Posts tagged with "Trade tensions"

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

 

Without fanfare, Senate votes to abate tariffs on Chinese goods

July 30, 2018

As trade tensions escalate between the Trump administration and Beijing, the U.S. Senate with little fanfare passed legislation on July 26 that would lower trade barriers on hundreds of items made in China, CNBC reported. A version of that bill already had passed unanimously in the House of Representatives earlier this year.

With no debate, the Senate unanimously passed a bill that would cut or eliminate tariffs on toasters, chemicals—and roughly 1,660 other items made outside the United States, the business news network said. Nearly half of those items are produced in China, based on a Reuters analysis of government records.

The move is meant to neutralize a 25% tariff on up to $50 billion of Chinese goods that Trump announced in mid-June—as well as a subsequent move by China to impose a 25% retaliatory tariff on $34 billion worth of U.S. goods, including agricultural products and U.S.-made cars.

In June, CNN reported that Trump meant his tariffs on Chinese goods to penalize Beijing for stealing American technology and trade secrets. The news network said that the “tariff is targeted towards the Chinese aerospace, robotics, manufacturing and auto industries.”

According to CNBC, the White House has not publicly taken a position on the so-called Miscellaneous Tariff Bill Act of 2018. The Senate and House now need to resolve minor differences before they can send the legislation to President Trump to sign into law.

The National Association of Manufacturers has said U.S. businesses pay $1 million a day on such import duties. In a statement, NAM urged passage of the act, “to eliminate unfair, out-of-date, distortive, and anticompetitive taxes on manufacturers.”

When asked in an April 11 Quinnipiac poll if they would support or oppose “raising tariffs on products imported from China, if it causes China to raise tariffs on American products,” 51% of U.S. adults nationwide said they would oppose the tariffs and 40% said they would support them. There was a partisan divide in the results, with two-thirds of Republicans supporting Trump’s actions.

Research contact: timothy.malloy@quinnipiac.edu