave Natzke
Editor / Progressive Dairy

Trade associations signing on to the letter represented the food, agriculture, retail and consumer packaged goods supply chain. Prioritizing vaccinations for those workers will be a key intervention to help keep workers healthy and to ensure that agricultural and food supply chains remain operating, according to the letter.

Agriculture dragged into U.S.-EU aircraft subsidy dispute

U.S. agriculture and dairy have been dragged into a long-standing dispute over aircraft industry subsidies between the European Union (EU) and the U.S. As a result, the EU announced it will impose nearly $4 billion in tariffs products it imports from the U.S.

The center of the dispute revolves around the EU’s Airbus and Boeing in the U.S., with the original case dating back to at least 2006. Since then, the World Trade Organization (WTO) has found both sides at fault, with the latest ruling in the EU’s favor.

Michael Nepveux, economist with the American Farm Bureau Federation, notes that U.S. agricultural products are frequently a target when retaliatory tariffs are imposed. He said the EU’s list in the latest dispute is skewed toward processed food and agricultural goods, as opposed to bulk ag commodities. The agricultural goods most impacted are alcohol, tobacco and cotton. The tariff rate on food, agricultural and industrial goods is set at 25%.

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While the latest retaliatory tariffs have little implications for U.S. dairy, they represent a continuation of tactics designed to restrict exports of U.S. agricultural products to the EU, said Jim Mulhern, president and CEO of the National Milk Producers Federation (NMPF). Those tactics include the EU’s use of geographical indications (GIs) to ban the U.S. from selling cheeses with common names, such as Asiago, feta or Parmesan.

“The EU’s restrictive trade policies that have resulted in a one-way flow of agriculture trade, and in particular dairy trade, to Europe is something that both the current and future administrations need to keep in mind,” Mulhern said. “In fact, the trade deficit between the EU and U.S. continues to widen as the EU uses unjustified trade tactics to erode U.S. market access and limit fair competition.”

One means of bringing the EU to the negotiating table is to impose retaliatory tariffs against EU dairy products, he said.

September 2020 fluid sales slip

Here’s an update on U.S fluid milk sales data from the USDA Agricultural Marketing Service:

  • Total sales: September sales of packaged fluid milk products totaled 3.72 billion pounds, down about 1% from a year earlier. Year-to-date (January-September 2020) sales totaled 34.4 billion pounds, up 0.4% compared to the same period in 2019.

  • Conventional products: September sales totaled 3.48 billion pounds, down 1.6% from a year earlier. Through the first nine months of the year, sales totaled 32.25 billion pounds, down 0.3% from a year earlier. Whole milk was the growth leader, up more than 4%, with sales of reduced fat (2% milk) up about 2.6%.

  • Organic products: September sales totaled 237 million pounds, up 7.7% from a year earlier. Year-to-date 2020 sales of organic products totaled 2.15 billion pounds, up 12% from the previous year. Sales growth leaders included whole and 2% milk, up 14% and 16%, respectively. Through September, organic represented more than 6.2% of total fluid product sales.

The U.S. figures represent consumption of fluid milk products in federal milk marketing order (FMMO) areas and California (now a part of the FMMO system), which account for approximately 92% of total fluid milk sales in the U.S. Sales outlets include food stores, convenience stores, warehouse stores/wholesale clubs, non-food stores, schools, the food service industry and home delivery.

Dairy Download: Retailers, independent grocers share takeaways

Retail and independent grocery businesses have been heavily impacted by the COVID-19 pandemic, speakers noted in the latest Dairy Download podcast, produced by the International Dairy Foods Association (IDFA).

Co-hosts Phil Plourd and Kathleen Wolfley of Blimling and Associates shared market insights during the podcast. They recapped a week that saw a steep decline in Chicago Mercantile Exchange (CME) cash cheese prices and an escalation of COVID-19 cases and increased restrictions on public gatherings and restaurant closures. However, the week’s outlook was also brightened by news a COVID-19 vaccine is moving closer to release. Plourd said the USDA’s crop production estimates forecasting lower ending stocks of corn will have implications on feed costs and milk profitability on the farm.

Marshal Cohen, chief industry adviser at the NPD Group, cited three takeaways from the retail sector since the beginning of the pandemic. First, lifestyle changes – with emphasis on staying at home for entertainment, education and exercise – are a big driver. When shopping for food, consumers aren’t necessarily stockpiling for the long term, but rather purchasing for the “here and now.” Finally, consumers are seeking new products, with an eye on convenience.

When the pandemic eventually recedes and the social recession moves into a social progression, there will be a surge in restaurant dining. However, Cohen believes many of the current trends will stick because people have learned they can spend less money. He cited high sales of small kitchen appliances during the pandemic as a sign more people are preparing food at home, and that local and convenience will be bywords for shoppers going forward.

Greg Ferrara, president and CEO of the National Grocers Association, a trade group that represents independent supermarket operators, said association members saw supply challenges during the pandemic and expects that to carry over into 2021 on some products.

Independent grocers are seeing fewer customers in store, but those customers are buying larger baskets of items. The grocers are also seeing new customers, possibly people staying out of big box stores due to perceived safety concerns. To accommodate shoppers, many independent grocers are looking into partnerships around microfulfillment centers. Due to their smaller size, independent grocers can adapt quickly to the needs of their customers while remaining price competitive, he said.

Things you might have missed

  • As the end of 2020 draws closer, dairy’s year has been influenced by a number of dynamics. Peter Vitaliano, chief economist for NMPF, provides a mid-November update in NMPF’s monthly Dairy Market report.
  • Starting in November, the milk for fairlife’s product line in Canada is being supplied by Canadian dairy farmers. In 2018, the company invested $85 million in a dairy facility in Peterborough, Ontario. It is now fully operational.

  • President-elect Joe Biden has named 17 members of an agency review team in charge of transitioning the USDA, Farm Credit Administration and Federal Ag Mortgage Corporation to a new administration.

  • The dairy-checkoff-founded Innovation Center for U.S. Dairy announced a memorandum of understanding (MOU) with the EPA in an effort to increase collaboration on the dairy community’s environmental sustainability efforts.

  • NMPF and the U.S. Dairy Export Council (USDEC) released an executive summary highlighting trade barriers that are hampering overseas dairy sales. NMPF and USDEC said the U.S. should prioritize trade deals most likely to yield net positive benefits for dairy and agriculture, such as with the United Kingdom and key Asian markets, including those in Southeast Asia.

  • Fifteen countries have signed the Regional Comprehensive Economic Partnership (RCEP), which is being called the “world’s largest trade deal.” The 15 countries account for about 30% of the world's population and 30% of global gross domestic product (GDP). The agreement involves Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, South Korea, Singapore, Thailand and Vietnam. Many of those nations are also part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the free trade agreement that developed after the U.S. exited the Trans-Pacific Partnership (TPP) negotiations in 2017.

  • The American Farm Bureau Federation shared results of a survey showing a majority of U.S. adults have a positive view of farmers’ sustainability practices, and an overwhelming majority trust farmers. More than four in five adults (84%) say environmental sustainability and economic sustainability are both important for farmers.

  • The USDA National Resource Conservation Serivce updated its National Conservation Practice Standards. The standards provide guidelines for planning, designing, installing, operating and maintaining conservation practices. The update, mandated in the 2018 Farm Bill, includes 58 standards that have been updated or revised since August.

Progressive Dairy COVID-19 resources

Progressive Dairy frequently provides updates on COVID-19 news and resources on a special webpage. News posted on Nov. 17 covers:

  • Updates on upcoming events, including the 2021 DairyStrong (virtual), Pennsylvania Dairy Summit (virtual) and Central Plains Dairy Expo (in-person) conferences

  • Information on mental health resources created for farmers and veterinarians

There’s also archived information; a comprehensive list of other state, regional and national resources; and helpful articles previously appearing on the Progressive Dairy website.  end mark

Dave Natzke