TheDairySite Newsletter - 2 March 2012

TheDairySite Weekly Newsletter

Friday 2nd March 2012

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Welcome to this week's newsletter

Editorial: Does NZ Dairy Pose a Threat to the US Markets?

This week, leaders from nine countries are meeting to discuss the Trans-Pacific Partnership (TPP) free trade agreement (FTA) in Melbourne, Australia. And for the first time in two years access to dairy markets will be on the table.

For the US this could be an issue. Last year President Barack Obama backed full and comprehensive opening of markets in TPP talks, however in the dairy industry there is some resistance to this.

Only last week the US Dairy Export Council sent a letter to US Trade Representative Ron Kirk and US Secretary of Agriculture Tom Vilsack. Despite supporting the TPP, the letter cited concerns about pervasive anti-competitive practices by the New Zealand dairy industry.

The US dairy industry claims that New Zealand has a "smothering domestic monopoly and aggressive pricing in foreign markets".

New Zealand does have a dominant role on global dairy markets, accounting for 35 per cent of global dairy exports. Over the last year, New Zealand dairy exports of milk powder, butter and cheese increased 25 per cent. The US accounts for 12 per cent of global trade in major dairy commodities.

The US Dairy Export Council believes that because of New Zealand's dominant role, it policy allowing anti-competitive practices imposes negative impacts on global competitors. "Such a dominant role affords it unfair advantages over its competitors and distorts international trade in dairy products."

Fonterra, a New Zealand owned co-operative maintains around a 90 per cent market share of NZ produced milk.

The US industry has also said that is will oppose major non-tariff measures that negatively impact the US's ability to fairly compete both at home and abroad.

Simon Tucker, from DairyNZ said that shutting NZ dairy exports out of the US will not help US dairy prospects.

The US is a major player on global dairy markets, and so restricting access to its domestic markets will have effect their access to foreign markets in the long term.

With NZ focusing their dairy marketing efforts on South East Asian and Chinese markets, it seems unlikely that they will dramatically increase sales of dairy products to the US.

Earlier this year, the New Zealand Ministry of Agriculture (MAF) announced proposed changes to the Dairy Industry Restructuring Act (DIRA). Looking at raw milk regulations, MAF has proposed that Fonterra increase the volume of raw milk it makes available to independent processors.

Still under consultation, the proposals hope to increase competition at the farmgate and ensure that sufficient regulated milk is available for dairy food and beverage companies who process raw milk but do not have their own supply.

Fonterra Chairman, Sir Henry van der Heyden, said that the proposal would impose nearly NZ$200 million of additional costs over the next three years alone and work against the co-operative's efforts to reduce the price of milk in New Zealand.

With European dairy quotas being lifted in 2015, an additional nine billion litres of milk is expected to come onto the global market. Kevin Bellamy, senior global dairy analyst for Rabobank, has said that New Zealand has little to fear from this. "Continued strong medium-term growth in world demand for dairy is set to absorb the additional supply."

Charlotte Johnston

This Week's Feature Articles

We have 4 new features this week:

Buying Hay or Silage after a Flood, Fire or Drought
Home grown or purchased hay or silage are extremely valuable feeds after a flood or fire. If well made, they should be safe to feed and are excellent “comfort food” for short term feeding of cattle, horses, sheep and other grazing animals, writes Neil Griffiths Technical Specialist Pastures Paterson with New South Wales, Australian government.

Global Dairy Outlook: Farm Returns Improved
The global dairy market will offer strong growth prospects in the coming five years, but the uneven spread of this market expansion and an era of elevated pricing will create as many challenges as opportunities for key players along the dairy supply chain. This is one of the key conclusions coming out of the Rabobank Food & Agribusiness Research and Advisory report, “Global Dairy Outlook: Show me the money”.

Frost Seed Clover in 2012
An important forage option available to cattlemen is the addition of clover to cool season grass pastures. The addition of clover to grass pastures will improve the quality of forage that cattle graze, dilute infected tall fescue and also supply nitrogen via nitrogen fixation, writes Dr Mark A. McCann, Extension Animal Scientist, VA Tech.

Parasitic Gastro-Enteritis in Cattle
Reports of Haemonchus contortus in calves in the UK, as well as a case of the parasite in a water buffalo were reported as being detected by passive surveillance by the Veterinary Laboratory Agency in 2011. All were differentiated by molecular techniques from the similar H. placei, which has not been reported in the UK.

Market Reports

» Canadian Dairy Statistics Q4 Results
» UK Milk Prices and Composition of Milk
» USDA Dairy Product Prices Week 9
» US Cattle on Feed Up Two Per Cent
» USDA GAIN: Meat Demand In Urban Chinese Households - February 2012
» CSO Livestock Survey (January 2012)
» Ireland Milk Statistics January 2012
» USDA Agricultural Prices - February 2012

Company News

Texas & Cornell Uni's Join Forces with Pfizer
US - Cornell University College of Veterinary Medicine and Texas A&M College of Veterinary Medicine & Biomedical Sciences have announced a groundbreaking partnership with Pfizer Animal Health. This unique partnership between academia and industry will deliver the Universities’ expertise in medicine and teaching, supported by Pfizer Animal Health’s information delivery and customer service know-how.

Global Dairy Cattle Industry News