Posts tagged with "Trade partners"

In America’s heartland, saying ‘cheese,’ no longer brings a smile

December 18, 2018

In Wisconsin, the “cheeseheads” are not happy—and it has nothing to do with football. Nor will you find smiles in America’s second and third top cheese-producing states: California and Idaho.

“It’s a nightmare,” Errico Auricchio, president of BelGioioso Cheese, a second-generation family company based in Green Bay, Wisconsin, told The Wall Street Journal recently—noting that demand for the producer’s classic and artisan cheeses has dropped precipitously since last summer, when Mexico and China, major dairy buyers, instituted retaliatory tariffs on U.S. cheese and whey.

Cheese shipments to Mexico in September were down more than 10% annually, according to the U.S. Dairy Export Council trade group, and shipments to China were down 63% annually. Indeed, an Informa Agribusiness analysis commissioned by the council predicts that Chinese tariffs on U.S. dairy products will costs U.S. dairy farmers $12.2 billion by 2020, if they stay in place. The tariffs are now as high as 45% on some exports.

What are producers to do with all the cheese?  Today, about 1.4 billion pounds of American, cheddar, and other kinds of cheese is socked away at cold-storage warehouses across the country—the biggest stockpile since federal record-keeping began a century ago.

And that’s definitely not a good thing: Cheese has a limited shelf-life—making the stored inventory less valuable once it spends weeks in cold-storage—and producers are concerned that the glut and price drop that has come with it could eat into profits. Spot market prices for 40-pound blocks of cheddar fell around 25% this year from 2014 prices, while 500-pound barrels typically used for processed cheese declined 28%., the Journal reported.

“There’s a whole ton of aged product lying around,” Nate Donnay, director of Dairy Market Insight at INTL FCStone Financial, told the financial news outlet.

Driving the glut are cheese-makers who ramped up production before trade tensions abroad tamped down demand for many of their products, the Journal reports. And not only are exports down, but shifting tastes at home—including a reluctance by Millennials to eat processed cheeses, such as American cheese—have further changed the outlook for traditional cheese-makers.

Americans ate a record 37 pounds of natural cheese per capita last year. But they are ditching processed, American and plain cheddar cheese for foreign varieties. Per capita consumption of mozzarella has topped cheddar since 2010. Consumption of processed cheese spreads per capita is about half what it was in 2006, according to the news outlet.

Strong pizza sales have helped rocket mozzarella into the top cheese spot, dairy analysts said. Grocers big and small are also increasingly beefing up cheese counters with imported and less typical varieties as Americans turn away from processed foods for unique products.

More adventurous cheese eating poses a challenge for big U.S. cheese makers focused on traditional varieties.

In response, some cheese producers say they are adjusting their operations to produce newly popular varieties. Wisconsin-based Sargento Foods. has added Gouda and Havarti varieties to its line of sliced cheeses. Schuman Cheese in New Jersey has added twists on Parmesan, Asiago, Fontina and Alpine to its product line.

Those who are betting that the tariffs will be negotiated down are hoping that it happens sooner rather than later. Stan Ryan, chief executive of the Seattle-based Darigold, told the Journal that falling prices have driven down profits for the affiliated Northwest Dairy Association cooperative’s roughly 450 farmers.

“It is very challenging for dairy farmers to stay in the game,”  Ryan, adding that more than 25 of his farmers have gone out of business in the past year.

Research contact: heather.haddon@wsj.com

 

Three cheers: USA, Canada, Mexico support new trade deal

October 2, 2018

The United States. and Canada have agreed on a deal to restore the 24-year-old North American Free Trade Agreement (NAFTA) to its traditional structure as a trilateral bloc, Bloomberg reports.

U.S. and Canadian negotiators negotiated around-the-clock over the past weekend, September 29-30, to make a Sunday deadline that would allow the countries to sign the deal as their final act before Mexico’s outgoing President Enrique Pena Nieto leaves office at the end of November.

The new deal will be called the United States-Mexico-Canada Agreement (USMCA), according to a joint statement by  Foreign Affairs Minister Chrystia Freeland and U.S. Trade Representative Robert Lighthizer that was issued late Sunday night.

“USMCA will give our workers, farmers, ranchers, and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region. It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home,” the statement said.

According to a report by Reuters, Canada has agreed to provide U.S. dairy farmers access to about 3.5% of its $16 billion annual domestic dairy market. Although Canadian sources said its government was prepared to offer compensation, dairy farmers reacted angrily.

“We fail to see how this deal can be good for the 220,000 Canadian families that depend on dairy for their livelihood.” Pierre Lampron, president of Dairy Farmers of Canada, said in a statement.

“This has happened, despite assurances that our government would not sign a bad deal for Canadians.”

The deal also requires a higher proportion of the parts in a car to be made in areas of North America, paying at least $16 an hour, a rule aimed at shifting jobs from Mexico.

The new deal will need the approval of Congress, and it is not likely to reach a floor vote until the next session of Congress in 2019. The top Democrat in the House was not endorsing the deal just yet.

Democrats will closely scrutinize the text of the Trump Administration’s NAFTA proposal, and look forward to further analyses and conversations with stakeholders,” House Minority Leader Nancy Pelosi said in a statement.

With control of both the House and Senate at stake in November, it is unclear if Congress will support the deal, ABC News reported.

However, Trump was optimistic, telling reporters he thinks it will pass “easily.”

Research contact: @jendeben